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To renovate or not to renovate? Unfortunately, it doesn't have a simple yes or no answer. If you're thinking about renovating your property, the cost and return on investment (ROI) play an important role.
In this article, we list common investment property upgrades to help you identify which ones may seem worth it.
What should you consider when renovating?
You need to consider the cost of the upgrade, including labour, materials, permits and other fees. If you're doing an extensive home renovation, it could impact tenancy.
The longer it takes to renovate the property, the longer it sits vacant and without revenue.
Also, look into how your potential upgrades could affect rental income and property values. An upgraded bathroom or kitchen, for example, could net you higher rent prices or increase the value of the home, but this all depends on local demand.
Research current market trends to see if renters or buyers are looking for specific features.
What are the most popular investment property upgrades?
Not all renovation projects are created equal. Bigger isn't always better when it comes to home improvements. The key is knowing how much an upgrade is worth versus how much you'll spend on it.
Repainting the interiors and exterior
This is often one of the simplest and most cost-effective improvements you can make. A fresh coat of paint can do wonders for a property's façade or an old room that needs updating. Choosing a more modern colour scheme and clean finishes can elevate the property without much effort.
Painting a single room can cost anywhere between $400 and $1,200 depending on the design and how big the room is. For a single-storey exterior, it could start from $4,000 to $10,000 depending on the size of the property.
Kitchen upgrade
A kitchen upgrade is one of the most popular home renovations, and for good reason. A well-designed kitchen can boost a property's resale value and make it more appealing to future tenants.
A quick kitchen refresh, which involves new doors, countertops, updated cabinetry, and other small cosmetic changes, could cost around $8,000 to $12,000 and above. Meanwhile, a complete kitchen overhaul can set you back anywhere from $20,000 to $35,000 or more depending on the type of materials and appliances you put in.
Bathroom renovation
A bathroom update can improve a property's appeal and may offer a strong return on investment in some markets. It typically costs around $10,000 to $18,000. Some older properties may need a complete update with new tiles, fittings, sinks, shower enclosures, and other bathroom features. This could cost more than the usual estimates, so it's a good idea to really do your research and understand how this could help your bottom line.
Newer properties could still benefit from a bathroom renovation by including more smart storage solutions and water-saving fixtures to make it more environmentally friendly. Simple additions can go a long way when it comes to renovations.
Flooring
New flooring can make a huge impact on the overall look and feel of a property. Good floors may not be instantly noticeable, but bad flooring like worn carpets, outdated tiles, and aged wooden floorboards can be an instant turn-off for buyers or renters.
Replacing a house's floor can cost around $5,000 to $12,000 or more depending on materials and square footage.
Outdoor amenities
Building outdoor features such as an outdoor kitchen, deck, patio, fire pit or water feature can improve a property's appeal and may boost resale value. The cost of building these outdoor amenities can vary greatly depending on whether you're doing a basic renovation, which can cost around $2,000 to $10,000, or something more premium, which can go from $30,000 to $75,000 or more.
When adding amenities to a property, make sure it's in line with what your target demographic wants. Do your research to see what outdoor features people want most. A common mistake of investors is installing cool and expensive features that they think will appeal to buyers or renters but don't really have the demand.
Green home upgrades
Adding environmentally friendly features to your property could not only help with maintenance but also attract more buyers or renters. Recently, more Australians are prioritising sustainable home features when buying or renting.
Insulation improvements and installing double-glazed windows can provide potentially good returns. Solar power systems can offer strong long-term savings and may appeal to buyers seeking lower energy costs. All these green home features can help reduce energy and utility bills, making them potentially high selling points to possible buyers or future tenants.
The cost for these upgrades can be hefty, with a basic green renovation going for $15,000 to $35,000 while a mid-range upgrade can cost $35,000 to $70,000.
Financing your investment property renovation
There are a few ways to fund your renovation project. You may be able to refinance your current loan and access available equity to fund renovations, or you can use a construction loan for more extensive upgrades. For more information about your loan options, get in touch with us at loans.com.au. Call 13 10 90 or apply online today!
Disclaimer: Costs are indicative only and may vary depending on location, property size, material and labour costs. The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek independent professional advice tailored to your personal circumstances before making any financial decisions.
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