Rental properties often get the short end of the stick when it comes to renovations. Without day to day access to your property, it’s easy to let things slide and not see how tired things have gotten. Many investors tend to adopt the approach ‘if it’s not broken, don’t fix it’, but having this mindset could be losing you money over the long term.
Brisbane’s rental vacancy rates have been slowly climbing in inner-city suburbs, which means any neighbourhood within five kilometres of the city is currently a very tenant-friendly market. Despite this, tenants tend to go to inspections with a fairly precise wish list in mind, and as a result properties in great shape continue to be in great demand.
First impressions count, and sometimes a cosmetic makeover can really change your investment’s fortune. New air-conditioning, freshly polished floors, new carpets or a fresh coat of paint can increase your property’s rent by $40-$60 a week. This increase will be quick to help you recover your initial renovation investment, and also makes your property more valuable to future buyers who will be very interested in a property’s increasing rental return.
If you’re looking at larger scale renovations, it’s really important to get the balance right and avoid overcapitalising. Houses with four bedrooms fetch more rent then houses with three bedrooms and a study. Avoid pigeonholing the functionality of additional space, instead keep rooms free of built-in clutter like desks and shelving so tenants are able to maximise bedroom space and enjoy a flexible floor-plan to meet their needs.
Spend money where it matters: the kitchen and bathroom. This isn’t to say you need to invest in top-of-the line cabinetry and astronomically expensive European appliances, but you do need to ensure your kitchen and bathroom are functional, neat and inviting for prospective tenants. A questionable bathroom or kitchen is a deal breaker for many tenants, and you’d be surprised how easily a property’s fortune and popularity can be turned around with a smart renovation. Updating these rooms will put money back in your pocket down the track on auction day, and will also boost your rent, sometimes quite significantly.
Other ways to add capital value and increase rental demand include considering a covered outdoor entertainment area, installing security screens throughout or fitting an internal laundry into the floorplan. If you’re in position to improve storage through bedroom built- in robes or a lock-up garage, this will also help your property command higher rent.
Like most things in life, it pays to renovate in moderation when it comes to your rental property. People may not pay a premium for frivolous extras like bathroom spas, snazzy lighting or even swimming pools, but they will pay top dollar for comfortable clean homes with flexible floor-plans, modern kitchens and bathrooms, and a generally pleasant appearance.