Building your investment property portfolio with renovation is a wise strategy, and when the property is empty, changes are relatively straightforward to execute. However, when the time comes to renovate your tenanted property, you’re likely to experience significant issues executing your plans smoothly and timely. In this article, we share with you the process of renovating a tenanted investment property, and how best to approach this situation to ensure every party is satisfied.
Establish your plans
Before you establish communication with your tenants on the issue of renovating, it’s essential you’ve already developed your plan for the renovation. These plans should include the specifics of what will be changed, the areas of the home affected, the time frame in which it needs to be completed by, and who is specifically involved in the process. Your tenant will want to know these details, and it’s proper to have them detailed for when they ask.
Understand your rights, and theirs
During this time, you and your tenant have certain rights over the use and development of the property. These rights are addressed in your rental agreement and by the rental laws of each Australian state. It’s essential to educate yourself of your entitlements as a landlord and the access you have to your property during renovations. Understanding the rights of your tenants is also crucial; with this knowledge, you better communicate and negotiate with them without infringing on their use of the home.
Speak openly with the tenants
Your tenants will likely be more cooperative and open to assisting the renovation process if you communicate openly and politely about your plans. The more your tenants know and understand about the process, the more likely they will be agreeable with the plans and assist you in making the changes a reality. Uncertainty breeds hesitation, and this is something you want to avoid.
Be willing to negotiate
It’s incredibly likely your tenants will seek compensation for the interrupted use of the home. Compensation requests may be discounted rent during the renovations, alternate accommodation, or adjustments to the lease agreement to include specific requests, such as the allowance for a pet, for example. If you expect negotiations, you can better prepare your options, as this part of the process can significantly stall your renovation timeline.
Understand you may lose a tenant
Some tenants, no matter how loyal they have been to you or how long they have spent in the property, won’t want to live through any renovations and will choose to vacate as a result. Losing your tenants is a risk you need to be willing to take financially, especially as this is an extreme possibility.