Every investor who plans to purchase a property for rental purposes has a goal: to generate cash flow from rents and increase the value of their investments over time.
Here are our top ten ideas on how you can do some simple renovations to add maximum value to your investment.
Any of these renovation ideas can be done by yourself or a handyman, saving you from additional expenses.
1. Add an ensuite to two bedrooms in a 3-bedroom house
If you own a 3 bedroom property such as terrace houses and old apartment blocks with only 1 bathroom, adding an ensuite to one of the bedrooms can increase your rental yields by $100 or more per week. Property with an ensuite is always in demand.
The cost of the renovation should be between $5000 and $8000. An increase in rental yield will be immediately available with this investment paying for itself in less than 12 months, not including any increases in rents during this period.
2. Change the kitchen
If your current kitchen is not modern or of low quality, replacing it with a new one will help to increase the value of your property significantly and add rental yields quickly. A quality kitchen costs between $6000 and $10000 and will immediately add an extra $50 – $200 per week or more to existing yields of homes. Bunnings is a great source of low-cost kitchens and will be significantly cheaper than engaging a cabinet maker.
3. Install new carpet and repaint the interior of the house.
A good quality carpet for a 3 – 4 bedroom house costs about $1500 – $3000 and will pay for itself within about 6 months depending on increases in rental yields.
New carpet will also make your property look modern and well-maintained, increasing its value. Painting the interior is the least cost-effective way to increase rental yields but still costs only about $1500 and pays for itself in less than 9 months.
4. Add a pergola or open pavilion to your backyard
This is the most expensive renovation on our list, costing between $5000 and $15000. However, it will quickly add another $100 – $200 per week or more to rental yields and increase your property’s resale value significantly.
5. Install a new fence with gates at the front of your house
A standard 6-panel wooden fence costs about $3000, with a wrought iron one costing only a little more. A new fence will increase the value of your property and help to separate tenants’ outdoor activities from those in your backyard.
6. Install a new entry door that will increase security and add value to your property
A good quality, secure front door costs about $1000.
7. Fix or replace broken tiles in the bathroom/kitchen areas of your house
This cost-effective renovation involves changing old cracked tiles with new ones, the modern fresh feel will immediately add $50 or more to weekly rentals.
8. Add a laundry/utility room to your house
Property with a utility area is almost always in demand and this renovation will increase the value of your home by 20% or more. Creating an internal laundry area also means that tenants save on additional costs associated with washing at the laundromat.
9. Install Air Conditioning/Heating
Depending on where your investment is located, Add air conditioning and/or heating to your property. Property with excellent insulation and efficient heating systems is always in demand during the winter or summer months, particularly thanks to COVID, tenants that now have greater flexible work arrangements and will appreciate the comfort.
10. Double Up Your Potential Income
If you have an old garage or shed, convert it into a studio apartment and rent it out separately, if allowed by the council. This is the most profitable renovation on our list. Property with additional units can easily add $150-$300 a week to your tenants’ rents and also increase the value of your property significantly.
Final word: Although this article has listed only the top 10 ideas for renovating your investment property, there are many other small renovation projects you can do to increase