Hi experts, I am keen to explore cosmetic reno project for resi IP to improve rental return and have some questions need help on: 1. What is the minimum value uplift I should be aiming for? 1.2x times or higher? 2. Are there specialised valuers I should seek advice from to provide assessment on proposed reno so I know if the project will hit the value & rent uplift objective? Or is there specialised one-stop shop consultant I should contact? Any recommendation for such consultant in Victoria? 3. Is uplift in value & rent typically a linear relationship? eg: value up 20% translates to rent increase 20%? Thanks, FXD
You've not given enough information to get an answer. What needs renovating? If your house compares badly to similar houses that you are competing against for tenants, then you'll need to drop your rent or spend the money to bring your IP up to a similar standard. So much depends on how much you believe you need to spend to be able to compete with the quality and finishes of the houses in direct comparison. What is it like now, how much rent are you getting and what does a similar but renovated house nearby bring in rent? Sometimes it isn't worth spending anything more than just maintenance.
For me, I'll only spend money to reno a place if there is a good chance for a significant value uplift after the reno. In terms of rental, I'd only fix up what needs to be done to get it rented at or near market rent. Everyone's different though. If however there is the off chance that a small amount of cash injected for a reno will result in a significant rental increase then I'd consider it. My guess is this is just a patch up job and rent. Be very careful not to over capitalise cash injected for a disproportionate rental return. Newbies often make this mistake.
First task is to ask your property manager for his/her opinion about what to do and what value it would create.
Renovating to improve rental return can have differences from renovating to improve value (refinance or sell). I have done the former a few times. Walk through the property with your agent and ask him by how much you could increase the rent if you were to do this or this (i.e. you ask if I add air cond, agent says +?/week, if I repaint and recarpet, agent says +?/week, and so on). Then work out the cost of doing this or this and see if any is actually worthwhile (how many years or rent increase pays back each renovation item). Also consider down the track what you want to do with the property, as whatever you renovate now should be either very minimum or part of a bigger picture (long term rental or sell as is in 5 years or major reno in 5 years are all different). Good luck
Hi, just thought id also mention try to find a renovations business that knows about VFM value for money ratio in terms of the build. It will help quite a bit. thanks
