6 steps for property investors to maximise renovation rewards

# Why renovation is a strategy worth planning

The article frames renovation as part of a BRRRR approach: Buy, Renovate, Rent, Refinance, Repeat (retain). Renovating to hold can create equity, increase rent, broaden the tenant pool and deliver tax depreciation benefits while avoiding the high transaction costs of flipping. But success depends on disciplined planning and commercial decision-making.

# The commercial starting point

Renovation is not about personal taste. The objective is to spend where the market will pay. That means targeting improvements that directly affect tenant demand and resale appeal in the suburb and price point where you operate. Cosmetic improvements are frequently the most efficient way to lift value and rentability.

# Step 1: Keep the renovation cosmetic

Seek properties that need visible, market-valued improvements rather than major structural reconstruction. Tenants and buyers respond to a modern kitchen and bathroom, fresh paint, durable flooring and good lighting. Structural work such as restumping, rewiring and roof replacement can be necessary for habitability, but these items tend to preserve value rather than add significant premium.

Tip: Use a building and pest inspection before purchase. A property that looks cosmetic may hide costly structural problems that will consume your budget.

# Step 2: Prepare a realistic budget and stick to it

Before committing, secure a building and pest inspection and obtain realistic renovation estimates. Ask more than one qualified builder or tradesperson to inspect so you avoid relying on a single optimistic quote.

• Materials and labour
• Professional fees and permits
• Insurance and finance costs
• Loss of rental income while vacant
• At least 10% contingency for unexpected costs

Treat the budget as a commercial constraint. Every additional dollar spent needs a clear justification tied to rentability or value uplift.

# Step 3: Understand your target market

Identify who will rent or buy the property once works are complete. In many inner and middle-ring suburbs, features once considered luxury are now expected: a functional kitchen, dishwasher, modern bathroom, adequate storage and heating or cooling.

Direct your budget to the items that mirror local owner-occupier and tenant expectations. That increases your tenant pool, reduces vacancy risk and supports higher rents.

# How the BRRRR logic fits

The recommended path is to buy, renovate, rent out the property, refinance to extract manufactured equity and then hold the improved asset. Retaining the property lets you keep rental income, claim depreciation where applicable and participate in future capital growth while avoiding repeated transaction costs.

# Practical takeaways for execution

• Prioritise visible improvements that the local market values.
• Use building and pest inspections to reveal structural risks before purchase.
• Obtain multiple quotes and include holding and soft costs in your budget.
• Keep a minimum contingency of 10% for older properties.
• Make renovation decisions based on likely tenant and buyer expectations, not personal preference.

Following these steps improves the odds that your renovation will manufacture equity efficiently and produce a property tenants want to live in and care for.