Does your property need a vitamin C shower?
There was an article in the press recently which reported that Leonardo DiCaprio has recently bought a Manhattan apartment with a vitamin C shower, a ‘wellness concierge’, purified air and water and ‘dawn simulation’. But does this mean that you should start getting estimates for posture-supportive heat reflexology flooring and circulated aromatherapy air supply for your investment property?
We certainly wouldn’t advise it, and we’re not just saying that because of the inevitable high cost! As a property investor you have to make your decisions about your property based on return on investment and yields rather than having the trendiest most gadget-filled living space you can afford.
For decades we have warned landlords against designing and furnishing a rental property to their personal tastes. They should be furnished with your target market in mind; start with a neutral palette and let the soft furnishings provide the colour. However, this does not translate into doing things on the cheap. Whilst extravagant furnishings do not guarantee success, cheap furniture flatters to deceive and we would always recommend sturdy furniture which can withstand the rigours of the rental market if it is to increase your rental income.
Our furnishing division, Decorum Interiors, has an excellent example of successfully increasing the rent through furnishing here. They were asked to furnish a one bedroom cottage in central Oxford which had be fire damaged. The client spent only £5,500 and the property was quickly re-let at a 4.6% rent increase.
The larger decisions should be made even more carefully: if your one bedroom apartment in Banbury is in a development where average rents are £500 – £600, there is no point spending £50,000 putting in a flashy kitchen because you will not achieve a rent markedly higher than the average. It comes down to the old adage: location, location, location. Every property will have a ceiling when it comes to potential rent levels and this should be considered when deciding on kitchens, bathrooms etc.
Our video on transforming a property in 5 weeks shows how to do this successfully. A one bedroom apartment in East Oxford was transformed with a carefully chosen bathroom and kitchen. Had the landlord spent minimal money and only carried out basic improvements the marketing rent would have been £700 pcm. After spending just £20,000 the marketing rent was increased by 20% to £850 pcm.
So before you get your chequebook out (how old fashioned, perhaps we should say “before you download the mobile banking App”) and take a trip to the home improvement store, consider the following three points:
1) Location of the rental property: an apartment in Witney will not achieve Central Oxford rents just because you’ve spent £100,000 on it. Research the average rent achieved for the area before you start.
2) Type of property: If you are working with a small property you need to choose your kitchen, bathroom and furnishings very carefully so as not to make it feel smaller than it is
3) Your target market: if you want the best tenants you have to think about what sort of space they would want to live in. High-quality tenants are hardly going to pay high rents for flat-pack furniture.