6 questions investors should ask to achieve optimal returns on a property renovation

“If you’re thinking about renovating to sell or rent, there are many questions to ask yourself. What will make the most impact and should I tackle every room?” 

To help owners make the right renovation calls, the institute gathered the best advice from agents on what works can help provide the best return on investment. 

1. Which room/area has the highest impact?

To gain the highest return on their investment through renovations, real estate agents suggest that investors should understand which room in the property will have the most impact.

Most real estate agents agree that the kitchen has the highest impact on the returns of renovations due to its status as the “heart and soul of the house” where families spend most of their time, REIWA said. 

“Even by making a minor change, such as swapping out the cabinet doors or modifying the backsplash, you could potentially add thousands to the valuation of your property,” the institute noted. 

For starters, agents recommended avoiding bold colours and keeping the kitchen light neutral will help boost the saleability of a property by ensuring that “buyers aren’t turned off by the colour scheme”. 

When renovating your property for sale or rent, it’s important to consider cost-effective options for updating plumbing fixtures such as sinks and taps. 

While trendy options like gold, gun metal, and rose gold may seem appealing, the institute recommended opting for timeless and cost-efficient chrome that can help maximise your return on investment without negatively impacting your sale price.

2. Which bathroom renovations are worth doing? 

Modernising the bathroom (master or ensuite) can also add significant value to your home, according to agents.

Whether you opt for a comprehensive revamp or just replace certain elements such as shower glass, vanities or fittings, renovating your bathroom can significantly impact the appeal of your home to potential buyers.  

However, agents cited by REIWA highlighted that renovating a bathroom can be a substantial expense, particularly if you’re contemplating a new design that needs repositioning the pipes and electricals. 

Therefore, it may be worthwhile to explore whether you can achieve a considerable upgrade while retaining the current plumbing layout.

3. What cosmetic updates should you consider when renovating? 

Adding “finishing touches” that add an intrinsic value can be the renovations that your property may be missing, according to agents. 

These changes, which include light fittings, window treatments and carpets, can add a “sense of luxury” to any property without breaking the bank. 

For those who are working within a budget, the institute recommends investing in areas where changes can be visibly seen, adding that it is better to focus on one area to create a point of difference for prospective buyers or renters. 

For example, installing a new ducted cooling system may not have as much impact as cosmetic changes that improve the appearance and façade of the property.

4. What’s behind that wall? 

Does your property have a wall that could come down to transform your dining/kitchen area, or turn your master bedroom into a master suite with walk-in robe and ensuite? 

If you have a larger budget, knocking down a wall or two to create an open plan design could help a property’s value increase, according to agents. 

5. Who are the potential inhabitants of your property? 

Agents also recommend researching your local market and who is looking in the area in order to ensure that the renovations investors undertake will be worth the money. 

To help investors get started, it’s recommended to ask questions such as: “Are there more families looking for a larger living room/kitchen or a separate theatre/games room? Or are there more downsizers looking for a master bedroom on the ground floor?” 

REIWA highlighted that understanding what people are looking for will help investors make informed renovation decisions and secure a better result in the end.

It also advised looking at recently sold properties and the marketing descriptions of listings, to see what the “hot buttons” are in the suburb your property is located in. 

6. Do you need to renovate at all?  

According to REIWA, this is the most important question that investors must ask before taking on any renovation projects. 

While some buyers prefer a “renovator’s delight” — an unrenovated property so they can add their own style to it and make changes that meet their particular needs — there are others who don’t want to do any renovation and instead are looking for a home that is ready to move in and enjoy as is. 

“In such a tight rental market, tenants are looking to move into homes as soon as possible, so taking the time to renovate might leave you further out of pocket in lost revenue,” REIWA explained. 

If you have a desirable location, investors are advised to hold off renovating, as their property can already fetch a good sale or rental price.

By failing to account for this, REIWA warned that investors may find themselves shelling out on unnecessary expenses.

“You may actually find yourself out-of-pocket if you do so, given the rising cost of materials and trades, and the impact of almost-guaranteed delays in the renovation process,” it stated.