If you’re a landlord or seeking your first investment property, it’s a great idea to periodically assess your rental or portfolio for potential improvements that will enhance tenant appeal and increase rental income and capital value.
The pandemic has contributed to a flat spot in many rental markets, but this won’t last forever. As an experienced real estate agent in the area, I’ve only ever seen the property market swing back stronger after a weak period.
Right now, it’s a great time to think about buying an investment property and be ready for the inevitable recovery, which will include a surge of returning tenants who’ll push rental prices upwards.
When inspecting rental properties to buy, you should focus not just on the quality of the building but the potential for improvements that will increase your rental income.
Together with colleagues in our property management team, I’d be happy to advise you on the current rental market in our area and the features that will command a premium price with tenants. In the meantime, here are eight ideas to inspire you.
- Create an extra bedroom – When inspecting a property, make a note of any large rooms that might be remodelled to create an additional bedroom. Large master bedrooms or an empty attic often hold the greatest potential for this type of upgrade. Bedrooms are pivotal in determining the amount of rent you’ll be able to charge. Make sure there’s room for a double bed and a wardrobe, otherwise you might not get a good payback from the work.
- Note the building codes – If you undertake any structural work, ensure you meet all the building codes. Failure to obtain the right permissions may end with you having to reverse the job, and that will mean a loss of thousands of dollars.
- Add a half-bath – If the bathroom is a little shabby and there’s sufficient room, pull out the existing shower and install a half-bath with a shower unit. You’ll often see these in smaller hotel rooms. Perhaps a smaller sink and toilet might create the space you need. Use the existing plumbing layout as changing the location of pipes is expensive and disruptive and will undermine your return on investment.
- Laundry ideas – It’s still possible to find older apartments without plumbing for a laundry. If there’s no obvious location, integrate it into the kitchen. Pay a plumber to install connections for a front-loader in a kitchen cupboard. However, think carefully about whether you should provide the washing machine. If that’s an expense you’re prepared to take on, make sure a higher rent compensates you.
- Upgrade the kitchen – A quality kitchen will drive up your potential rental income. Replace damaged benchtops and consider lightening and brightening. If you replace the doors and handles of the cupboards and drawers, prospective tenants will believe they’re walking into a brand new kitchen.
- Don’t get into hot water – Check the state of the water heater. Find out its age and when it will need replacing. Please don’t wait until it breaks down or, worse, floods your property because the bill will be higher when that happens.
- Floor your tenants – Great flooring has an enormous impact on tenants and the amount of rent you can charge. The jury is out on carpets. Fresh carpet is excellent, but many tenants prefer a timber floor these days. There’s a vast choice of flooring that covers every budget. This upgrade is well worth consideration.
- Brushstrokes of genius – Top everything off with a fresh coat of paint. Keep your colours neutral and consistent. Bright paints on feature walls can polarise opinion. I guarantee that some potential tenants will walk away if they don’t like your sense of style. Please make a note of the paint colours you use because we’ll need them for touch-ups and preparation of the property between tenants.