Rental Renovations: Smart Upgrades for Increased Property Value in Perth
Like most investors, you probably want your property to grow in value — and you’d like a healthy rental return.
You may also be wondering whether renovating would improve both outcomes.
The answer might be yes — but rental renovation is very different from renovating your own home.
It’s a financial decision rather than a personal one, so why not consider these expert tips before diving in?
How To Start Planning a Rental Renovation
Do Your Homework
First, speak to a property manager — if you don’t already have one, the helpful team at We Love Rentals can advise you.
They know what renters value and how much extra they will pay for particular improvements. You can also research the market yourself.
- Attend local ‘Open Homes’ for properties similar to yours with rents those properties command.
- Make a list of renovation options based on what property managers in the area suggest will add the most value.
Offering what tenants want will ultimately attract higher-quality renters who are also willing to pay more!
Consider Costs and Benefits
As well as considering rental income, consult experienced local sales agents about which renovations add the most value for a future sale.
Don’t assume that spending $20,000 adds $20,000 to the sale price! Some renovations, for example, a whole new kitchen, may not add equivalent value.
You may also have spending limits and how long you can afford to have the property vacant. Seek advice from reputable contractors to estimate costs and timelines.
Ask for quotes and:
- time needed to draw up plans/gain permits, if applicable
- when they can start work
- time required to complete work.
These answers are crucial to estimating probable vacancy time and lost rent.
The return on investment (ROI) of a renovation is the sum of how much rental yield improves, plus how much the value of the property grows. Consider both as you need will most likely need significant gains to justify the cost and stress of a major renovation project!
Major Versus Minor Upgrades
If you own a free-standing house, you may have the option of choosing between major structural work (like an extension), or minor cosmetic upgrades. Strata owners have fewer choices and should consult by-laws.
Major work such as adding a bedroom, bathroom, upper storey or granny flat, can add substantial value.
Sometimes, this type of project is costly and often has more ROI risks. Trade shortages, long lead times to commence and finish projects, potential for material shortages/price hikes, and the need for skilled project management, make costs and vacancy times hard to predict.
If a major renovation like a new bathroom or kitchen is needed to solve structural issues like leaks, or for a property to fulfil its rental potential, these renovations must be done.
However, minor upgrades that improve returns without structural work are often more practical for investors.
Ideally, these can be completed far more quickly so the rental property might only be vacant for a few days between tenancies.
Below are some non-structural improvements that appeal to tenants, with some being more budget-friendly than others. In our experience, they all enhance rental returns!
Recommended interior upgrades include:
- repainting — use light colours for a clean, spacious look
- replacing carpet — consider vinyl, laminate, or timber
- refreshing kitchens:
- repaint
- replace benchtops/handles
- update appliances — if there’s no dishwasher, install one
- giving bathrooms a lift:
- repaint
- replace shower curtains/deep-clean shower screens
- reseal tiles/grout
- replace toilet seat/shower rose/towel rails
- replacing drapes — blinds are more stylish/easier to clean
- installing air-conditioning – a ‘must have’ for many tenants
- optimising storage (shelving/built-ins)
- updating to LED lighting
- providing Foxtel/broadband connection.
Recommended outdoor options include:
- improving street appeal by:
- pressure cleaning driveways/pavers
- weeding/mulching/adding “potted colour”
- painting front door/fence
- adding extra security:
- security screens/grilles
- CCTV
- alarms
- lockable gates
- entry lighting
- video doorbell
- adding practical features like:
- undercover parking
- covered decking
- shed/lawn locker
- child/pet-friendly fencing
- solar panels/EV charger.
These improvements enhance a property for tenants and buyers.
Compliance Considerations
After all of this, make sure what you’re planning is permitted.
Consider:
- strata by-laws
- local government requirements
- building codes
- Residential Tenancies Act (RTA).
Expert advice on compliance issues is highly recommended.
What’s The Next Step?
Why not give us a call?
The experienced property management team at We Love Rentals have a wealth of knowledge to share and can refer you to other local experts.
We’ll help you get the best return on your renovation investment!
Our past renovation and rental property upgrade blogs may also help!
Why not email us or call (08) 6254 6300 for friendly, professional advice.
Brendan Leahy
I am the licensee of We Love Rentals and provide support to the team whenever needed. I began my real estate career over two decades years ago. While I loved seeing people achieve their dream of a new home for their family, I kept thinking that there had to be a better way of doing real estate – one with respect for the long term benefit of the client and one that focuses on customer satisfaction.
