It’s an age old question … should your renovate your rental property now, or wait until it’s time to sell?
The answer is always renovate NOW! Whether your investment is a 4 bedroom house, tiny studio or a solid two bedroom apartment like the project I tackled recently, there’s no time like the present to get in and upgrade your property to maximise your rental returns.
But Cherie, won’t the tenants just wear it out? I hear you ask…
The answer to that is, ‘Does it matter?’. If you’re a property investor with a rental property, you’re in it for one thing and that is a financial return. But there’s two ways to maximise your return; (a) hold your property for long term capital growth, and (b) make sure you get the highest rent with minimal change of tenants as possible. Well, Renovating For Profit takes care of both of these.
By renovating your investment property now, you’ll manufacture equity by increasing the value of your property. That makes you more palatable to banks and lenders should you want to refinance or borrow again for your next property. Renovating also makes sure that you can ask top dollar in terms of rent. Great looking, freshly renovated rental properties are rare, so tenants will be willing to pay more to snap yours up, and they’ll stay longer, minimising rental losses you would otherwise experience in between tenants.
Recently I helped newlyweds and aspiring renovators, Richard and Linda, maximise the rental yield and uplift the value of their 2 bedroom apartment in Sydney’s inner-west. Here’s a breakdown of what we achieved in 5 days:
SCOPE OF WORKS
- Installation of a brand-new kitchen including new appliances
- New waterproof laminate floorboards throughout
- Internal painting throughout (DIY)
- Update electricals including; new lights, switches, relocation of several power points, and electrical rough-in for new kitchen appliances
- Relocate existing hot water service in kitchen
- Installation of large mirrored wardrobe in the master bedroom
- Install new window furnishings (white timber venetian blinds, curtains & rods)
- Bathroom refresh including; tile painting, new shower screen, new vanity, new mirrored shaving cabinet and new bath, shower and vanity taps
A fresh white colour scheme in Taubmans ‘Cotton Ball’, with bold feature walls in Taubmans ‘Private Jet’ give this 60s apartment a modern update. Black accessories, like curtain rods, light fixtures, kitchen cabinet handles and tap ware throughout, keep the theme consistent. This monochromatic scheme is perfect as a backdrop for fun colourful styling and accessories, from pinks to poppy yellows and aqua. It’s a smart colour scheme for rentals too because any tenant can easily see their own furnishings fitting in.
Property value (before renovation): $455,000.00
Renovation spend: $ 19,376.00
Renovation time frame: 5 days
Property break even point: $ 474,376.00
Property value (after renovation) $ 495,000.00
Renovation Uplift: $40,000.00
Net Profit Margin: $ 20,624.00 (after all costs accounted for)
Pre-Reno Rent: $ 335 per week
Post Reno Rent: $ 430 per week
Weekly Rental Increase: $ 95.00 per week
TAUBMANS PAINTS USED
- Internal Ceilings: Taubmans Endure Interior Ceiling / White
- Internal Walls: Taubmans Endure Interior Acrylic Low Sheen / Cotton Ball
- Internal Feature Walls: Taubmans Endure Interior & Doors Acrylic Matt Paint / Private Jet
- Internal Frames & Architraves: Taubmans Endure Interior Windows & Doors / Brilliant White
- Bathroom Tiles: White Knight Tile and Laminate Primer and Tile Paint / White