“Are the types of renovations you do for investors simply redecoration or are they renovation.?”
That’s a question I recently received via email, and it raised a very valid point. What do these terms mean with regard to your investment property? What are the outcomes and cost that come with each?
There are only two reasons to renovate in investment property:
• To increase your equity
• To increase your rent and rentability (reducing your vacancy factor)
To achieve these goals, you may only need to redecorate without doing a major renovation. This could save you time and money, but it’s important to get it right.
Firstly, and most importantly, work out what your budget will be and then set about planning your project. Once you have established your list of works it should become clear if your project is redecoration or a renovation.
Your project is redecoration if:
• The work is just superficial
• It’s easy to remove or replace the items that are being changed.
• The work doesn’t require any structural or integral changes to the building footprint.
Usually, this kind of work can be done in a few weeks.
For the typical redecoration you simply require new paint, new carpet and vinyl and small items such as new handles on your kitchen cupboards and possibly a new mirror and tapware in your bathroom. Often even novice landlords can manage these types of projects; provided you understand the workflow of each trade and the consequences of getting it wrong. For example you always lay the carpet after painting to ensure it never gets paint damaged. This may mean small touchups on skirting boards but that’s minor compared to a full tin of paint on your new carpet. Generally you can source the items yourself and get quotes from tradespeople.
The common redecoration mistakes
The trap for new investors or renovators here is that they buy the wrong materials for the project – make sure you buy carpets that are suitable for rental properties and taps and shower mixers of a good hard wearing quality or you will soon be replacing them all again. Also, many people over-capitalise on their projects because they are not prepared or simply get carried away.
Redecoration will always be the most cost effective way to drag your tired investment property into today and achieve greater rents. For every 10 investor renovation projects we look at, five will end up being redecoration and often cost the landlords considerably less than they had expected.
So knowledge and experience is the key and can save you thousands with some careful research before you begin. It’s often not necessary to rip out kitchens and bathrooms, resurfacing bench-tops and painting cupboard doors is also a great option. We also enamel existing baths and basins to avoid costly plumbing bills and to speed up the process where we can for landlords; this is all redecoration in our opinion.
Your project is a renovation if:
• The work is of a structural nature such as changing walls
• If the work requires the replacement of units or hardware in the bathroom or kitchen
Typically, a renovation project might be dividing a room into two or removing a non-load-bearing wall.
Alternatively, it could be changes such as the replacement of kitchen units, new baths, showers and vanities. Generally renovating will be more costly as you will have to buy entire new kitchens, often move plumbing and electrics.
Overall, you need to modernise a property to fit today’s lifestyle, not that of, say, 30 years ago when the property was first built.
The common renovation mistakes
It’s hugely important to set a realistic budget before you start and follow that budget when you do a full renovation as any blowouts or costs not budgeted for can be expensive and time-consuming and very frustrating. Poor planning causes problems when it comes to the workflow of contractors – the project will be even more critical and costly if you get it wrong. Getting fixtures and fittings wrong is also a common mistake; these will need to be made to order or purchased at specific sizes or they won’t fit.
Renovations can often require council consents both building and resource and these will usually place long delays on your project so ensure you have everything permitted before you start and have your team set to go as soon as you have the green light. You must ensure you have each stage of the renovation signed off by a council inspector and the final product as well, don’t be surprised if you encounter new obstacles along the way as often requirements for certain issues such as waterproofing or drainage are not made clear until you get under way and can also add expense and ruin your budget.
The average cost from our experience to fully renovate a three-bedroom home to a reasonable quality can start at $15,000.00 and go up to $25,000.00, depending on level of quality and size of kitchens and bathrooms. Always have a firm start and finish date and keep the project going at all times (crack the whip on those contractors) and ensure your expectations are clear at all times with them.
Good luck whether your project turns out to be redecoration or a renovation and remember don’t overspend and get sound advice on how to increase the value of the property and your rent before you start!
The case of the disappearing prospective tenant
Ever wonder why when you turn up to show a tenant through your rental property and they don’t show?
Well actually they did. They arrived 10 or 15 minutes early pulled up outside and saw that the place was untidy and the lawns were not cut, the fence wasn’t painted and the letter box was broken so they drove off!
That’s what real estate agents call ‘street appeal’ and tenants want exactly the same thing.
So always remember when redecorating or renovating your investment property that the outside space is what makes a great rental and home for your tenants.
Paint the fence on a nice day, spend a little time on your garden, plants such as grasses are extremely cost effective and look great when surrounded by bark or river stone. A small paved area for outdoor tables and chairs can cost as little as a few hundred dollars. A few hours for you to pave will provide an outdoor entertaining area or another rental feature for your property, particularly in summer. Consider putting up trellis to give privacy and create an extra outside space.
Mark Trafford Director “Maintain To Profit”