Ruth yields success from renovations on her Mayfield investment property.
When Ruth’s previous tenants decided to move to a retirement village, her investment property became vacant. Unfortunately, it wasn’t in a rentable condition and needed some major renovations as the property had be leased for over 10 years.
The property looked like it had not been renovated since the 1960s. The bathroom and laundry floors dipped noticeably, and the cramped kitchen was no longer fit for purpose. Doors hung precariously, shelves threatened to collapse, and the yellowed walls were adorned with tattered blinds. Ruth, was keen to renovate, she needed some guidance to navigate the renovation process.
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The Challenge
Initially Ruth just wanted a quick refresh for the property – a new coat of paint and carpets. Matthew, our Investment Services Manager explained that a basic refresh wouldn’t be enough to attract renters, and we’d need a more extensive renovation.
Our on-site meeting transformed Ruth’s vision for the property. Initially, a quick paint and carpet refresh seemed like the plan. However, the Property Health Check revealed the true extent of the work needed. Despite having the budget, the cost estimates were a bit daunting. However, the meeting with Matthew was productive. It helped establish trust between them, clarified the return on investment (ROI) and potential for future property value growth, making Ruth more comfortable moving forward.
Ruth appreciated Matthew’s suggestions, and he was able to have a productive conversation about expanding the renovation scope. This openness paved the way for a more comprehensive plan. “He was very helpful and helped me understand the vision.”
The Solution
The Leah Jay Investment Services team secured quotes from a range of specialists – builders, blinds suppliers, flooring experts, and even wardrobe installers – to ensure we got the best value for the project. After the owner carefully reviewed and approved the quotes, we signed contracts with the chosen builder and got started. While the project was underway, Ruth decided to invest further based on Matthew‘s suggestions. She was eager to upgrade the bathroom and laundry, as well as opening up the kitchen by removing a wall. These additional changes aimed to maximise potential rental income by creating a more modern and desirable living space.
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The Results
The renovation was completed two weeks ahead of schedule, allowing us to quickly list the property and showcase its fresh upgrades and modern feel to potential tenants.
Renting out for the highest rent wasn’t Ruth’s main goal. Her priority was to fully restore the house and potentially have it ready for her son to inherit in the future. But, in saying that she was able to significantly increase the value of her property. “Overall, I was very happy with the outcome of my property and how efficient the process was,” said Ruth.
The previous rent was $370 per week. The Property Health Check suggested a potential post-renovation rent of $650 per week. However, thanks to the improved aesthetics and functionality, the property secured a new tenant at an even higher rate of $720 per week.
Improved ROI: The renovation resulted in a significant return on investment (ROI) of 13.1% with the entire renovation costing $139,299.
Key Takeaways: This case study demonstrates the power of strategic renovations in boosting rental income and ROI for investment properties. It also highlights how conducting a PHC, having a project manager and gaining multiple quotes helps with keeping within budget and achieving optimal results. Additionally, expanding the scope of the renovation during the project allowed the owner to capitalise on an even higher rental return.
Wondering if it's worth doing renovations?
To talk through options or other ways you can optimise your investment property, get in touch with Pippa and the Investment Services team today.
