TO RENOVATE OR NOT TO RENOVATE... THAT IS THE QUESTION!
Our investor clients often ask when the best time is to renovate their investment property. Experience tells us that the best time to renovate is when the property is vacant, however, some renovations can be done with tenants still in the property. Obviously, this is dependent upon the renovations to be undertaken.
Renovations undertaken during a tenancy can encourage a tenant to enter into a longer-term lease at an increased rent or to maintain the property at a liveable standard without the need of creating a vacancy.
Renovations do not necessarily mean gutting the property in total. Renovation could be the installation of built in wardrobes, upgrading bathroom tiling and shower/bath recess, painting, new window coverings, re carpeting and the installation of a new kitchen or appliances.
We stress that it is unwise to over capitalise by installing top of the range products. This is a mistake that many investors make. Top of the range products not only cost more, but do not necessarily add rental value to the property.
Be careful when considering renovations and take the advice of your property manager as to what type of renovations will increase the rental value and what tenants actually desire in their search for a rental property. By knowing what the renting public are looking for and tailoring your renovations to market expectations you are spending your time and investment dollars towards deriving additional income and not simply improving your property.
Remember to retain all records and invoices. Speak to your accountant as to the tax implications of any renovation work that you undertake and also consider obtaining a tax depreciation report so your renovations can be depreciated for tax purposes.