The biggest mistake some investors make is by doing renovations such as converting a third or fourth bedroom into an office with a built-in desk.
When investing in property for the purpose of increasing the value of your investment as well as gaining higher rental returns, it is essential to have the requirements and the needs of tenants on mind while undertaking such work. The whole idea is to make an investment property attractive, comfortable and functional for the tenants and making it valuable for the landlord. These renovations can be purely cosmetic or more comprehensive in order to align the property with the rental market and its demands.
However, this will be dependent on the condition of the investment to begin with. Given that the current rental market in some areas is still a ‘tenants’ market, they are attending rental open homes with a mental checklist of their needs and wants. And why wouldn’t they when there is so much to choose from!
Some of the expected features are things such as available parking whether it be a garage or a covered carport, air-conditioning, security screens, built in robes, storage space and weather proof entertainment areas. While some of the above may not necessarily increase the value of a landlord’s asset, it will bring the home in direct competition with comparable properties, which will help minimise the vacancy of the investment. Generally, if the home needs more than a cosmetic makeover, items such as fresh internal/external paint, new flooring (tiles, timber, carpets), building an entertainment area, and air-conditioning can increase weekly rental income by approximately $40-$70 per week.
The biggest mistake some investors make is by doing renovations such as converting a third or fourth bedroom into an office with a built-in desk. This not only limits the chances of leasing a property but also makes it less attractive for the prospective tenants. The whole idea is to not over capitalise the investment but rather focus on the add-ons to increase weekly rental return and being realistic about the amount of money spent on renovations. If the investment property has a kitchen and bathroom which could do with a bit of TLC, you are better off installing a new kitchen and bathroom as again, this will increase the value of an investment, achieve a higher rental return and a landlord will avoid over-capitalising in this instance.