I’m excited to share my insights on the types of renovations that typically offer the best return on investment for property owners.
The most impactful renovations include painting (both internal and external), replacing carpets, and updating blinds. Upgrading lighting and plumbing fixtures can also add significant value.
Timing and Budgeting for Renovations
Knowing when to undertake these renovations is crucial. If your property looks tired and isn’t fetching today’s market price, it’s time to consider renovations. During routine inspections, I suggest budgeting for these upgrades so you’re prepared when the tenant moves out. There’s a balance between advising a landlord to renovate for tenant comfort and for increasing property value, and often these goals align. If you want to raise the rent, tenants have the right to challenge you if no significant maintenance has been done. You need to justify higher rents with quality improvements.
Tenants can negotiate rent increases based on the property’s condition. If you decide to stick to higher rents without improvements, you might struggle to find new tenants, leading to vacancy costs and reduced rental income. It’s essential to weigh the costs of renovation against potential vacancy and letting fees.
Common Renovation Frequencies
On average, painting should be done every seven years. For carpets, if you opt for the cheapest options, they might only last two to three years. Investing in medium-grade carpets ensures they wear better and last longer, providing better value in the long run. When landlords want to cut corners with cheaper materials, it’s about clear communication. I inform them that low-quality materials may need replacing sooner, costing more in the long term. I recommend medium-quality carpets and wash-and-wear paints for durability.
The Logistics of Renovations
If renovations need to be done during an active lease due to damage or other urgent needs, in cases like storm damage, I may negotiate a rent reduction or arrange for the tenant to temporarily move out while repairs are done. It’s crucial to manage these situations with minimal disruption to the tenant and landlord.
If you’re looking to sell in a year or two, it’s wise to handle big-ticket renovations now. This ensures your property remains competitive both in the rental and sales market.
Maximising returns through strategic property renovations is a balancing act of costs and benefits. Whether you’re planning to rent or sell, making informed decisions about upgrades can significantly impact your property’s value and rental income.
