Investment property renovations: Knowing when it’s the right time to renovate
It’s a common question we hear from Perth landlords and investors:
Should I renovate my investment property?
It’s important to remember that the goal of investment property renovations is simple: maximising rental returns by making a property more attractive to renters.
While the potential reward can be attractive, the pitfalls can be extensive when it comes to renovating an investment property. How can the risks of these pitfalls be minimised? By making strategic, cost-efficient renovation decisions.
As a Perth-based property management company, we know a thing or two about renovating strategically, so here are some top suggestions.
Do your due diligence
When completing due diligence, there are a couple of things to consider here:
- Market cycles
- Population and renter demographic, and
- Supply and demand.
It’s a little tricky to do all this on your own, but you don’t have to.
Have a strategic plan
If there’s one thing you need, it’s a strategy.
- Make a list of the market trends you identified when you performed your due diligence. What should you do to stay competitive?
- Note down all the renovations you’re contemplating and how much they cost.
- Prioritise the renovations based on one question: what do I need to fix?
Without a plan, it’s easy to lose track of your spending, which affects your profit margin.
Consider the time available
There’s a huge difference in what you can achieve in three weeks or three months.
- Be realistic about how much time you are willing to forego in rental income.
- Don’t forget to factor in extra time for planning permission, if applicable.
- Choose the most efficient renovations available.
Remember, less is usually more
When you’re considering investment property renovations, it’s true: less is often more.
- Think of your property as a blank canvas for tenants to build upon. Keep things neutral and pleasing to your targeted tenant demographic.
- Don’t become personally attached to the property.
It’s not your home – it’s an investment. And, you’re aiming to attract the right tenants.
Be aware of overcapitalising
Overcapitalising is when the renovation costs outweigh the potential benefits of return. While this appears common sense, it’s important to remember that costs can increase once renovations are underway.
But how do you avoid overcapitalising? Here are some ideas.
- Value the property.
- Set a renovation budget and stick to it.
- Be realistic about what appeals to your target market. For example, do you really need to re-landscape the whole garden, or could a few potted plants work just as great?
So, when should you renovate your property?
All that said, is there a “right” time to renovate an investment property in Perth?
The short answer is: it depends. Knowing when the right time to renovate depends on:
- Market trends
- Projected costs, and
- Your finances and long-term objectives.
Ask yourself these questions:
- Is this improvement necessary?
- How much will it cost, and how much can I afford to spend?
- Will it actually increase my rental income?
Remember, there’s no rush. Think through your options before you start a renovation project and get advice from a Perth property management company who understands the local market if you’re unsure.
If you’ve decided it’s time to renovate your property, where should you start? Here are some cost-efficient, yet highly effective ideas.
- Reface kitchen doors and units to freshen the room up.
- Give every room a fresh coat of paint.
- Change carpets to wooden flooring.
- Replace the front door.
- Add extra power sockets, especially if you’re trying to attract young professionals who might work from home.
We’re HERE to Help
We get it. Investment property renovations aren’t always easy, and it’s good to have experts on your side.
That’s where we come in. You see, we’re more than just a Perth-based property management company – we’re a partner.
With almost 40 years’ experience working in the Perth property market, we understand the unique challenges facing our clients, and we know that every client needs a unique, bespoke strategy to achieve their objectives. No matter whether you’re a new landlord or an experienced investor, it’s our goal to help you increase your rental income and realise your financial goals.
The bottom line? With our support, you can reach your wealth objectives. We are HERE to help, so contact the team today for bespoke property management advice.