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Benefits of Renovating Your Rental Property 

• Increase your rental income.
• Increase tenant appeal and reduce tenant complaints.
• Increase rental demand and reduce empty periods between tenancies. 
• Reduce ongoing maintenance costs. For example by providing durable flooring that is easy to clean. 
• Meet legal requirements for renting. All homes must meet the Healthy Homes standards. 
• Increase resale value.

Key Considerations 

When it comes to renovating your rental property, not all renovations will give the same return on investment. Here are few things to consider before renovating: 

• • Will it enhance tenant comfort? Upgrade to energy-efficient elements which are easily noticeable to tenants such as heat pumps and double-glazing.

• Does it reduce maintenance cost? Will it prevent more time and money being spent later on?

• Will it increase the achievable rent? What are other comparable properties charging in the area, will the upgrade justify a higher rental price?

• What is the expected payback period? How long will it take to recover the renovation cost through increased rental income or reduced maintenance costs?

• • Will a cosmetic update suffice over a major renovation? Rather than replacing the entire kitchen, replace cabinet fronts and handles instead. 
  • What sort of property is it? Different tenants value different features. A family home may benefit from storage and practical living spaces, while a property targeting students or young professionals may benefit more from durable, low-maintenance, and cost-effective upgrades. 

• When to renovate?
• Between tenancies: you don’t want to spend too long renovating between tenancies as this will reduce rental income, however, if you renovate before listing it for rent you could increase the rental price to reflect the upgrades. 
• During a tenancy: minor upgrades that don’t disturb the tenants can increase tenant satisfaction and prevent big renovations between tenancies. 

Renovations can also play an important role when preparing a property for sale, helping to increase buyer appeal and potentially support a stronger sale outcome. 

Benefits of Renovating Your Property Before Selling

• Maximises the value of the property and gets the best price.  
• Increase buyer competition. 
• Create a strong first impression for buyers.
• A property that is ready to move into, with fresh neutral finishes can help buyers to see the property’s potential.
• Reduce the time the property sits on the market. 

Key Considerations 

• Will it give you the same ROI? Avoid overcapitalising. Spending $200,000 dollars on renovations might not add $200,000 to the asking price. 

• Is the property a doer-upper? If so it might not be worth spending your money on. 

• Who is your target buyer? First-time buyers, developers, investors, different buyers may value different features. 

• Will the renovation delay your sale? Sometimes getting the property to market quickly may be more beneficial than undertaking extensive work. 
• Is it a renovation that the buyers really care about? Small upgrades such as fresh paint, a tidy garden, modern finishes in the bathroom or kitchen can all instantly make your property more attractive to buyers

How to Fund Your Renovations 

Ready to renovate your property? Here are some common ways to fund your upgrades: 

• Use cash savings for smaller renovations to avoid borrowing costs. 
• Choose a loan from a bank such as the ANZ Reno Loan which offers a 3 year fixed rate at 2.50% p.a up $50,00 with a minimum 20% equity  or BNZ’s Better Future Home Loans that lets you borrow up to $80,000 at 1% p.a fixed rate for three years to pay for eligible upgrades. 
• Refinance or restructure your mortgage. With the help of the team at The Finance Hub you can strategically leverage your property’s equity, providing you with the funds to make that renovation. 

Every property and renovation project is different. Before committing to a major upgrade, it pays to understand both the potential return and the funding options available. The team at The Finance Hub can help you assess your borrowing capacity, explore lending solutions, and structure your finances to support your property goals. Get in contact by calling 0800 346 482.