How to Strategize, Budget and Plan for Your Rental Property’s Renovation
Renovating a rental property is an important piece of any rental property investor’s business plan as it can add value and increase rentability. Smart renovation choices can save you money long-term too. Read the guide below to renovating a rental property with an eye toward saving money.
The best reason to renovate a rental property is to maximize the return on your investment by increasing rent value and competitiveness. Cash flow is king. If your renovation won’t increase or maintain your property’s rent roll, take a step back and re-evaluate.
Unlike a home renovation on your residence, rental property renovations are not personal. Don’t renovate your rental property like you’re renovating your own home. It’s important to upgrade the house to meet modern standards, but don’t put the time and money you would put into your own home. You should look at the renovation project with a property investor’s eye as the tenants are not likely to take care of it the way you would, so it’s not worth over-investing. We’d suggest keeping the renovation cost at approximately 10% of the property value.
If you’re planning to do room rental in your rental property, you might want to consider partition an additional room to accommodate even more sharing. Your partition walls can also be positioned in a unique way and double as an additional feature wall. It would be great if the partition can be done without covering natural sunlight as natural sunlight will always make your unit feel cosier.
Finding a balance between quality and cost for rental property is always challenging, but it is highly related to your ROI. For example, which one gives u better ROI? Will it be better to spend RM200 for a mattress that would sink after 2 years, or RM600 for a mattress that lasts for 10 years? RM3,000 for a kitchen cabinet with melamine (wood based) top that may give u mold and stain issues, or RM4,000 for a quartz (stone top) that allows you to avoid the mold and stains? However, a TV would last more or less as long, no matter if it is RM1000 or RM2000. From furniture to decoration to wall fixtures like painting or wallpaper, how do you know where to spend more on? It’s tempting to go for the cheapest offer out there but think twice.
You should always keep in mind that your goal is to get the most added rent with the least money spent. That goal should guide the renovation’s scope, as well as material selection, style, and even the choice of interior designer you work with. Look for designers who understand property management or rental to help spend wisely, as they are able to strategize and perform a cost effective makeover. What’s more important is that these professionals are property investors first, interior designers second. Still unsure about the types of renovation that fits your rental property best? Get your free consultation here.