Renovating a Rental Property26-03-2019 | Financial
Every now and then, it’s a good idea to refresh a rental property in order to stay ahead of the competition and attract new tenants - however it’s important that every penny spent is justified by return on investment. Before planning an overhaul, big or small, do the maths. What’s the budget? How much value will it add? The right tweaks and changes can help you get the most out of your buy-to-let investment and if you spend the right amount at the outset, you’ll reap the financial rewards further down the line.
Where do I even start with budget?
Renovating a rental is about maths and finance above everything else. Rental yield, which refers to the rent a property can generate as a proportion of its value, is particularly important to consider in all aspects of a renovation. If something isn’t going to add value and generate more money in the long run, is there any point in doing it?
Although it’s vital to be sensible with money and budgets, there’s some areas of a property that there’s just no point cutting costs on, such as carpets and flooring, paints (opt for the reputable brands and splash out on anti-mould paint for bathrooms) and bathroom fittings. With these, you’ll probably end up spending more in the long-run if you go with the cheaper options, rather than splashing out from the outset with good quality materials. Consider your time frames and schedule. After all, time is money and the longer you spend on your renovations between tenancies, the longer the property will be vacant which is ultimately a financial hit. Schedule any work the day after the previous tenants have left and try and minimise the timescale as much as possible without rushing your chosen tradesmen. And speaking of tradesmen, we recommend having a builder you trust to initially look over your property to make recommendations for improvements or upgrades throughout the property. A professional opinion could be the difference between making much needed and beneficial changes to the property, and wasting your money on improvements that needn’t be undertaken for years to come.
How can I easy add value to a rental property?
These days, the rental market is notoriously competitive and landlords everywhere are looking for ways to give their property the edge, without breaking the bank. There’s definitely a few easy and practical wins when it comes to adding value to a house. Although carpet is homely and cosy, it can be easily marked, damaged and worn - buy-to-let properties do tend to take a beating. How about opting for laminate flooring instead? It’s much easier to maintain, looks chic and contemporary and it’s fairly easy to install yourself, saving you money on labour costs.
It’s common knowledge in the world of renovations that the money-makers are a property’s kitchen and bathrooms so this is always a good place to start. They can however be the most costly rooms to renovate, so weigh up the pros and cons and be smart with the changes. Painting cupboard units is a great way to update and refresh a kitchen. Greys and greens are particularly popular at the moment and will be more hard wearing than whites and light neutrals. No one likes a dark property, however no one wants to be installing extra windows either as this is a costly job. Think about adding thoughtfully placed mirrors to create a trick of the light, making the room feel brighter. Perhaps you could transform practical items within the property into head-turning design features to give your property the edge. For instance, install a dramatic light fixture in the kitchen or living area. Industrial style lights with exposed filament bulbs look great and are sure to impress prospective tenants. Just remember to maintain the healthy balance between aesthetics and a sensible budget.
How can I set my property apart from the competition?
Perhaps your property has some kind of selling point that could be maximised. This could be something as simple as a cellar that could be transformed and marketed as a wine cellar, simply by fitting a few large wine racks to the wall. That way, something not particularly exciting becomes something unique and interesting - and that just might sway it for prospective tenants.
You could also look at turning your property into a ‘smart home’ by installing thermostats such as Nest, or smart door locks such as August to give your property the edge over others. Maybe you could fit an intelligent security system or some other special extras to entice interest. Rental renovations boil down to balance - aesthetics vs budget. You could blow thousands turning your rental property into a palace, but will your tenants treat it like a palace? It’s not their money that’s been invested into that luxurious carpet or expensive wallpaper. Keep it simple, fresh and clean and make smart changes to add value and turn your property into the most desirable in the area.