10 ways to Increase your rental return by renovating and upgrades - Misc. NZ
10 ways to Increase your rental return by renovating and upgrades

10 ways to Increase your rental return by renovating and upgrades

Planning a rental renovation is very different from renovating your own home. A rental renovation is not an emotional investment where you consider the needs and wants of your family members. A rental renovation is all about investing your money in the right upgrades and renovations to get the maximum return on your investment.

Words by Superior Renovations

How exactly do you plan a rental renovation?

Planning a rental renovation is very different from renovating your own home. A rental renovation is not an emotional investment where you consider the needs and wants of your family members. A rental renovation is all about investing your money in the right upgrades and renovations to get the maximum return on your investment.

You want to add value so you can get a better rental yield and also be able to resell it at a good profit. The materials you choose and the areas you renovate are considerably different from when you renovate your home. It is important to understand this difference so you do not over invest in your renovation.

In this article we will first discuss what exactly rental yield means. We will then discuss the reasons you should renovate your property and whether renovating is the right thing to do for your current finances.

Finally we discuss in depth the 10 different ways that you can add value to your home and most importantly how you can increase your rental yield.

Having the right plan is important before you invest into your rental property.

What exactly is rental yield?

If you are a property investor in Auckland, you are either looking at getting the maximum rental yield for your property or renovating to sell for a maximum return on investment. For the purpose of this article, we will be talking about ways in which investors across Auckland can maximise their rental yield.

Rental yield is one of the most important figures for any landlord. It is basically the rent that they can charge for their investment property. You cannot however charge any number that you desire. The rent a landlord can charge is always in proportion to the value of the property. This is easily explained with an example of a luxury two-bedroom apartment that can yield $900 per week

whereas another 2-bedroom apartment in need of some sprucing up might yield only $450.

At every stage of your investment, you will have to carefully consider your rental yield. What is your realistic rental income versus mortgage payments? Many lenders will require you to show that you can at least get 125% of your repayments in rental income.

Not every renovation is the same or as important to your tenants. Some types of renovations offer more rental value than other renovations. Kitchen and Bathroom renovations are the top two renovations to add value to your property.

However, exactly why do you need to renovate your rental property?

Why should I renovate my rental property?

So it is really worth renovating your rental property? The answer is yes. Even simple renovations to your rental property can bring higher quality tenants who are willing to pay more for a comfortable modern home. They want a home that is functional, has all the modern amenities and is easy to clean and maintain.

Differentiate your property from other competitors by putting some thought into your renovation. Make it attractive for potential tenants and for future buyers.

Expert Tip: Do not renovate your rental property as you would your home. When you are renovating your home, you personalise your renovations according to your taste. However, your taste could be vastly different from your renter’s or buyer’s taste. If you personalise your property, then it could put a potential renter or buyer off the property.

When renovating to rent, choose materials that are easy to clean and maintain. This will make life easier for tenants but more importantly it will ensure that you have lesser wear and tear. Do not choose the most expensive hardwood flooring because you love it. Instead choose laminate flooring to mimic hardwood floors which are of a great quality, easy to clean, and fantastic for your budget.

Reasons for renovating a rental property

  • Improve energy efficiency: Adding energy efficient appliances such as induction cook-top means lesser electricity bills for tenants as well as a great selling point when you plan to sell in the future
  • Increase property value: By renovating in a thoughtful manner you could add value to your property which would attract higher rent or fetch a higher yield when you plan to sell the home.
  • Improve renter satisfaction: Include good quality appliances for your renters. Good quality appliances such as dishwashers etc would mean that they will increase renter satisfaction and also there will be fewer fixes that you have to make throughout the tenancy.

Now how much is too much to spend on rental property renovations? Let’s look at budget planning for rental property renovations.

Is renovating your rental the right thing to do financially?

Research is important when renovating either your home or investment property. But when you decide to renovate your investment property it is even more important to do some thorough research about the market. Your first step would be to see whether you are charging low, median or higher rent as compared to the average rent for similar properties. If you are charging below the median rent then getting the property renovated to add value would be a great idea. However, if you are already charging way above the median rent then renovating to add value would not be great return on investment.

Here are a few questions to think through:

  • How much will the property cost to renovate?
  • How much will it allow you to increase the rent if renovating?
  • How long will it take for you to pay off your cost of renovation with your new rental increase?
  • How much can you increase the rent of your property realistically for people to want to renovate your property.

Once you have conducted your research, it would be good to contact a renovation company for advice related to the areas that could renovated with the goal of adding value to your property.

Do your research and get several quotes from various companies compare them in terms of what they offer and the costs. Choose a company that can give you a fixed quote in order to avoid future budget blowouts. Also as this is your investment property, you do not want to spend too much time on the property managing things. Choose a company that can provide a Design to Build service while providing a project manager to over see the entire renovation from beginning to end.

10 Improvements to increase rental Value of your property

1. Minor upgrades to make the property comfortable

A lot of landlords see minor upgrades as an expense rather than a long-term investment. Experts suggest that keep the formula simple. Invest in small upgrades that add convenience to a tenant in order to attract a more interest for your property, higher quality tenants and better rental yield. In the long term you will more than make your money back. Following are a few minor upgrades to add convenience:

Heat pump installation

Adding a heat pumps are an energy efficient alternative to furnaces and air conditioning. Summers and Winters in NZ often require either fans or heaters. If you install a heat pump in your home, you are bound to differentiate your home and attract tenants that are willing to pay more for this convenience. You can either get single units for each room, multi-level split units for multiple rooms or ducted heat pumps for central heating. Moreover, central heating will add value to your home when you want to sell in the future.


A well-insulated house does not only provide health benefits but is also important to ensure the longevity of your property. A house that is not insulated will encourage the growth of black mould which is detrimental to the structure of your home. Black mould can seep into your walls and cause them to crack which in turn weakens the structure of the house.

Homes which are not insulated further deter good quality tenants and retainability of good ones. A home that is not insulated will not attract families as they can prove to be an unhealthy environment for families. Families usually are better tenants who will look after your home better that students etc.

Ensure the longevity of your property and increase rental yield by insulating your property. It should never be mistaken as an expense but an in investment.

BEFORE – Their roof above the kitchen was leaking so the client decided to first get that repaired and then eventually opted for a full kitchen renovation

AFTER – Kitchen renovated by using materials that were low maintenance, durable and easy to clean. Laminate floors, Acrylic cabinets and engineered stone benchtop used.

Make sure your electric wiring is in good shape

Having your electric wiring in good shop might not translate into higher rental yield but it should be something you should check regularly. If your electric wiring is old and you have not checked it in a few years then it would be good to get a professional to carry out an assessment to ensure that it is in good shape. Bad, damaged or old electric wiring could be detrimental to the safety of your home and tenants. The sure signs of bad or damaged wiring could be frequent bulb blow outs or a fire.

2. Kitchen upgrades and Kitchen renovation

Gone are the days when a kitchen was a secluded room at the end of the house. Kitchen now is a very integral part of everyday living. Open plan kitchens are not just a trend but a way of living. Apart from structure and layout, easy to clean materials are a must if you want to attract good tenants and retain them. You should also use materials that are not hard to maintain such as hardwood flooring as you cannot guarantee whether your tenant will take good care of it.

Expert tip: Rental properties should never be renovated according to the owner’s personal taste. Too much personalisation can deter tenants as well as future buyers. When renovating an investment property use classic colours and low maintenance materials. Classic colours allow tenants as well as future tenants flexibility to mould the house to their tastes.

We have listed a few ways that you can get the most out of your kitchen renovation if you want to get a higher rental yield or add value to your kitchen.

Flooring Use Laminate or Acrylic if you are redoing your kitchen floors. Laminate and acrylic flooring are low maintenance materials which are easy to clean and cost effective. They can imitate any other type of flooring in terms of texture and looks which make them a highly versatile material. Unlike most cost-effective solutions, they are also very highly durable which means that they increase the longevity of your kitchen floors. In case you do want to change this type of flooring in the future you can do so at a fraction of cost compared to hardwood flooring.

Property renovation in Avondale (West Auckland) – Laminate flooring to imitate hardwood flooring

  • Cabinets and Drawers Changing or replacing your kitchen cabinets is a great way of refreshing the look of your kitchen. Most people think that it is cheaper to just change cabinet drawers rather than replacing the entire kitchen cabinet. This is far from the truth. This is because it is easier to manufacture entire kitchen cabinets rather than finding the right cabinet doors to fit your previous cabinet structure. The cost of manufacturing new kitchen cabinets, doors, drawers, drawer runners and shelving can range rom $5,000 to $12,000 depending on the materials you choose as well as the size of your kitchen

It is also important to choose the right type of materials for your investment or rental property. Use Melteca for your kitchen cabinets to ensure durability and low maintenance compared real wood. Melteca is a highly versatile material which can imitate texture, look or colour of any other material. Melteca is also easy to clean and cost effective compared to real wood. This ensures longevity but is also easy to replace if you want to in the future due to low costs.

Kitchen renovation in West Harbour – Acrylic gloss finish cabinets custom built for low maintenance

Open plan Layout – Open plan kitchens are not just a trend but a way of living in our society today. If your kitchen is secluded at the end of the house, then it would be a good idea to call a professional to see how you can incorporate it into the living space. Breaking a couple of walls that separate your kitchen from the living room will create an open floor living that will generate more interest and a higher rental yield for your home. This will also add more value to your home if you plan to re-sell in the future.

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