Guide: How To Renovate a Bathroom in a Rental Property
How To Renovate a Bathroom in a Rental Property
Wondering how to renovate a bathroom in a rental property to increase rent? Or just curious about bathroom renovations on a budget and how to ensure you renovate for profit?
Here we’ll share our complete guide on how to renovate a bathroom in a rental property to increase rent, including how much you should spend on a rental renovation, how to ‘makeover’ rather than renovate your bathroom to give it a fresh, clean look for a fraction of the cost, and much more.
Landlord? Get an instant bathroom renovation quote and we’ll take care of the entire process – ideal if you don’t live near your rental property.
Is it worth renovating a rental?
“Can I see myself living here?” It’s among the first questions potential renters ask themselves whilst looking for a new rental property. As the bathroom is an important personal space where tenants begin and end their days, it’s key to offer an area that’s both functional and attractive. Think neutral colours and contemporary finishes.
With this in mind, if the two focal areas in your rental property – the kitchen and the bathroom – are looking tired and out of date, it’s likely that renovating, when tackled properly, will be extremely cost-effective.
Not only will a fresh, modern bathroom and kitchen ensure your rental property spends less spend time sitting void on the market, you’ll be able to ask more in monthly rental fees. And if you are considering selling at some point, you should be able to recoup 50-80% of the cost put into the project too.
Still, it is important not to overcapitalise on your rental property – but we’ll go into exactly how much to renovate a bathroom later. The biggest factors to increase the value include updating worn-out items, modernising fittings and fixtures, and creating a more functional space with good storage options. Let’s look at costs and other considerations.
Project overview: Self managed vs. project managed
Installing new cabinetry, power points, wash basins, showers, and bathtubs: These are big jobs, and they’re only the beginning of a full bathroom renovation. When self managing your rental property renovation project, it’s up to the owner to find, contract, and schedule every trade involved, from the electrician to the plumber, to the artisan who cuts each tile to perfection. In other words, you need to think about how to renovate a bathroom step by step.
The self managed route can also be quite costly in terms of time as well as financially. Hours spent researching professionals, reading reviews, and negotiating costs add up, taking landlords away from other, more profitable activities. Assigning a project manager, or a contractor frees up time while offering a whole host of benefits.
The benefits of project management during a renovation:
Many project managers offer start-to finish services meaning that everything is taken care of including design, choosing fixtures that meet your needs in terms of function, budget, and aesthetics. Every aspect of the renovation itself is handled, and appropriate rubbish removal is typically provided.
Project managers offer efficiency, so that all jobs associated with the renovation are scheduled at the appropriate time and finished as quickly as possible, and in accordance with legal requirements.
With a project manager to oversee each step of the bathroom renovation process, high-quality work is assured.
You are not responsible for ensuring that tradespeople stick to the budget; instead, this falls to the project manager.
Most project managers can help you with the process of obtaining building permits when necessary.
Besides preventing costly mistakes and delays, project managers offer working knowledge of the tradespeople they contract for renovations. They know which companies offer the most competitive pricing, and they know which have the best reputation. When you hire a project manager to renovate before renting, you save time, money, and stress.
What to look for in a contractor
Whether hiring individual trades or choosing a project manager, there are some very important things to look for.
License and insurance:
Is the individual or company you’re planning on working with fully licensed and insured in accordance with the law? This is vital as it ensures that you have legal recourse in the event of mistakes. As most contractors are not willing to risk their licenses or pay higher insurance premiums in future, hiring only licensed, insured contractors is the best way to ensure that the project is completed to your satisfaction.
Seasoned contractors offer proof to back up claims concerning experience, and they’re proud to show photos of previous renovation projects.
Vetted tradespeople only:
If you work with a contractor, they should pre-vet the tradespeople who work on their projects. Most reputable contractors take great care when selecting tradespeople since quality attention to detail enhances the company’s reputation.
While few companies offer a 100 percent positive review record, contractor reviews should be mostly positive, with plenty of details and insight from previous customers. Look for specific details:
Did tradespeople show up on time?
Were workers courteous and did they respect clients’ property?
Were bids accurate?
Was the renovation completed within the anticipated timeframe?
Are clients pleased with the results?
Price is important, but it isn’t everything. The contractor’s personality should be a good fit and you should feel comfortable with everything from their background to the way the prefer to communicate. It’s beyond important to feel confident that the contractor is clear about your expectations, your budget, the start and finish dates, and other aspects of the job including payment schedule, the brand of fixtures being used, and an allotted time limit for correcting any defects.
Check to see how what renovation costs investment property jobs typically incur in your area, focusing on projects with similar requirements to your own. The bids you receive should be similar – perhaps slightly higher or slightly lower, but not too far off either way. Lowball bids typically mean that the contractor is cutting corners or using cheaper materials, or that they have a habit of increasing price further down the line. Look for a good value but be careful not to invite trouble.
If you are uncertain about whether an individual or company is properly licensed, you canrun a quick online check with the Australian Building Commission. Ask to see copies of the Certificate of Currency, which will provide insurance particulars.
How much does a bathroom renovation cost?
If you’re wondering how to renovate a bathroom in a rental property to increase rent, everything comes down to cost.
After all, even though bathroom renovations effectively increase property value, it’s important to keep costs contained. The general rule of thumb is to pay no more than 2% of the property’s value on a bathroom renovation.
The size of the bathroom will impact the cost of renovation. In general, the larger the bathroom, the higher the cost will be. Here are some typical average costs in relation to bathroom size in square metres:
However, these costs are not set in stone. The level of finish can greatly impact price depending on product options and suppliers. For example, purchasing budget fixtures at a place like Bunnings will cut costs while choosing fixtures from Reece or another high end supplier will do the opposite. Keep in mind though that the cheapest fixtures can be a false economy since they age quickly and are more damage prone. Your project manager can help you here by identifying which brands and models offer the best long-term value.
Alternatives to a full gut renovation (bathroom renovations on a budget)
One of the most important things to remember when calculating the renovation costs – investment property equation is that so long as the bathroom is structurally sound, some simple resurfacing can save you vast amounts. And, despite what you may have seen on TV, most tenants aren’t looking for ultra-plush, over-styled properties. Instead, they long for functional living spaces that look modern while feeling comfortable. This means that it isn’t always necessary to conduct a full gut renovation to increase rent and attract quality tenants, sometimes bathroom renovations on a budget are just as effective.
If you are wondering how to renovate a bathroom without blowing the bank, here are some ideas for bathroom renovations on a budget.
How to makeover rather than renovate:
Replacing the existing floor tiles with new ones
Updating the shower with new walls and tiles
Replacing the bathtub, sink, or toilet
Installing new finishes to the sink, bathtub, or toilet
So long as the size, configuration, and functionality of the current bathroom don’t need to change, upgrades like these can be incredibly transformative. Keep upgrades neutral and avoid adding any polarising statement pieces. The newly renovated bath should appeal to the average person, and it should have enough durability to withstand wear and tear.
What do similar properties with renovated bathrooms fetch in the current market?
In terms of value, and return on investment (ROI), bathroom renovations are second only to new kitchen installations. As the saying goes, the kitchen and bath sell the house!
A renter will definitely spend more on a property that offers a modern, functional and fresh bathroom. On average, having a renovated bathroom allows landlords to increase their asking price by $100 or so per month. This may not sound like much at face value; however, over time, it can add up to an impressive ROI. (Especially when you consider that bathroom renovations on a budget can still yield this ROI.)
Resale marketability will also increase as a result of bathroom renovations. So, if you plan to sell your rental property anytime within the next five to ten years, it’s likely that an updated bathroom will still provide a good return on investment – about 80% or so.
Do some market research
As for your particular property, conduct some market research on your own to determine how similarly configured properties fare when they are offered with and without updated bathrooms. Most landlords find that after paying for upgrades and receiving an increase in rental fees combined with less time spent unrented between tenants and a higher resale value, the cost of bathroom renovation is well-eclipsed by the overall ROI.
Renovating a tenanted property
Depending on the extent of renovations and whether the home has multiple bathrooms, it may be possible to renovate a rental property without displacing the tenants. You’ll want to check to ensure that you follow all laws; in general, here are some important points to remember when renovating an occupied rental property:
Key things to consider
The law requires that tenants be given 60 days notice if they must vacate the property for renovations or repairs. Check Consumer Affairs to determine which paperwork to provide.
Offer a fixed-term lease? Tenants must be given notice before the lease’s end date.
If the tenant can only partially live in the property, or if they cannot occupy it during the renovation, they are legally allowed to end their lease early. If they opt to do so, they may stop paying rent beginning on the date they vacate the property.
Large bathroom renovations can mean that temporary move-out is required, meaning tenants can stop paying rent beginning on the day they are required to vacate. If they stop paying rent, they are responsible for covering the cost of replacement accommodations and related expenses including transport, meals, and pet accommodation if needed.
Landlords should attempt to negotiate suitable temporary arrangements for their tenants for the duration of the renovation. Any arrangements made must be documented in writing.
If landlord and tenant are unable to come to an agreement, either party may apply to the government for a determination.
Renovating a bathroom during a lease? Ensure that you update your Entry Condition Report by completing the bathroom section again. Make it clear that the new report supersedes the old one, and ensure that the tenant signs and dates it before providing them with a copy.
Other important things to consider before your bathroom renovation
When planning a bathroom renovation, there’s more to consider than the physical space itself. Here are a few things to keep in mind as part of the big picture.
Prioritise the allocation of funds to come up with a budget that extends as far as possible. An experienced project manager can provide guidance and help you come up with an accurate estimate. (This is whether you want to reconfigure the bathroom and it’s a large renovation, or you’re after bathroom renovations on a budget)
Are renovations to rental property tax deductible?
Renovating an investment property typically increases value and ROI, but that’s not all. If you’re wondering “Are renovations tax deductible on a rental property?”, the short answer is yes.
As long as costs relate to ongoing maintenance while the property is rented or available for rent (on the market), you claim the cost of repairs and maintenance the same tax year that you carry them out. However, you need to claim for renovations or improvement costs (capital works) over time. The cost of renovations and capital works (eg. a new roof) is claimed over 40 years at 2.5% of the total cost per year.
The experts at eTax Accountants take the confusion out of rental property renovation tax deductions here. They’ve also provided these handy examples:
Are you going to be working with a Strata committee?
If you must work with a Strata committee, check the strata scheme to learn more about your obligations and rights. (If you’re working with us we’ll handle all of this for you.) Strata managers and committee members can help you determine how to approach next steps. This can include notifying neighbours and seeking permission or approval from the owners corporation if necessary.
How long will your property be out of action for?
·Consider the amount of down time the investment property will spend out of action. Full renovations take far longer than cosmetic upgrades or bathroom renovations on a budget, for example.
·Plan for the long term. Hard-wearing materials may represent a slightly higher investment but they are cost-effective over time. Plus they’ll ensure that your bathroom renovations last into the future.
Although renovating a rental property will likely be worth it, every situation is unique. When embarking on a bathroom renovation, weigh the options carefully. Factor in the costs of a full renovation vs. a makeover along with potential home value and rental income. You will also receives fewer maintenance requests and lower costs associated with maintenance. Armed with the facts, you’ll feel confident in your investment and the finished project’s ability to meet expectations.
Housace can help!
Whether you want a full bathroom renovation, a makeover (new tiles, flooring etc) or bathroom renovations on a budget, we can help! We have completed hundreds of successful rental property renovations and normal home renovations. In terms of location, we cover bathroom renovations Sydney and bathroom renovations Melbourne. And just as the world is taking virtual viewings by storm, we can do the whole quote and planning process online, so you can get completely ready for your project while in lockdown or isolating.
Remember, renovating your rental property today can yield a healthy return tomorrow. Give us a call on 1300 304 367 or email us at firstname.lastname@example.org for a chat. We’re happy to take you through the process, give you a fixed quote, and answer any questions you may have.
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