I’m renovating a house to rent, how can I get a good return?
So you’ve snapped up a bargain and now you need to renovate – but do renovations increase value?
If you’ve watched any housing programmes recently, you might have felt the urge to head to your local auction. Or maybe you’ve found a cheap deal via your high street agent.
But as with most good deals – there’s usually a reason they’re cheap! It’s likely going to take some time, effort and money to get it into a condition where you can rent it out.
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What are the first steps for renovation?
The first steps are all about making sure the property is sound. Hopefully you were able to get a professional opinion on the property because you bought it, a thorough survey is always recommended to check for structural or other dangerous issues.
- Electrics. Get an electrician to check the state of the electrics. You’ll need to get an EICR before you can rent out the property, but at this point, you want to make sure that the electrics are safe while you are making the necessary repairs and updates. This will also give you a heads up on any issues you’ll need to resolve before getting that EICR
- Gas. As with the electrics, it’s worthwhile getting the gas checked to make sure everything is safe before you start work. You’ll also need to get a Gas Safety Certificate before you rent it out so, again, this initial check will flag if there are any problems that would cause you to fail
- Structural. Get your builder in to have a thorough inspection of the property. Your initial survey will have flagged any major issues, but now is the time to have another look and check all the walls, foundations etc. to make sure there’s nothing else to worry about
If you haven’t done that yet, make sure that you get that done ASAP! Making sure the building as a whole is safe is key. If you are unlucky to find yourself dealing with structural or electrical issues, get these resolved as soon as possible.
What renovations most appeal to tenants?
Safety always comes first, but it’s swiftly followed by practicality. Is your property as practical as it could be?
- Does it have central heating? If it’s a very old property, it may be that central heating was never installed, or it might be very old and inefficient. No tenant is going to want to forego central heating, so you’ll need to install it and, if you already have it, consider updating it to an efficient system that will positively impact your EPC rating
- Does it have a modern bathroom? Older homes might not have showers installed, or they might not be as powerful as modern ones. Make sure you get this updated! If you find yourself the proud owner of an avocado suite, you’re better off ripping it out and starting over with white – keep it simple and neutral
- Does the layout work? Older properties, or ones that have been converted in some way, often have rather odd layouts. Perhaps the kitchen is upstairs and one of the bedrooms is downstairs. Now is the time to reconsider that layout and opt for something more traditional
- Is the space being maximised? Take some time to consider the space you have and make the most of it. Perhaps you’ve purchased a 4 bedroom home, but if you go down to a 3 bedroom, you’ll have larger rooms to offer tenants
When it comes to decor, as always – keep it neutral! Go for creams and greys and do not be tempted by trendy wallpaper and fashionable colours. You will only need to update it in a year’s time. A tenant will want a blank space they can put their own mark on with their own knickknacks and furnishings.
Should I invest in a renovation project?
Well, as you can see – there’s a lot to consider in a renovation project and while you may save money on the initial purchase price, you will have to fork out quite a bit to get it into a rentable condition.
- Time. Do you have the time to commit to the project? If you’re a builder or electrician or plumber who could do some of the work yourself, do you have the time to commit to the project? Can you afford not to be able to rent out the property for several months while you work on the renovation?
- Money. You’ve got two budgets to bear in mind – the budget for the initial purchase and the budget for the renovation. The latter needs to be as flexible as possible, as you could end up needing to go over budget. Again, here you need to consider how quickly you need the property to start making money for you – you may not get it on the market as quickly as you hoped
- Effort. Even if you have handed over the work to a professional team, you will need to be making decisions on spend, layout, decor. It’s a lot more work than regular landlording, so consider if that’s something you really want to take on