If you’re thinking about renovating your investment property, there are a few things you need to consider. From creating a budget to picking the right fixtures and fittings plus getting the project management and time lines right are key. We have put together a list of the main things to consider when you renovate an investment property.
Determine a budget and the available deductions
Renovating a property could result in some larger than normal expenses for your property. Make sure you put together a budget before you get started. It’s also a good idea to determine which expenses can be fully deducted in the current financial year and the other expenses that will need to be depreciated over several years.
Talk to the body corporate early
If your property has a body corporate, it can sometimes take a while to get approval on potential works. If your property is in an apartment building where you’ll need approvals, talk to the body corporate and put your case forward early. Include rough timelines for the renovation, your plans for the property, any safety precautions you need to consider and note when noise disruptions may occur.
Make a project list
You may complete this step when you’re putting together your budget. Make a list of all the parts of your rental property that you want to upgrade. The general rule of thumb is to spend approximately 3 to 4 per cent of the property’s value on kitchen upgrades and under 1 per cent on the bathrooms. When you’re thinking of the improvements on this list, consider what will give the property “wow factor” for potential renters. And don’t forget to budget 10 to 20 per cent for the unknown things that may crop up once you begin the renos.
Keep neighbours informed
Let neighbours of the property know that renovations are going to take place and when noise disruptions may occur. If it’s an option, you can also display a notice in the building’s common areas.
Be mindful of fixtures and fittings
A few careful decisions on fixtures and fittings can make all the difference when it comes to attracting quality renters. Leave installing new carpets until the end of the renovations to ensure everything is in good condition and fitted properly. Some other things to consider is if installing new kitchen benchtops, are they heat, scratch and stain resistant? And don’t forget to include plenty of power points around the property, especially in the kitchen, living areas and bedrooms.
This is just as important as the renovation itself. Be sure to calculate your time line correctly (the time it will take to complete the renovations) and consider if that time line is achievable. More often than not, it can take longer than expected to complete the renovations as you need to factor in things such as relying on other trades people to attend exactly when you need them to.
Renovating your rental property is a great way to increase the value of your investment, attract higher rental prices and ensure you find quality renters. Remember, a renter wants a blank canvas to work with when they move in, so keeping everything neutral and fresh is important and will pay dividends in the future.
Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.