Renovate To Rent or Sell?

Renovate To Rent or Sell?
01-Jun-2018 Mark Honeybone

Renovate To Rent or Sell?

So you are a new investor and deciding to renovate your first investment property? First, you have to decide whether you are renovating to sell the property or to rent it. It is very important as the renovations should be totally different.

Renovate to Rent

This will involve less work. However, I don’t suggest you be a slumlord and do nothing just because you are tenanting it.

When you renovate to rent, you should look at the below fundamentals:

  • Make the property warm for the tenants
  • Protect your investment
  • Dry, no leaks
  • Maintenance issues
  • Provide some niceties for the tenants
  • Make it inviting

The two main reasons for renovating to rent are: first to protect your asset by limiting any future maintenance issues, and second to make it warm and inviting for good tenants. A well maintained, tidy and nice looking property will attract better tenants and ensure higher rent.

 

 

 

Renovate to Sell

In most cases, this should be quite different to renovating to rent. There is much more to consider when renovating to sell, such as what the location is like and who your target buyer is.

These will determine whether you’re putting in a carpet for $59 p/sqm or $200 p/sqm.

What you are trying to achieve here is understand what your buyer will need in the area you’re selling. Will they need a double garage, no parking, a deck, two bedrooms or five bedrooms?

Here are some of the most critical points when renovating to sell:

  • First impressions: This is the first and usually the last impression someone will have of your property when they view it, so make it count.
  • Any additions? If you can add a room, make a bedroom larger or create an additional lounge, this will usually get you a better price and/or better rent appraisal.
  • Get the chattels right. Depending what type of the house it is and location, you want to make sure you have the right chattels installed. If you are in Fendalton (Christchurch) or Remuera (Auckland) you may want to avoid F&P appliances and get quality ones instead to reflect the area’s standard.
  • Don’t leave unfinished work. Buyers will notice that, and it’ll affect your selling price.
  • Make sure everything works. There is nothing worse than when you view a home for sale, and a draw handle falls off when you touch it or seeing missing light bulbs.



 

 

Point to Note: Several years ago I witnessed a building company building a house. A quality home that was probably one of the best-built properties in NZ when it comes to what was under the gib and paint.

What I couldn't believe was this building company used the cheapest door handles and light shades for this property. They even had videos showing how solid the property had been built but failed to provide proper quality finishing. What a shame!

Here I wanted to share a real example of the topic discussed in this article.

I recently bought a small place in Te Atatu Peninsula.
My initial thoughts were to renovate and sell it thinking it would be a great first home for
someone once I tidied it up, however after buying it for a well-negotiated price I decided to keep it.

 

My renovating amount went from initially planned $28k to about $10k. The property already had a new heat pump and solar panels as well as a fairly new kitset kitchen. So here is the list of what the property will have once it’s renovated:

  • New seals around the windows so no water can get in.
  • The damage from the leaks fixed.
  • All walls with windows painted.
  • New carpet.
  • A few boards on the deck fixed.
  • A few fixes in the bathroom (including a glass door over the bath instead of shower curtain)
    to make the bathroom dry and look great.

The budget of around $10k will make the property tidy and liveable for my tenants comparing to the higher estimated budget of renovating to sell.