Renovating your apartment can be profitable and cost-effective, writes Aaron Tunstall
At the moment we are seeing traders who are buying run-down apartments and renovating them, then on-selling to make a profit. Why not do it yourself?
Maintaining your apartment is so important - and there are plenty of benefits:
- A refurbishment will quickly pay for itself in increased rent and value. Renovated apartments get top dollar when they come to market, and they get top rents from happy tenants
- Modern apartments get fewer vacancies. Serious investors know that having no vacancies is more important than getting a higher rent, because it only takes a empty few weeks to erode your investment's profitability.
- Renovated apartments also attract higher-quality tenants. Your tired old apartment may be rented out right now, but will it cause you more trouble down the road if you're attracting low-quality tenants who do not care for the property and or pay the rent?
We've seen plenty of examples of how effective a makeover can be for any apartment. Most recently, we took over management of a slightly tired-looking three-bedroom city apartment with scuffed walls, old oversized furniture (making the living area look tiny) and bare flat walls. The previous tenants had been there for years and were paying $420 a week.
The new owner let us manage the renovation, and the first thing we did was to give the whole place a thorough clean, including removing the scuff marks from the walls. Then we sold the big old furniture and bought some modern compact replacements. We invested in a good corner sofa that fitted nicely into the living area. We had a 42-inch TV which we mounted on the wall to save space in the living room.
To make the apartment look more presentable, we bought a smart painting off TradeMe and some matching red cushions to brighten the apartment up (it's a ground floor apartment so doesn't get a lot of sunlight). For the bedrooms, the answer was a trip to the Warehouse, where we brought some affordable art pieces and matching bedside lamps. To round off the look we put new linen on the beds. The whole tidy-up cost less than $3,000 but made the apartment look twice as appealing.
When we went to rent it, it looked so lovely that we decided to push for a higher price to start with - we could always drop it for the right tenant if we had to. So we listed it at $600 a week, and the property manager made certain that she wrote a good detailed advertisement and included plenty of photos to show off the property.
Straight away we had eight applications. It just proved to us (not that we had any doubt) how much of a difference a well-presented and well-maintained unit can make. In the end someone offered an extra $50 per week for the apartment and they have been great tenants ever since.
Assuming you are not selling your property, you can do your own version of your body corporate committee's maintenance plan. Renovate one part of your apartment each year. Now would be a good time to replace the TV as the digital changeover approaches. Plan to repaint the interior in year one, then in year two you could replace the carpet. (You'll find that in small north-facing apartments the carpet will only last a maximum of seven years.) In year three, replace the beds in a furnished apartment. The next year it could be the whiteware and the light fittings. When you get to year seven, you start the cycle again. It will pay off in spades in the long run.