I’m going to talk about cosmetic renovations and how they are the easiest way to increase value, rental return, and improve tenant quality. Cosmetic renovations can both increase the value of a property and serve to transform a dated and older style property into a more modern and presentable home for a prospective tenant.
Having a vacant property is one of the biggest fears new investors face, and they should be worried. An integral part of being a successful property investor is ensuring you are buying an investment property that will be tenanted - even in the worst of times. Knowing your tenant and buyer demographic will be essential. This is why it’s important to talk to local property managers, investors or buyers agents. Knowing what tenants and buyers look for in a property in each area will help you determine what cosmetic renovations you can do to make sure you get the best possible return on your investment. I try and make my properties the best presented to ensure that vacancies are reduced as much as possible and the rental return is as high asit can be.
I’m far from a handyman, so don’t worry if you aren’t handy with tools. Below I’m going to list some of the cost effective things I have done to help improve value, boost rent, source materials, and entice more tenants to my properties.
If you have an outdated kitchen but the base is still strong, consider repainting the doors and putting new door handles on. This is a cheap and effective way of making the kitchen seem more modern and presentable. If you are really looking for a new look, a benchtop and new taps are only a couple of hundred more. You can even replace door handles on all doors in your property to enhance the overall appearance and style.
A kitchen that looks clean and presentable will entice more tenants, and may allow you to market your property for a higher rent.
This is the easiest way to transform a room with worn carpet into something sharp and presentable. Your local Bunnings will usually have classes on how to lay this style of flooring and it’s quite easy to do. The medium priced boards are quite sturdy and don’t scratch easily which makes them great for tenanted properties.
Floors that clean easily and look good even after years of rental use will mean less maintenance costs for you, and happier tenants.
Painting walls/door frames-
This is the easiest way to make a difference to an outdated and aging property. For a couple of hundred dollars and a few hours of your time you can make the property look fresh and bright again. I recommend sticking to neutral colours as outlandish colours may put tenants off. It may be a good idea to choose based on the colours you see in other properties around yours.
A freshly painted property looks newer and like it is well kept. If you want your tenants to look after the property, starting with a place that looks like it has been taken care of is a good place to start.
This one is more of a rent booster, but dishwashers can add an extra $10+ rent per week if you can squeeze them into your kitchen. It will cost about $600 to purchase a dishwasher and have it installed. In about a year and 8 weeks the dishwasher will pay for itself before it starts providing you with $10 a week – straight in your pocket. You also will be able to claim depreciation over a number of years.
Sourcing cheap materials and labour-
If you are trying to create equity, keeping costs low is essential. In the past I’ve sourced second hand goods from the numerous Buy Swap and Sell pages on facebook. There is almost guaranteed to be one for every local area in Australia. You name it and it can be found second hand on some of these pages. For example, I’ve seen dismantled kitchens, ovens, sinks, taps and range hoods available for free. I’ve also sourced numerous amounts of leftover tiles for free from other people’s renovations, which has allowed me to tile small areas such as kitchens and laundries. Obviously the condition of any items or materials needs to be checked, but if it’s in better conditions than what you currently have why not take advantage of it.
Your property manager should have a number of trade contacts that they trust. As much as I trust the property managers I select, I still demand 3 quotes for any work needed. This gives me peace of mind that I’m getting a fair market value for the work I want completed. Unfortunately I think certain tradespeople raise prices for out of towners, or as soon as they hear the word ‘investors’. One such instance I was installing a split cycle air conditioner and I had three quotes prepared. The prices ranged was $1700 to $2900. That is a $1200 saving just by getting three quotes. You may be thinking ‘what about the quality of the work?’ – That is why you should choose your local tradespeople in discussion with property managers who know the local area.
See below for a couple of examples of cosmetic changes I've made to add value to my investment properties.
Property 1: As you can clearly see, the woodgrain laminate and lino flooring in this property are just begging to be replaced. I changed the cupboard doors (and end panel), laid down some tiles, and added new sink fixtures. I also got a new oven/stove installed. The results almost speak for themselves: A low cost cosmetic renovation that looks good and will attract better tenants to the property.
Property 2: This was a more complete fix up of the kitchen area in this property, as you can see this property had quite an old kitchen, the laminate was starting to come up off the bench tops and it really looked quite dull. I replaced most of the kitchen including: the cupboard doors and handles, range hood, bench tops and sink, and tiles on the floor and splash back. The kitchen clearly looks brighter and more inviting than previously, as well as being more modern with the addition of the dishwasher, attracting a higher caliber of tenant and boosting rent.