Renovating Your Residential Investment Property Made Simple

Posted on Thursday, January 17 2013

Renovating Your Residential Investment Property Made Simple

Renovating a property for investment can be very difficult when you haven’t done it before and isn’t that easy even when you have to stay focused on what you need to achieve. So let’s take a look at what is important prior to starting out on your renovation.

Budget – Let’s say that word again – BUDGET. This one simple word is the one that should be paramount in all of your decisions within your project. It should dictate if you buy an investment property that needs a renovation or not and it should dictate exactly what work should be carried out. However an unrealistic budget or a guesstimate will catch you out every time and will leave you with a negatively geared property or a large unviable cost that will take many years to recover through rents.

Investment return- Ask yourself why you are renovating. There should be only two answers, firstly because the property has now become tired overall and hard to let and clearly needs refreshing to obtain quality tenants who will respect your property and pay top rents beyond the market and what you were receiving previously.Secondly because you have a specific area such as a bathroom or kitchen that lets your properties overall rent ability down and needs to be upgraded to ensure maximum rent is achieved. If your property doesn’t fit into one of those two don’t spend any money on it. Renovation should always be viewed as a return on investment not a cost to your property business.

Ok so let’s look at what you can do to make sure your renovation costs stay within budget and are the most efficient for your time and money.

Don’t personalize
You ARE NOT going to live in the property so stay away from your favourite colours and putting in anything at all because you like it and would have it in your home. Every decision you make at all stages ask yourself this question , is the money I am about to spend going to enhance the rent ability of my investment , increase my rent or add more value to my property. If the answer is no to any of these then don’t do it and you will be surprised how well you will do on staying within your budget and completing your project on time. All too often we hear landlords say to us but I really think that putting in those appliances will make the place look smart or we put that fence up because we thought the place needed it (no matter that every other house on the street doesn’t have a front fence and it’s a lovely cul de sac where all the kids play on the road together). Well we wouldn’t live in a house that doesn’t have a granite kitchen – so what… granite is costly to repair and replace.
Now let’s look at what makes and breaks a good renovation project both budget and time wise.

Exterior of the house

Here at Maintain To Profit we often see houses completely repainted that do not need to be and this is a waste of money. Have the property chemwashed and then take a close look at the exterior including the weatherboards or brick and the windows and doors and the base of the property. Can parts of it be painted at this stage and other completed later with you still achieving the correct amount of maintenance and giving you the street appeal tenants will pay more for? The same applies to garages, carports and fences. Keep your landscaping simple. Your local garden centre will give you great hints and tips on how to do these works with minimal costs.

 

Interior of the property

Kitchen- It is possible to renovate kitchen bench tops and units by resurfacing when taking into account this option you will also save on plumbing and electrical costs associated with a new kitchen. However you need to be very clear about the end product if refurbishing units and still change and upgrade handles, taps and tired appliances where necessary to suit. If your kitchen is beyond repair look for outlet stores or large kitchen chains such as Kitchen House that provide quick delivery dates and a good product with a warranty for peace of mind.
Bathroom- Bathrooms take the biggest hammering from tenants and lack of ventilation (or refusal to open windows) usually results in the need for work to be carried out regularly. This is one area that I suggest you spend more money on in the form of a heat, light and fan or heavy duty bathroom fan which runs of the light switch with a overrun so that the bathroom gets some ventilation every day thus reducing mould and condensation and prolonging paint and overall bathroom life ( every property we own personally has ventilation in the bathroom). If you do need to replace baths and showers and toilets shop around, there are some great package deals out there and DIY stores such as Mitre 10 Mega often have these as sales at great value.

Don’t choose cheap tap ware unless you are confident parts are easily obtained , costs for plumbers to service are very expensive and outweigh using good quality tap ware such as Methven in the first place. Remember to get more than one quote for building, plumbing and electrical work and explain clearly to your contactor that you have a budget and you expect their price to be fixed and not change.

Ceilings and Walls

Total repainting again is often not necessary so clean down the surfaces thoroughly before you make a decision. Wallpaper can be re fixed and painted over if you understand the process and ceilings will often come clean with just sugar soap and anti mould products. Painting quotes vary hugely and so does the quality and in our experience this is the biggest mistake investors make when renovating. Clearly understand what each quote entails and the finished product you will receive. Always paint with neutral colours that will be available in years to come so that you avoid total repaints and can simply paint one wall in a room when necessary. Use a contractor that works on investment property and you will not go too far wrong.

Floor Coverings
I was in another property recently where an investor had begun their renovation and was nearly finished painting throughout. I noticed the carpet was actually in good condition but needed relaying correctly. It was ruined as was the lino by paint. The quote for new carpet and lino was $3100-00, a total waste of money from an investment point of view. Both carpet and lino can be cleaned and does not always need to be changed, always ensure you protect it during you renovation process. The investor was already over budget and wanting advice on how to cut costs to finish the project.

Insulation and Ventilation

7 out of every 10 homes that Maintain To Profit look at with our investor clients have no insulation or ventilation system and either suffer from cold or damp or both. This an area where we strongly suggest that you DO spend money, not only will your tenants appreciate a healthier environment it is our own personal experience that those homes that are warm and dry rent more easily and obtain higher rents consistently especially in winter. With government grants now available there is no excuse when renovating not to include this in your budget. Simple ceiling insulation or under floor insulation on wooden floorboards or a Smartvent or DVS or similar system makes a huge difference to a property. We have seen properties painted internally become mouldy in three weeks due to no insulation or ventilation system in place and that’s in Auckland.

Structural work
If it’s structural it’s going to cost whether it’s for a builder or the materials or for council consents it means more time and more money. Be very aware of what you are taking on and don’t cut corners or you might just find your house is bending or sagging ( we’ve seen it plenty of times before). Spend the money and carry out the works properly, there are no short cuts or cost effective methods.
So in summary Here’s our Top 10 no no’s for your next project.
1. If it involves council engage a professional company or don’t do it.
2. Set a realistic budget and stick to it.
3. Don’t personalize ever
4. If you need to paint take a close look first
5. Don’t rip out your kitchen without considering a revamp of what’s there already
6. Buy items at sales or in bulk to get the best price
7. Your garden doesn’t need to feature in “Garden monthly Magazine” get advice an keep costs down
8. Get more than one quote for all trades and products
9. Ignore insulation and ventilation at your peril
10. If you haven’t got the skill, contacts or enough time use a professional investment renovation company.

Renovating for investment can be great fun and hugely rewarding especially when you come in on time and on budget and the property rents quickly and for the maximum it can achieve. Tenants in general will also appreciate a renovated property and are far more likely to stay for longer and treat it as their own home.
For more information and some great free hints or tips on your next project check out our website at www.maintaintoprofit.co.nz

To busy or just to hard, don’t have time, are you out of Auckland or overseas ? WE CAN HELP call us now on 09-9294546 or Click here for a FREE QUOTE NOW

 

Mark, Dean, Teresa and The Team
Maintain To Profit – The Best Maintenance Company in Auckland
www.MaintainToProfit.co.nz
P. (09) 929 4546
F. (09) 929 4547

 

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