As any good estate agent will tell you, your renovation strategy will depend on whether it is a home you will be living in or one you plan to rent out. Here are some handy guidelines to get you started with a successful and profitable renovation in The Hills.
Are you looking to renovate your home, or do you have an investment property you want to rent out? Perhaps you’re considering an investment property for rental income, but need to to make some improvements. Maybe you own an older rental property that is now due a facelift prior to advertising it for sale or attracting new tenants.
As many real estate agents and property managers will tell you, there are some key differences between renovating your own home and and giving a facelift to an investment property.
“With an investment property, focus on getting the best return on your improvements.”
In your own home, you’re thinking not of a future sale price but your own priorities, tastes and everyday life. For an investment property, you need to keep your business head on and focus purely on getting the best return on your outlay.
Our top tips for renovating for profit In The Hills
Here are some key areas to focus on when renovating for profit, for both your own home and an investment property.
1. Set your renovation budget
With your own home, you can afford to be more generous with your budget as you’re investing in a space that you’ll live in and enjoy every day. With an investment property, it’s more important to focus on creating an attractive and appealing home with good-quality robust fixtures and fittings. Setting ‒ and sticking to ‒ a strict budget will maximise your profit for when you let it out or sell it.
You need to ensure that any changes you make are in keeping with the overall value of house and won’t result in overcapitalising on your investment. Adding a luxury kitchen to a one-bedroom flat may not be an expense you can recoup in either rental income or eventual sale price.
2. Identify your target market
With your own home, your target market is you, and although you should think about resale value when making any changes, the most important thing is that you’re happy living there.
With a rental property, knowing your potential tenants and what they want is essential, both when buying an investment property and when renovating. This is where it’s worth talking to your local real estate agent or property manager to learn what the market is looking for.
Perennial favourites, modern kitchens and bathrooms generally top the list. Air-conditioning and useable outdoor space, with a shady alfresco area, also prove a huge drawcard.
3. Be strategic in your renovations
For your own home, where you will be staying for a while and want to feel happy living in, choosing a luxury kitchen or flooring, or splashing out on a beautiful bathroom are all going to be money well spent if you use and enjoy them every day.
With a rental, however, it’s essential to be strategic; you aren’t aiming for a Block-style show-stopper of a home. Will your renovation generate a higher return on either the rental income or sales price, or is it just going to look good?
Tenants tend to be more pragmatic about what they need compared to buyers, who will fall head over heels in love with a property.
Focus on cosmetic changes such as fresh paint, new flooring, modern window coverings and new tapware in bathrooms and kitchens, rather than full makeovers. A useable and attractive outdoor space is also prized by many tenants; spending money and effort here will reap better rewards than Italian bathroom tiles.
“Visit open homes in The Hills to get ideas for your renovations.”
You need to think about broad market appeal, which means keeping your own taste out of the equation. While you may love a particular colour scheme, it won’t appeal to everyone, and once the property is rented, you’ll never see it anyway. Instead, choose neutral, good-quality finishes that will appeal to a wide range of tenants.
Where you may choose expensive details such as stone bench tops or glass splashbacks in your own home, in a rental you want to consider robust long-lasting finishes that won’t be expensive to replace ‒ unless you’re targeting a luxury market. And remember that sometimes you can do less ‒ rather than re-tiling the kitchen or the bathroom, regrout. If the colour is particularly hideous, you could use tile paint. Rather than ripping out a kitchen, give it a facelift by replacing cabinet doors or door handles, discoloured power point covers and tired-looking tapware.
“For rentals, use robust finishes that are less expensive to replace.”
Remember ‒ while you want to offer the market an attractive property that will appeal to good tenants, you don’t want to overcapitalise, or spend money that you won’t recoup in rent or eventual sale price.
4. Use your time wisely
Spending months on structural work may be worth the effort for your dream home, but for investment properties it means missing out on rental income ‒ not to mention the cost.
Focus on cosmetic improvements that can be achieved within a reasonable time frame. If you have more than one investment property, consider using the same paint, tiles and fittings across your properties to save you time and money. This also helps with maintenance between tenants.
An exception to this is straightforward structural work that will increase your pool of potential tenants; the most obvious example is dividing a large area to create an additional bedroom or study nook.
5. Use top tradespeople
Whether investing in your own home or a rental, always look for good tradespeople. Check their reviews, ask friends or your real estate agent for referrals, and look after them if they are good. Shoddy or incompetent tradespeople will cost you time, money and stress, so here it’s worth searching ‒ and paying for ‒ the best.
Talk to us at Stone for advice
Always do your research before renovating your investment property. Visit open homes in Castle Hill, Baulkham Hills, Kellyville, Bella Vista and surrounding suburbs to get an idea of what similar homes are selling and renting for, and use this research to inform your decision making.
Talk to us for our tips on top market trends. We have a wealth of experience in home sales and property management, and can steer you in the right direction.
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