Obviously the point to owning rental property is financial reward. It’s important to know how to renovate in a way that will protect your investment, maximise your income and save costs. How is this done without jeopardising tenant satisfaction - a content tenant brings consistent cashflow.
Here’s some tips to help you gain the maximum benefit from your rental property improvements:
1) Don’t over-renovate!
· Remember a rental is usually not going to be treated with the same quality of care as your home because it’s a temporary place for your tenants to live, especially in New Zealand where we typically have just 12-month rental contracts.
· It’s important your rental looks desirable to live in. You only have one shot at that key first impression and you want to attract renters that will respect the house. But when it comes time to sell you don’t want to be losing money because you have over-capitalised.
· Get the house professionally valued, which will help you to know how much to spend on improvements.
· Take into consideration things like the neighbourhood before you renovate. Depending on the location and surrounding homes, this usually means a certain threshold that renters and buyers are willing to pay for your house.
· Ensure there’s adequate insulation that meets the current legal requirements for rental properties. This adds important value to your home when it comes time to sell. A well-insulated house is easier and cheaper to heat. It can make the world of difference to prospective tenants and the rental fee you can expect, whilst encouraging them to keep the house drier too.
2) Clean Well
Clean thoroughly each time you have a tenant changeover – including removing marks from walls and getting carpets cleaned professionally. This can radically transform a tired house, including removing odours and provide an effective face-lift. Cleaning is just a fraction of the cost of buying new carpet.
3) Repair Before Replace
· Walk through every room of your rental with a pen and paper, taking a good objective look at everything. Even better, take someone else through with you. Make a note of everything that looks tired, or damaged. At first it may seem there’s only a little thing needing improvement here or there, but those little things soon add up and can make a world of difference to a prospective tenant and what they’ll pay/whether they’ll stay, e.g. annoying things like a constantly running toilet!
· Remember not everyone has excellent handyman skills – don’t take shortcuts. Find someone with the appropriate expertise if it’s not your area of strength and set them to work. They’ll probably do the job in half the time an inexperienced amateur will and provide a great end-product.
· Make sure you get 3-4 quotes before you select a tradie. Most tradesmen will provide these for free and what they offer can vary.
· Keeping up with maintenance will avoid more serious deterioration over time. It’s much cheaper to repair than having to buy new and replace, and a house kept in good nick definitely pays off when it comes time to sell.
· When repair is not possible, make sure you replace things like:
- tap washers, or taps that cause dripping/running water
- door handles that no longer work
- blinds with damaging/missing slats
- lighting that’s more than 20-25 years old
- worn carpet
4) Paint
One of the easiest, most cost-effective improvements is to paint. It can provide an instant brightening and modernising effect. Just remember that neutral colours will appeal to more people. Adding pops of colour with furniture or accessories provide attractive contrast and can be easily changed. This is ideal when home staging.
5) Target the Kitchen and Bathroom
These two rooms provide the best wow factor and it’s well known that kitchens and bathrooms sell houses. If you want to sell your rental in several years time these rooms can provide an excellent return on investment. In the meantime they will enable you to increase the rental you can ask, or increase the calibre of tenant.
· Let’s face it, who wants to wash themselves in a mouldy bathroom?! Make sure you have an effective extractor fan (and encourage tenants to use it). Replace an outdated vanity and old plumbing and fixtures. Retiling the floor can also give your bathroom a more modern, appealing look without being costly.
· Update the kitchen where you can. It’s the heart of a home. A shiny new oven, or sink, and a new floor can make a house much more appealing.
6) Street Appeal
First impressions are crucial. You want the property to look interesting and to be safe.
· Keep the front lawn and shrubs trimmed and tidy.
· Remove or repair any uneven steps and pathways and repair the fence or gate.
· Make sure that any plants you use in the garden are ones that like the soil and general growing conditions in your area. Using mulch or bark chip will keep weeds down, plants moist and garden areas tidy.
· Remember that many tenants are not interested in gardening so you want an outdoor area that looks good but doesn’t take much work to keep that way, e.g. native plants that provide annual colour and interest but don’t need replacing.
· If there’s a good view, make sure nothing is in the way of that like a spreading tree.
· Fresh paint on a front door can instantly increase the house appeal.
Take a look at this simple, house exterior change example!
Ultimately, remember with any renovations that tenants don’t necessarily want to live in a highly styled, posh property, but somewhere they can feel comfortable and secure - a place they’ll want to remain living and paying rent in!