Wear and tear are inevitable occurrences in any real estate property and something that should be given due attention by any property owner.

A major renovation of your property can be expensive and burn a deep hole through your pocket. However, it can also give you a profitable return on your investment, especially when it is done on a rental property.

To maximise your return on investment for your renovation, it is important not to overcapitalise by sticking to your renovation plans and budget, at the same time ensuring that you get good quality results and durable materials that could secure your property for a much longer period.

Before you decide to take that step to begin renovations, here are a few important things to consider helping you make the right decision.

Impact on returns

Before you jump into renovating your rental property, ask yourself if the costs could justify the return on investment, such as justify an increase in rental rates after the renovation or have better chances of recovering what you have spent on renovation costs with the rental returns. At this point, you must be realistic in your expectations. For instance, it would be unwise to spend $30,000 to upgrade the bathroom or bathroom and not be able to charge an additional $60 or more per week. Assess if renovations are needed or not, since some of the smallest fixes can give the property a lot of impact such as enhancing lighting fixtures, a fresh coat of paint, new bathroom taps, or replacing worn-out cupboards and door handles. Of course, when there are indications of structural, water, or major damages it would be practical to get an expert to inspect the property and make an assessment of things that need to be addressed. At this point, time is of the essence and the sooner repairs or renovations are made the less likely you could spend more by preventing the damage from progressing over time.

Budget considerations

Take note that renovations should not be rushed without proper planning. There are several factors to consider such as your budget, existing condition of the property, and frequency of maintenance assessments or activities on the property. While it may be tempting to provide premium appliances, additional amenities or features, it may not be practical to invest too much in eye candy and not be able to recoup your expenses.
For instance, using whole or light-coloured carpets that could easily get stained compared to carpets with a darker shade means that you are more likely to spend more on regular maintenance or having it replaced more often. Ideally, direct your attention to areas that are commonly used, such as the bathroom or kitchen. Having these areas regularly checked or maintained can have a big impact on savings and ensure you with better opportunities on your investment returns.

Need or want

Again, renovating a rental property is no joke and needs careful consideration, especially in spending and income. Make it a rule of thumb to apply improvements when necessary and avoid replacing anything that can be fixed. Researching current rental market rates and trends may also help you decide if a renovation is a way to go and give you the returns you expect.