Sometimes you have to spend money to make money. This is certainly the case with property when you are trying to attract the right tenants. Depending on the type of investment strategy you follow, and the property you purchase, there will generally be some work that needs to be done before renting. Even newer properties can benefit from a coat of paint before a tenant moves in. Sometimes the work required is more extensive, but if done the right way, can result in a property that is in high demand from quality tenants.
There are plenty of cosmetic improvements you can make to a property that are cost effective and have a massive impact. Repainting walls, or replacing/resurfacing your flooring are both relatively low-cost ways to update and give your property a fresh, modern feel. The key is over-capitalising. Look for good value-for-money products that are durable, rather than “top of the range” or trendy options. If you have wooden floors, check the durability of the type of timber they are made from and either restore and protect, or replace with something more durable if they are a particularly soft wood. If flooring needs to be replaced, think carefully about the options and consider if you need carpet in high-traffic areas, or if this can be replaced with a more durable hard-floor alternative. If you are using carpet, select durable options, such as nylon as opposed to wool. Nylon is a popular carpet fibre as it is strong, easy to clean, mildew resistant and non-allergenic.
Sometimes properties need more than a lick of paint, and a major overhaul, such as replacing a kitchen, bathroom or both is required. This is a significant investment, and one that must be entered into with a strict budget to avoid over-capitalisation. You should aim to spend no more than 5 percent of the value of your home on renovations. The cost of a new kitchen can range from a few hundred dollars to replace cabinets to a full kitchen kit from $5000. However, something more bespoke can cost significantly more. According to houzz.com.au, the average cost to renovate a kitchen is $20,000.
This is not your personal kitchen or bathroom, so the design should be kept as timeless and broad-appeal as possible so décor doesn’t date. Think light, bright neutral colours that will complement tenants’ furniture, and surfaces such as tiles, cabinets, benchtops, and fixtures such as taps, sinks and lighting that are easy to clean and use.
Hipages advise that the cheapest option is not always the best, especially when it comes to using laminate benchtops in the kitchen of a rental property. Laminate benches are not scratch-proof “so choose a laminate with a textured surface and don't choose a solid colour. Smooth surfaces and solid colours highlight scratches. The stone-look finishes are very popular and it's hard to pick one that would not be acceptable to most potential renters. Get either bullnosed or rolled front edges and consider getting a rolled splashback. A rolled splashback eliminates any risk of water getting into the backs of the cabinets and damaging them”. Hipages also recommend using melamine for the front of cabinets and doors due to its durability. “Doors and drawers aren't as prone to scratches as benchtops are, so you can safely select a solid colour. White, off white or neutral tones are better than bright colours for a rental property and stay away from gloss finishes. Gloss finishes highlight scratches”.
It is also important to ensure the materials you select meet safety standards. For example, are your cabinets made from fire and water resistant MDF (Medium Density Fibreboard)? MDF is a far superior product to particle board, and the fire and water resistant MDF is even better. There is a huge focus on fire-resistant materials in the building industry, and in many areas they are mandatory. Question every element in your renovation, from fastenings such as staples and screws, to draw runners and hinges. There will be cheaper versions of all these elements, but how long will they really last, especially in a rental property.
When it comes to appliances, stick to mid-range items. If you go too cheap the quality might be compromised and you’ll spend more money repairing or replacing them in the future. Don’t go top-of-the-range either, because if there is a problem, the specific parts and technician required to replace the parts are likely to be costly. Hipages also suggests that “Built-in cooktops and ovens are probably better than free-standing ranges because they eliminate those hard-to-clean spaces between the range and the adjoining cabinets”.
Try to visualise the impact of wear-and-tear, and how your chosen colour scheme and materials will potentially look in a few years’ time.
According to houzz.com.au, the average bathroom renovation costs around the $13,000 mark.
For a quick fix:
1. Replace a tired looking shower curtain with a fresh, stylish one. If you bathroom is all white then a colourful shower curtain is a great way to add a pop of colour.
2. Replace window coverings with simple blinds that are moisture resistant and easy to clean.
3. Replace the toilet seat, especially if it is damaged or discoloured.
4. Spray dated tiles a neutral colour such as white. This is a trick that Shaynna Blaze from The Block and Selling Houses Australia often employs as a quick, cost-effective way to update tiles if you can’t afford to replace them straight away.
5. Update tapware. It’s amazing the difference shiny new taps and a shower head can make, especially if they aren’t caked in lime scale!
6. Thoroughly clean and re-grout mouldy areas. No one wants a bathroom with mould.
If you are renovating a bathroom from scratch, hipages.com.au recommends thinking carefully about your target market and the functionality of your bathroom. “If you want to rent to families, a bathtub to bathe children in will be essential. If you are trying to attract young professionals, however, a dual vanity and a good size showering area will be of more benefit. If you want a good all-rounder bathroom that still saves on space, you may want to combine the shower and the bathtub (you’d be surprised at how many people like to have a soak at the end of the day)”. If your bathroom is seriously dated and no longer relevant for your target market, now is the time to fix it.
As with any renovation, beware of over-capitalisation. Hipages.com.au explain, “Spending $2,000 to $5,000 for a rental return of $20 extra per week and an additional $10,000 on the resale value of your home is better than spending $10,000 and achieving the same returns,” which is spot on.
There is no excuse for a dirty property when a new tenant moves in. It is your responsibility as a landlord to ensure there are no grubby areas or mould that has been neglected in the bond clean after the previous occupant. It is also important to check all appliances such as the oven, dishwasher, etc. and heating/cooling systems are clean and in good working order. Do whatever you need to do to ensure your property is sparkling clean when your new tenant moves in. A house might be older, but it can still be clean. There are many professional cleaning companies you can engage the services of to guarantee a clean property. Your property manager or agent will be able to recommend companies to use or avoid.
Everyone wants to live in a clean, well-maintained house, and your ideal tenant is no different. Put yourself in their shoes and imagine the key things that could transform your property from good to great. With some careful planning and a strict budget you can create a property that prospective tenants will be fighting over, resulting in increased rental returns.