Should you renovate your rental property to increase your rental income?
Category Rentals
A rental property investment can be financially rewarding provided it is well maintained and the finishes kept up to date to ensure you are able to attract quality calibre tenants and a competitive rental income.
The golden rule is to ensure your rental property is well maintained, but not to overspend on any renovations.
What do tenants look for in a rental property?
As a rule it is always advisable to invest in a property which appeals to most tenants. Tenants generally look for basic features. For example, when it comes to apartments, most look for two bedrooms and when it comes to a house, the highest demand is usually for three bedrooms.
Unless it is a luxury home, more bedrooms and extra living rooms may be superfluous to the needs of most tenants, and would therefore not yield a higher rental return. The same goes for elaborate fittings and finishes.
Most tenants look for the basics and extras such as braai facilities and a swimming pool, but there is usually no need for elaborate features. Renovating and improving for the sake of it, might therefore not yield a higher rental and may result in the landlord battling to find a tenant.
When should you renovate your rental?
If the property is rather old and the finishes are quite dated, and this affects the ability to secure a rental rate similar to other properties in the area, then you should update the finishes. It is, however, recommended that you keep the finishes in line with other homes in the area.
If the maintenance costs are becoming problematic, then it might be feasible to upgrade the bathrooms or kitchen, or other problem areas, but take care not to over capitalise on expensive fittings and flooring.
Quality fittings and finishes are always recommended for rental properties given that they tend to have higher wear and tear due to tenants coming and going. The interior and exterior of the property should also be painted with a good quality paint. Always keep finishes and colours neutral.
The kitchen, bathrooms, wardrobes and floors are usually the most important areas to upgrade. Other in-demand features include good security, and we are now seeing that solar or power back-up systems are also increasingly sought, given the Eskom electricity challenges.
Why should you keep your rental property updated?
A better quality property stands a better chance of attracting a good calibre tenant and better rental income. Tenants also tend to stay longer in a quality home and are unlikely to want to move elsewhere. Tenants may even be prepared to pay extra for useful features such as a solar back-up installation to help during power outages.
If you decide to sell your rental property, then you may also need to do certain renovations to ensure it is in a good sellable condition so that you can maximise the potential of a faster sale and a better price.
Home is our Story and property my passion. The news that the inflation rate has dipped to 4.7% as at July is encouraging for the market and could mean that the interest rate may be poised to start coming down again in the near future.
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Author: Gina Meintjes
