Simple renovation ideas could improve the rental yield of your investment property several fold
A well-maintained rental property not only ensures happy tenants, but also higher rents. If you’re finding it hard to see the light at the end of tunnel in this global turmoil, take heart – there are ways to ride the downturn. Property has shown an average of 10% growth per annum since records began, and even though values may remain stagnant for a few years yet, it is still a secure and tangible asset. If you take good care of your assets, they will be good to you. With this in mind, many investors have kept their properties afloat during the current crisis is by renovating them to increase the rental yields.
It makes good sense for investors to spend money on their existing assets to increase the rental return, because doing so creates more cash flow. And in an environment of low interest rates, it is even more relevant. If a property is cash-flow positive and the owner has lost their job, the place could still generate enough income to cover its expenses – and possibly even provide some for the owner.
The trick is knowing which simple renovation ideas are going to increase the value of your asset and bring in higher rents, so you can avoid over-capitalising on it. Most tenants move from one rental property to another instead of buying. So it is useful to know why they would rather spend the money, time and effort to move, rather than pay a little bit more to stay.
It comes down to some fundamentals in simple renovation ideas:
- change in circumstances: the tenant may have lost their job and cannot afford the accommodation
- property no longer fits requirements: a growing family requiring more room or downsizing with a smaller family
- dissatisfaction with property: maintenance issues not being dealt with or even outdated furnishings and fittings
Simple renovation ideas to maximise your rental return
There are many things you can do to increase your property’s appeal to prospective tenants – and increase the rental return in the process. Although it is difficult to put a figure on how much the improvements would increase your rental return, keeping your property well maintained and up-to-date makes it attractive to tenants – and would certainly improve the competition.
Here are 13 of simple renovation ideas for improving rental potential of an investment property.
1. Wash the walls and repaint them
The results will amaze you. Keep your colours neutral throughout. That way people can bring their furniture in without feeling they are competing with the place. Choose a light colour on the window frames to draw the eye outside, making the space feel bigger. Paint comes in a variety of finishes. The flatter and lower the sheen, the more imperfections are hidden – but the finish is harder to keep clean.
2. Take all rubbish away inside and out
This includes tree pruning, leaves and garden waste. Garbage removal, etc.
3. Put up new blinds/curtains
Nothing brightens a house like new blinds or curtains. Aluminium blinds are a good touch – they look clean and go really well with stainless-steel appliances and door handles. They also don’t compete with furniture. One drawback, however, is they can be damaged fairly easily.
4. Improve storage with built-in wardrobes
These are a great addition to any property, because they reduce the need for tenants to provide their own.
5. Install new door handles
These can cost as little as $10 each (even less from some secondhand outlets). Most will like the simple ball handles in brushed stainless steel from major hardware outlets. They will match the stainless-steel appliances in the kitchen and the blinds.
6. Create bright areas with higher wattage light bulbs
Light fittings don’t have to cost a lot but can detract from the look of the place if they are dated. Simple ball shades are under $10 and don’t compete with furnishings or appear dated.
They are very important to some tenants – and not to others. The thing is that tenants who don’t care still put up with one being there, but those who cant live without one wont rent a place without one, so they are a good investment for a rental property either way.
8. Clean, clean, clean
Clean the floor coverings and carpets and deodorise the curtains. Even if the carpets aren’t dirty, cleaning them leaves the house with a fresh smell.
9. Change the floor coverings
Even though carpets depreciate well and are a good addition to a property for that reason, polished floors or porcelain tiles can bring in a much better rental return.
In Singapore’s harsh climate, tenants will pay more for a property with air-conditioning. Sometimes they wont even look at one without it. Split systems are cost-effective and can heat and cool the place.
11. Update your kitchen with a new paint job
One that’s old and worn-out can take the fresh look out of a property. Painting wooden or laminate cupboards and drawer-fronts is a very cost-effective way of improving the look without the expense of replacing them. Use a good quality primer and semi-gloss paint – not high gloss as it shows the imperfection. Make sure you take all doors down, and sand them and paint them outside – away from open flames as some paints can be flammable.
It is very important to many tenants. Installation of secure locks and even security doors can pry a few more dollars out of your prospective tenants pockets.
13. Have the property wired for the modern day
This includes security lighting, and internet connectivity in most rooms. Alarm systems are a good investment in some areas – just tell the tenant they are not responsible for the cost of monitoring.