Peter Grant, chief executive of Grant Property, reveals some of the ways that property investors can get the best out of their new investment through renovations.
This seems obvious but a bit of tasteful redecoration can make a real difference when it comes to your rental yield – after all, you are selling a lifestyle. To maximise our clients’ investments, we always undertake a makeover to ensure the property is appealing to the target market as possible. In addition to achieving a let quickly, you will usually find you have increased equity and rental return too.
Interior decorating doesn’t have to cost a fortune and can add real value to your home in terms of both rental and resale value. Try and think about the market you’re aiming at before you make any rash decisions; students are likely to prefer a blank canvas whilst professionals will expect something more finished and stylised. It’s important to bear this fact in mind before picking up the paint brush.
Whilst at Grant Property, we actively look for properties on behalf of our client with the selected market in mind, if you have already purchased your property you should chat through your ideas with your letting agent – or speak to us direct - and together identify which type of tenant is best suited to your property. If you are still to purchase a property, speak to an advisor like Grant Property first, as their economies of scale can save you time and money.
Think period features
Traditional properties always outperform new builds with both occupancy rates and rental yields. They are, without a doubt, the most desirable properties for all types of tenants and have an unmistakable warmth and charm. At Grant Property, we always focus on higher performing traditional Georgian and Victorian properties to maximise return on investment.
You can add extra character and detail and create softening focal points for rooms by investing in period features from salvage yards.
Maximise impact with authentic features such as original fire places, doors and flooring. Cornices, ceiling roses, dado rails and skirting will also help finish a property beautifully and can be recreated easily.
My main piece of advice is to choose authenticity and craftsmanship over mass production, where possible. Don’t be afraid to ask the experts at the salvage yards for their advice, either.
Adding extra bedrooms
Whether extending or convert existing space, it’s beneficial to reconfigure if possible to add an extra bedroom. This has a satisfyingly effect on rental yield. For instance, a two bedroom property in Edinburgh’s Marchmont area would typically rent for £750-800 PCM while a three bedroom flat in the same area would be priced at £1,050 PCM. However, it’s crucial that you take into consideration the overall scale of the property to ensure you are not compromising on room space just to make another bedroom. Professional tenants, for example, will demand spacious living rooms/kitchen spaces for entertaining.
Again, always consider your potential market. Families may want to give children small rooms of their own, but couples or single-occupiers often prefer one or two spacious bedrooms.
At Grant Property, we tend to opt for properties that require some reconfiguration as this often yields an even better return on investment. We even manage the renovation works. We have a specific team for each key city who know the areas inside and out; this insight and expert knowledge allows us to make the right decisions which can mean the difference between a win and a financial loss.
Full blown renovation
This of course is the most costly of all three options. However, if you invest a significant amount on renovations – and if they are done properly, it can positively impact on rental level, the property’s value and ongoing maintenance costs. That said, there are various rules and regulations attached to this, so it can be a better option to allow a third party to manage the process for you. At Grant Property, we source many properties that require renovation for our clients with the express purpose of increasing rental yields through making key improvements. You have to know what to look out for – and what to avoid at all costs. If you select right, spending £30,000 renovating a property can amount to a 50% increase in the rental yield.
Choose your market
As I’ve highlighted throughout, it’s crucial to choose your rental market; don’t just assume your property will attract a wide range of potential clients. We have been helping individual property investors become landlords for over 15 years and have helped build profitable portfolios for clients, ranging from one to 400 properties, throughout Scotland and England. The key to success is to do your homework from the start.
• Peter Grant is chief executive of Edinburgh based property management company Grant Property Management