Renovate to rent: Keys to increase your real estate profitability

Renovating a property for rental purposes has become a common strategy for landlords who want to increase their profitability and attract quality tenants. A well-executed renovation can increase the value of a property, reduce the vacancy time between rentals and minimize future problems such as breakdowns or constant maintenance. It also improves the positioning of the property in a competitive real estate market, where details and finishes make the difference.

It is not just a matter of beautification, but of adapting the property to current market requirements: energy efficiency, functionality, neutral aesthetics and modern distribution. These improvements make it possible to justify a higher rent and reduce tenant turnover. From ParatuReforma we would like to comment on some of the keys to take into account to increase your real estate profitability when renovating for rent:

Short and long-term financial advantages

In the short term, a well-planned renovation can increase the rental value by 15% to 30%, depending on the area and the initial condition of the property. This translates into additional monthly income and a faster return on investment.

In the long term, having an updated property reduces corrective maintenance costs by minimizing electrical, plumbing and insulation issues. In addition, more stable and solvent tenants are attracted, which translates into lower turnover and lower management costs.

Impact on housing revaluation

A renovated home also appreciates in value in the buying and selling market. Even if you have no immediate plans to sell it, increasing its value is a way to protect your equity. Elements such as new bathrooms, a renovated kitchen, high-strength flooring and thermal enclosures can increase the appraised value by 10% to 25%, depending on the location.

Define your ideal tenant before you renovate

Before making design decisions or purchasing materials, the smartest step is to define who you would like to rent your property to. Knowing the profile of the ideal tenant is essential to focus the renovation according to their needs, lifestyle and economic capacity.

Renovating a student apartment is not the same as renovating a home for a family or an expatriate professional. Each type of tenant values different aspects: functionality, space, style, technology or location.

Tenant profile and type of renovation

Students look for practicality, basic furnishings and fast connections (such as Wi-Fi and study areas), while a family with children prioritizes security, number of rooms, a functional kitchen and ample space. Young professionals, on the other hand, value modern design, quality finishes and efficient appliances.

Depending on this profile, you can decide whether the renovation should prioritize functionality (more rooms, optimized spaces) or design and aesthetics (open spaces, modern finishes). This decision will help you choose from the materials to the decoration, increasing the chances of renting quickly and at a good price.

How to analyze the local market and adapt the design

Estudia el entorno de tu vivienda: ¿está cerca de universidades, zonas de oficinas, hospitales, colegios o zonas turísticas? Esto te dará pistas claras sobre qué tipo de personas buscarán alquilar en esa zona. También puedes revisar otras ofertas similares en portales inmobiliarios para ver qué tipo de pisos se alquilan más rápido y a qué precios.

With this information, you will be able to design a tailor-made renovation: more rooms if the market demands it, open kitchen if the style is in demand or energy efficient appliances if the tenant’s profile is eco-conscious.

Plan a realistic and cost-effective budget

Planning the budget for a rental renovation is one of the most critical parts. This is where the line between a smart investment and a poorly planned expense is decided. To avoid surprises and ensure a good return on your investment, it is essential to set a realistic budget and keep track of it in detail throughout the renovation.

Not only must you consider the direct cost of materials and labor, but also the execution time, the necessary permits, possible unforeseen events (such as obsolete electrical installations) and the opportunity cost (the time the apartment will be empty).

How to calculate expected profitability

A useful formula is to compare the expected increase in monthly rent after the renovation with the investment made. If you invest €12,000 and you can raise the rent from €650 to €900, you will earn an additional €250 each month. That is equivalent to €3,000 per year, which means recovering your investment in 4 years. From then on, it’s all net profit.

Remember to also calculate the useful life of the materials. Investing in cheap faucets that break down within a year is not profitable in the medium term. It is better to invest in quality products that will last at least a decade without major maintenance.

Investment margin vs. return

Although you can invest more, the ideal is to adjust to a return of 15% to 25% per year. That is, if your renovation is going to cost €10,000, expect to recoup at least €1,500 – €2,500 per year in rent increase alone. This calculation will help you set a smart investment ceiling and prioritize improvements that really add value.

Common errors in budget management

Among the most common mistakes are: not requesting several budgets, relying on low quality materials because they are cheaper, not including unforeseen events in the calculation, or making unnecessary reforms that do not increase the value perceived by the tenant. It is also key to avoid aesthetic reforms that do not solve functional problems.

When it comes to renovating to rent, not all areas of the property carry the same weight. There are key areas that, when renovated, directly impact tenant perception and rental value. Investing wisely in these areas increases the demand for the property and accelerates closing times.

Essential renovations don’t always mean major or expensive work. Sometimes, with a layout change, an aesthetic update or a functional upgrade, you can achieve a “wow” effect without blowing your budget.

The kitchen is one of the best renovations to rent

When renting, the kitchen is one of the most watched rooms. If the future tenant sees an old kitchen, with old appliances and worn furniture, it is very likely that he will lose interest or try to negotiate the price down.

Conversely, a modern, functional kitchen creates an immediate sense of comfort. Replacing cabinet doors, installing a durable countertop (such as compact quartz or high-end laminate), renovating the sink and changing faucets can completely transform this space.

If the budget allows, incorporating energy-efficient appliances and an open design with island or breakfast bar is ideal for premium rentals.

Functional and modern bathrooms

Bathrooms also play a key role. A renovated bathroom conveys cleanliness, order and modernity. The key is to opt for compact sanitary ware, modern faucets and functional solutions such as shower trays, glass partitions and suspended furniture.

Details count: mirror with LED light, stone or ceramic tiles with matte finish and neutral colors increase the feeling of spaciousness and comfort. Don’t forget ventilation: a quiet exhaust fan or a functional window will prevent future moisture and odor problems.

Living room and common areas

The living room is the social space par excellence. Here, more than spending, it is a matter of good distribution. If you can eliminate partitions to integrate it with the kitchen, you will gain visual meters and natural light.

Paint in light tones, use heavy-duty vinyl or laminate flooring and make sure there is good natural and artificial lighting. Make sure there are enough electrical outlets and update the electrical installation if it is old.

Optimization of space and natural light

The perception of spaciousness and light can make a small apartment seem larger, more comfortable and, above all, more valuable. Many tenants prioritize natural light and a flowing layout over actual footage. This is where smart design works magic.

Opening up spaces and tearing down partitions

Eliminating unnecessary partitions or integrating kitchen and living room has a very positive visual impact. This trend, besides being modern, improves cross ventilation, the entry of light and circulation inside the home.

Evaluate with a professional which walls can be removed without compromising the structure. Sometimes, opening only part of the wall and installing a bar or fixed glass can create that open effect.

Color palettes and finishes that broaden

The use of light colors (white, pearl gray, sand, light beige) on walls and ceilings amplifies the light. For floors, light wood or beige ceramic tones are ideal. Use satin or matte finishes to offer elegance.

Complement with large mirrors, translucent blinds and good artificial lighting in warm tones (2700K – 3000K) for a cozy atmosphere.

Terrace, balcony or patio can be a big plus

Outdoor spaces have become a fundamental value. Even a small balcony can be decisive to rent quickly and at a better price. Investing in conditioning these spaces has a high return.

How to fit out an outdoor space on a low budget

With a minimal investment you can transform a terrace or balcony. Add artificial grass, new paint, solar lights and a table with folding chairs. Adding cushions or outdoor textiles also adds up.

If it is an interior patio, make sure it is clean, well-lit and well-drained. A bamboo curtain or decorative dividers can enhance privacy.

Recommended furniture and vegetation

Use weather-resistant furniture. Add easy-care plants such as lavender, succulents or bamboo. If space permits, a hammock or lounger can make a difference.

Hygiene and odors, essential for renting

It may seem minor, but odors and hygiene during a rental visit can define the decision. A home that smells good and looks clean conveys security and comfort.

Techniques to eliminate persistent odors

If the home has been closed or smoked in, do a thorough cleaning. Remove carpets, ventilate, steam clean, use ozonators or antibacterial sprays. If necessary, paint and renew textiles.

Materials for long-lasting cleanliness

Choose antibacterial materials, easy to clean and with low porosity: washable paint, stainless steel faucets, non-slip ceramics, quartz countertops.

Renting with or without furniture? Advantages and disadvantages

Deciding whether or not to furnish is key. It affects the type of tenant, rental price and speed of closing.

When furnishing is more profitable

It is profitable in temporary, tourist or professional rental areas. Also if you are targeting students or young people.

Advantages of furnishing:

• Higher rental price (10%-25% more)
• Reduction of vacancy time
• Attraction of foreign tenants or labor tenants

Furniture should be functional, durable, easy to clean and neutral. Avoid cluttered or low-quality styles.

Tips for choosing functional and neutral furniture

• Light colors and simple lines
• Durable materials: melamine, washable covers, treated wood
• Multifunctional furniture: beds with drawers, sofa beds
• Minimal decoration: translucent curtains, neutral paintings, good lighting

If it is a long-term rental or family area, unfurnished allows the tenant to customize the space.

Building materials ideal for renovation for rental

Choosing the right renovation materials is essential for a long-lasting, functional and cost-effective result.

Resistant and easy to maintain floors

• SPC vinyl: water-resistant, easy installation, wood appearance
• Laminate AC5 or higher: heavy duty, good value for money
• Ceramic or porcelain tile: ideal for kitchens and bathrooms

Avoid natural parquets, carpets or cheap floorboards. In ParatuReforma you will find the best materials to renovate an apartment and improve the rental conditions.

Durable paints, doors and coatings

Use washable plastic paint in white or neutral colors. For doors, choose smooth and lacquered models. In wet areas, use textured tiles or ceramics.

Affordable thermal and acoustic insulation

• Double glazed windows
• Weatherstripping on doors and windows
• False ceilings with insulation
• Sound absorbing pavements

If your budget is tight, don’t worry. There are many low-cost renovations that have a great visual and functional impact.

High-impact visual changes

• Paint: painting all the walls in off-white or light gray refreshes the space and gives a feeling of spaciousness.
• Modern faucets: changing the faucet significantly improves the aesthetics of the bathroom or kitchen.
• LED lighting: installing LED lamps with a modern design transforms the atmosphere without the need for major construction work.

With less than €2,000, you can visually transform a home and increase its rental value by more than €100 per month.

Appliances and details that make a difference

Investing in a new (albeit basic) washing machine, oven and refrigerator conveys a sense of renewal and convenience. So do:

• Change plugs and electrical mechanisms
• Renovating door and cabinet knobs
• Installing decorative mirrors in hallways or living rooms

These small details have a big impact on tenant perception.

Legal and tax aspects of renovating for rental purposes

Renovating for leasing purposes does not only involve technical or aesthetic aspects. There are also legal and tax implications that can benefit (or complicate) your investment if you don’t take them into account.

Tax deductions and applicable subsidies

In many autonomous communities there are subsidies for renovations aimed at renting, especially if they include energy, accessibility or sustainability improvements.

In addition, renovation expenses may be deductible on your income tax return if they are properly documented. You can also benefit from reduced VAT on certain materials or services.

Legal requirements to justify the reform

It is essential to keep all invoices with the supplier’s information, details of the materials and proof of payment. If you are renting as an individual, make sure that the contract reflects the habitual use of the property as your primary residence.

Consulting a tax advisor is an investment that can save you thousands of euros and avoid problems with the tax authorities.

Renovating to rent is a profitable decision if it is done with planning, clear objectives and adequate materials. You will increase the value of your home, attract quality tenants and reduce costs in the medium term. Whether it is a complete renovation or a simple facelift, in ParatuReforma you will find the materials and the perfect advice so that your investment pays off from the first month.