Property renovation can be undertaken with a variety of objectives in mind, but if your objective is to increase the rental income received from your investment property, how do you assess what will add value and what will not?
This can be a complex question, but by following our tip 5 tips, you can simplify the process and help to ensure that you receive the highest possible return from your renovation investment.
- UNDERSTAND YOUR MARKET DEMOGRAPHIC
Spend some time getting to understand who your tenants are likely to be. To do this, you need to know whom predominately lives in your area – students, young families, executives, or retirees. This may be influenced by local amenities such as schools or local employers.
- ASSESSING WHAT YOUR RENTAL MARKET WANTS
Utilising the information you have gained in assessing your market demographic, you can now establish what property features are likely to be important to your target rental market and renovate your property to ensure that your property offers those features.
- ESTABLISH WHAT IS ALREADY ON OFFER IN YOUR AREA
Establish what is already on offer in your area and note what properties have low / short vacancy periods and what attributes do properties attracting higher rents possess. These properties are your competitors and your renovation should address any features you identify as important to the market from this assessment.
- SET YOUR RENOVATION BUDGET – AND STICK TO IT
Plan your renovation and cost it out in detail, establish your renovation budget and most importantly, stick to it. Changes implemented as works progress are expensive and should only be made where absolutely necessary. Ensure that your budget includes a contingency to negate the unforseen issues that inevitably arise once works commence.
- CONSIDER THE IMPACT ON YOUR OVERALL PROPERTY VALUE
Renovating to increase rental returns is a great plan, but over-capitalising in the process may not be a good strategy. Ascertain how much value your renovation will add to your property and ensure that any amount invested in your renovation can be re-couped should the property be sold.
The best strategy will be individual to your circumstances and your property. Seek professional advice and feedback from locals with knowledge in the area. Commencing with a sound plan, which is executed with purpose, is the recipe for your success.
Jo Powell, 3 Pea’s Property Styling