To refurbish or not to refurbish – that is the question
So should you refurbish? In this blog we talk about whether or not you should spend money on refurbishing already suitable elements of your property and what may cause you to fall below your competition.
You may have seen pictures we recently shared on Facebook about a recent refurbishment that was carried by one of our Cambridgeshire landlords:
You may ask yourself why they chose to refurbish the bathroom
The local rental market is suffering from a dire lack of supply and the bathroom was perfectly serviceable. So, would people really worry? It’s a reasonable point of view but one that will eventually see you falling behind the market.
Why?
People will pay more for something they know is a good product. Whether that be a TV a new phone or a home to live in.
The next question that might be coming…
Was it worth it?
I will say yes – for a number of reasons:
- All businesses need money spent on them (training the team, upgrading the IT etc) and as a landlord, you are running a business. This means that you will need to invest in your portfolio.
- You need to make sure that you are future proofing your business. If we didn’t invest in our team, they might leave and as a result, we would not be able to give you the service you deserve. Were we to not upgrade our IT systems, our customer service levels would drop. If you fall behind your competition, eventually you will lose out.
- The figures work!
- On this particular example, the landlord was receiving a gross return of 7.9%, but after the refurbishment they are receiving 10.1%.
- The cost of the refurb on present rental return means that it will be covered in 17 months – back in profit by 18 months.
- By carrying out the refurbishment, they have increased their income by 21% over the next 5 years.
How was this refurbishment planned in?
We received notice in April (2022) that the property would be empty in June. We popped by the property in April to advise what we expected the rental to be should the changes be made, giving rental prices with and without certain works being done. When the tenant moved out in June, work began to refurbish the bathroom and it was completed by July when marketing commenced. Following new photos and a video tour, the property was let on the first day of viewings, within three days of the property going online. The tenant moved in 18 days later.
If you would like to find out the cost benefits of refurbishing your investment property, just give our friendly lettings team a call on 01480 494939.
