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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1398 Renovate or Regret? The Kitchen & Bath Matrix for Landlords
The renovation game has changed dramatically for property investors. What was once an affordable update has transformed into a complex puzzle of costs, regulations, and unexpected challenges. We dive deep into the surprising reality that kitchen renovations now cost substantially less than bathrooms - a complete reversal from traditional renovation economics.
Kitchens have become the renovation sweet spot for landlords. At $15,000-$22,000, a modern kitchen with DIY-friendly options like Bunnings' Kaboodle range can transform a dated apartment within two weeks. These renovations yield impressive returns, potentially boosting weekly rent by $50-$75 and delivering a 10-15% ROI - far outperforming standard property investment returns. Tenants gravitate toward updated kitchens, valuing increased bench space, modern appliances, and fresh aesthetics that elevate the entire living space.
Meanwhile, bathrooms have become renovation nightmares. With waterproofers and tilers seemingly disappearing "into caves," costs have skyrocketed to $30,000+ even for small spaces. We explore game-changing alternatives like "soft bathroom renovations" - strategic updates including tile regrouting, new fixtures, and improved lighting that refresh without triggering strata approvals or breaking budgets. Learn why keeping services in their original locations saves thousands and how updated properties attract quality tenants who stay longer, maximizing your investment returns in today's challenging market. Ready to renovate smarter? This episode provides your blueprint for renovation success.
Okay, renovations for kitchens and bathrooms for landlords. The world has changed, the costs have changed, what people are doing has changed. We're going to talk about landlord renos for kitchens and bathrooms. Stay tuned, I'm the ringleader, so let's go. Leo, expert property manager that does lots of renovations for bathrooms and kitchens. It's changed. What happened?
Speaker 2:it's changed. What happened? Uh, I think legislation impacted uh the good old home renos, uh, strata have become involved, bylaws have become involved. It hasn't just happened. It's been a bit of a thing for a while, but I'm finding more and more landlords are wanting to update their property and sort of going around certain things to avoid vacancy delay and compliancy with strata.
Speaker 1:So there's a few more layers than the good old-fashioned renovation. Yeah, out of interest, what's a kitchen and bathroom costing for an average one or two-bedroom unit in the Newark beaches these days?
Speaker 2:Well, a kitchen you can do quite affordably. Um, depending on the size upward of say, uh you know, 15 to 22 somewhere around there, a bathroom is going to be excess 30, 35, even for a small one, even for it never used to be like that.
Speaker 1:The kitchen was always more expensive than the bathroom.
Speaker 2:I know, I guess with the DIY do-it-yourself Bunnings ranges like the Cavoodle range I'm finding, you know, a good licensed carpenter handyman puts those together very easily. There's no wait time because they have a lot of stock on those kitchens, especially just a high gloss white cabinetry. Uh, you know, stone look, laminate, benchtop, all that can be put together within two weeks. Um, and affordably so, and it really does pack an impact on the um, on the rental property. They look amazing, they're fresh.
Speaker 2:Rip out those old 70s wooden kitchens. I don't know. I've never been a fan of the old timber veneer. It's very dark and dated. But you know, the the kitchens can be very easily. It'll elevate the whole, the whole apartment. It changes the whole look and tenants gravitate towards the kitchen. It's the heart of the home, let's face it, whereas bathrooms, I find, are overlooked. As long as they're not excuse me, the tiles are not too bad. People can overlook colour age as long as they're, you know, clean. So they're kind of looking like, well, it's got a bath. That's a bonus, you know. And they get left behind. A lot of these kitchens are amazing and the bathrooms aren't.
Speaker 1:So and the um. It seems like all the waterproofers and tilers have disappeared into a hole. You cannot find these guys anymore. They've gone. They've gone into caves. You know, to actually get these shades for a kitchen is easier than to get these shades for a kitchen. It's easier than you get these trades for a bathroom.
Speaker 2:Yeah, yeah, because I mean, you don't even have to have tiles in the kitchen, you can just have a glass splash back you or you know an easier style splash back excuse me, I've got frog in my throat.
Speaker 2:Um, lino on the ground, uh, timber flooring, the hybrid laminate flooring, so all these tiling trades I mean, I've got a good friend that's a tiler. Try and catch him to do anything. He's never available for anything. Um, and that's one that I know on the whole northern beaches that does tiling. Um, like you said, waterproofing, that whole part of the bathroom renovation is, you know, understandably so, because you're dealing with water, which becomes a huge issue in a unit block if it's not done properly. So, yeah, that's why they can't charge so much as well, because if that waterproofing fails, you know they have a duty of care to go back under warranty and rip up all the tiles and do it all again.
Speaker 1:And we've only seen.
Speaker 2:We've seen from the block like that show how, how um stringent the standards are for bathrooms and fall and how all that works, whereas I don't know. Back in the 70s, some of them don't even have a waterproofing membrane, it was just tiled and shower on top.
Speaker 1:And for a landlord that must have been really painful to come up with that sort of cost. Pay for that sort of cost. What sort of return is there? Do tenants pay more? Do they approve? Do their tenants demand it, need it? They don't care. What's a landlord's? If I do a 25 grand kitchen on a two-bedroom unit that's rented for 650 a week, how much more will I get?
Speaker 2:you could um get probably around 720, something like that.
Speaker 2:You're not going to go for seven bucks a week you're not going to go something ridiculous like two, three hundred dollars, um, if you're going to add other value carpet paint and it's a whole you know, a whole aesthetic change, then you may go up into those higher brackets in rent, um. But what I also find is an option for landlords is to do what we call a soft bathroom reno. That's a tile regrout, changing screen, update your vanity, update your toilet, toilet cistern, and then you haven't changed anything like tiles and stuff like that, so you can get away with doing that without involving strata at all. I'm doing that for a property now in dali street. So it's going to have a nice new shower screen.
Speaker 2:We're going to rip out the old vanity and then we're going to regrow out the tiles fresh tile regrow. That will make a huge change. Even lighting changing the lighting, having a really nice bright fluorescent LED light Some of these bathrooms have these old dingy lights. Just even adding that that adds value to a bathroom and then the owner can focus more on kitchens and flooring and other things within the apartment. So there are ways around it.
Speaker 1:That's a pretty good return on your money for a kitchen or a bathroom. It's better than hard real estate return on your money. It sounds more like a 10% return on your money as opposed to 5% when you're buying an apartment or a house, so it's good money spent on your kitchen. Which reno would you opt for for a return on money? Is kitchen going to make more money back reno, or is bathroom going to make more money back reno?
Speaker 2:Kitchen every day of the week. Bench space is huge. These old kitchens had no bench space. It's amazing how much yeah.
Speaker 1:Dishwasher.
Speaker 2:Dishwasher and just even the appliance upgrade In that cost is your oven range hood and stove top. They come as a package.
Speaker 2:How much do you? We pay for that. Oh look, if you're gonna individually choose a stove top, a bench top, a range hood, it's a lot more money, especially if you're going for high-end appliances like bosch and melee, whereas you can get a westinghouse pack that includes the oven, um, stove and range hood all together and you're going to save money. And that's part of the quoting that we include when we do a kitchen.
Speaker 1:How much for normally those $1,500 or what do you pay?
Speaker 2:Yeah, it can be in excess of that. You know, it just depends as well on whether it's gas or electric ceramic top induction there's a lot of variables with the costing. Stop induction there's a lot of variables with the costing. But, um, like I said, within that scope of around um 12 to 22, that also includes all your appliances, um, unless you choose a specific brand that you want. So, um, it's a.
Speaker 1:It's a good way to save money do you ever rent out with the unit with a tenant in there?
Speaker 2:yes, I've had um a mutual agreement where the tenants have said we're going on holidays for three weeks if the landlord was going to do something now I'm going to be gone. When they know they're going to get a new kitchen I had one in goodwin street they just became accommodating. Yes, I would love a brand new kitchen. They stayed with friends. They came back at night when the tradie had gone. You know, um, it's very viable. It's not, you know it's, there's not. It's not dusty as such, like a bathroom, like tiling dust and stuff. So you can pull out a kitchen, clean up the area and then start doing the cabinetry and stuff without making the whole place a mess. As much as you know, much as we try. And yeah, just adding value, a kitchen will add value. Definitely, tenants like a nice kitchen.
Speaker 1:So, in conclusion, $25,000 for an average kitchen, $35,000 for an average bathroom. Do both bathroom and kitchen have to go through strata and mid-blocks?
Speaker 2:No, that's the bathroom.
Speaker 2:Bathroom. Yeah, strata. Basically there's minor major renovations, majors bathroom. Minor is something like a a kitchen. You do sometimes have to go through approval with strata for a kitchen, but it's not as stringent, there's not as much bylaws. If you're not changing anything no plumbing's being changed or anything like that and you're just updating cabinetry, you can get around it because all you're doing is you know it's like anything if it breaks and you're gonna replace. You know it's like anything if it breaks and you're gonna replace or restore it. You know you don't go through strata to change your oven. You don't go through strata to put in a dishwasher, so all that sort of stuff with the kitchen. As long as you're not moving plumbing and gas and all that around, um, it's pretty straightforward well, that's a good secret.
Speaker 1:Try to keep your services at the same place, because sometimes you think, oh, I'd just like to move this over there and that's going to cost you five grand, or you don't do it and yeah, are you going to get more rent?
Speaker 1:No, so try to not move your services around on your kitchen or your bathroom and it's going to save you. It's going to be a better return on your investment and, by what you're saying, if you're spending $35,000, $25,000 on a kitchen, you're going to rent it for about $50 to $75 a week more, which means you're getting about a 10% or a 15% return on your money, which is a pretty good return on your investment. Considering if you just buy a property, you get a 5% return on your investment. So a kitchen of baths for Renaultno, to buy an original unit and do that reno and get the tax deduction and to get the extra rents and better return on money. So, from what you're saying, advice out there is buy an original and do it up. Sounds like it's a better return for landlords and something also, before we go, better quality tenants.
Speaker 2:Yeah, you get longevity out of that tenancy. They tend to stay when their place is nice.
Speaker 1:Yeah.
Speaker 2:And you know you're not reletting all the time and, yeah, there's no comparing new for new. You know, even when you look out there at all the apartments, you know most kitchens look very similar and a tenant will be happy to stay where they are if they're happy with their, with their kitchens and surroundings.
Speaker 1:definitely there you go. So um, thank you. So much clear, great advice from an experienced property manager with over almost 20 years property management experience, dealing with lots of landlords, lots of tenants. You're a champion, thank you thank you.
Speaker 2:Have a great morning. Everyone bye.