The buy to let market is currently booming and with such a high demand for rental properties, it makes sense to invest if you have some spare cash. But if you decide to renovate, you could face something of a dilemma. Do you spend a bit of cash doing up your rental property or is renovation a waste of money?
The problem with renovating a rental property soon after purchase is that it involves spending extra money, and if you have already blitzed your savings on the deposit and other expenses, you might not have anything left. One way to avoid falling into this trap is to make a careful assessment of the property before you buy. And if you think the expense is justified, borrow a bit extra on the mortgage to cover the cost.
The Cost of Renovations
Ask your real estate agent for advice: how much rental income can you expect before and after a renovation? Look at the figures and make a judgement as to whether the extra income justifies the expense. It may take a few years to recoup the cost of the renovations, but a nice modern property is easier to let and you are less likely to have extended void periods (which are a landlord’s worst nightmare). So if you are ready to do some renovation, here are the areas you should be concentrating on.
Kitchens are tricky. It very much depends on the type of tenant you hope to attract. Professionals will expect a high-end kitchen whereas students won’t appreciate granite counter tops or, more importantly, bother to look after them. A halfway decent kitchen is essential however, so if the existing one is falling apart, replace with a nice new one to match the lifestyle of your target tenants.
Bathrooms suffer a lot of wear and tear in rental properties and it won’t be long before the grout begins to look grubby and the bath needs resealing. White bathrooms suites are best because they are cheap and easy to match with any colour tiles and accessories. Dark tiles stay cleaner for longer, although you may need to re-grout periodically. Another top tip is to use decent quality faucets because cheaper ones break far more quickly.
Carpets rarely stand up to the impact of tenants and you should budget to replace carpets every two or three years or so. Laminate can be a good alternative because it is more resistant to stains, but avoid fitting laminate in kitchens and bathrooms because of the moisture problem. It is also a bad idea to fit carpet in a bathroom; vinyl is a much more hygienic choice.
Invest in the best quality central heating boiler you can afford, as this will save you a fortune on repairs later on.
There is a lot to think about when letting properties out, but don’t forget to prepare a property inventory before you accept a new tenant. You can either prepare your own property inventory or use a professional company such as hertsinventories.co.uk.