At Rentable, we help renters find apartments — that’s the name of the game for us. But what about the other side of the equation — the landlord or property manager? With that in mind, we thought we’d share some great info on rental makeovers and where the most value lies for the owner.
While renovations are sometimes necessary to keep the appearance and functionality of the rental space on par with the competition, some upgrades provide a much higher ROI than others, which makes them especially interesting from an investor’s standpoint. Here’s a brief guide for renovating a rental with the value in mind.
Seek approval from the owner’s corporation
Even if you don’t follow through on all the work you’ve planned, it’s important to plan the process. Some owner’s corporations have long times in granting approvals, which largely depends on their decision-making mechanisms and the size of the executive committee. Besides, in the case of concrete cancer, the floor should be inspected by a professional, whether you plan to replace the flooring or not. You can use the time waiting for approval to schedule necessary inspections.
Make a list of priority areas
In the case of owner-occupiers, the rule for renovating a property is to spent about 5% of the property value on the kitchen and about 1% on the bathroom. For rental properties, it generally recommended spending around 3-4% for the kitchens and under 1% for the bathrooms. Since the first impression count the most, when making priorities, make sure to include the first things potential tenants will see when they arrive for an open house tour. On top of it, remember to allocate at least 10-20% of your budget for contingencies, as renovations seldom run to plan.
Keep the neighbors informed
When you’ve established the timeframe, send a letter to each resident in the building to notify them of the planned renovations. Better even, have it displayed in the foyer or common areas, so everyone can see the notice on time. Include the contact number of the on-site contractor or your office, as well as a completion time estimate. Keep in mind that you may be asked for a deposit to cover any damage to common property, especially if you’re renovating in a multi-unit building.
Collect all the certificates
If you’re planning any structural work, keep in mind that it will have to be inspected by a structural engineer who’ll provide a certificate. Be prepared that some owner’s corporations require a certificate before the works start, assuring that the work can be done. Others will only need a certificate after the job is done, to confirm that everything is carried out in line with regulations. Make sure to double-check the requirements as they may vary from building to building.
Renovate the exterior first
While no one wants to pay to replace a roof, external improvements are essential for maintaining the entire property in good condition. A leaky roof can’t only compromise the structural integrity of the house, but also reduce the effectiveness of the insulation beneath. Since neither roof nor siding replacement is a cheap upgrade, explore every opportunity to save money. For example, the guys at Bayside Scaffolding offer competitive prices in residential scaffolding labor-hire, allowing you to optimize the equipment you need for your roof or siding repairs, and more importantly to complete the project safely.
Use heat, scratch, and stain-resistant kitchen tops
Kitchen benchtops are one of those areas where you want to spend as much as you can afford to ensure durability. Manufacturers offer good quality laminates which are among the most affordable and hardest-wearing materials in the world used for benchtops. Natural stone hasn’t lost a cent of its popularity, however, for rentals, engineered stone is a better alternative. Silestone, for example, is composed of 94% quartz, but unlike its natural cousin, it’s highly resistant to stains, scratches, heat, and spills. While looking stunning, timber is highly inappropriate material for these areas, as unless regularly sealed and maintained, it will quickly absorb moisture, stain, and swell.
Leave plenty of power points
The main difference between kitchens of the past and today is the number of outlets. Today’s households have a lot more appliances and having to unplug one to plug in another is frustrating to the point that potential tenants might pass on a property just for the lack of power points. In the kitchen, tell your installer where you want them, and don’t forget the splashback, as there’s where most for the smaller appliances will be plugged in. A tiled splashback is considerably cheaper, but if you can afford it, go with glass. It’s far easier to maintain and keep clean than tiles, which might become discolored and need re-grouting.
Facelift the bathroom
You don’t need to spend a fortune to add an entirely new bathroom to make it more appealing to potential renters. A simple bathroom remodel can recoup anything between 60-67% of the cost, depending on whether it was a mid-range or upscale remodel. The vanity should be your priority, as it can bring a whole new look to your space. Beyond that, replacing fixtures is inexpensive while a new faucet, showerhead, and cabinet handles make a refreshing change.
Not every home renovation offers a great return on investment. Most upgrades you make around your property end up costing hundreds or even thousands more then they’re worth. In the case of rental properties, the figures are even more dramatic as you expect those homes to bring you income. To get the most out of your investment, make sure to follow the tips listed above.