When it comes to renovating your investment property, caution and a close eye on the bottom line are the orders of the day. We show you what to do and what to avoid.

With DIY renovations the new rage, it is easy to confuse hobby with necessity. When it comes to your rental property, there are a number of ‘little jobs’ around the house that, if done properly, will help maximise your rental return.

Many DIY jobs are best described as ‘preventative maintenance’. And since prevention is not only better but also cheaper than the cure, it is here that most landlords should focus their energies.

Value lies in land, not dwelling

When planning improvements or repairs it is important to remember why you are doing them. Most of a property’s value is gained from the land it sits on, rather than the bricks and mortar.

Any improvements made for capital gain generally must involve major structural or cosmetic alteration in order to be reflected in the future sale price.

Tax benefits

One of the key benefits of carrying out improvements to an investment property are the tax deductions allowed by the Inland Revenue Department. Investors should always seek professional advice from an accountant or other tax professional. Some deductable expenses you may be entitled to claim include painting, fence repairs, retiling, roof-fixing and virtually anything classed as maintenance.

If you do DIY, remember that you cannot claim for your time (unless the property is in the name of your spouse and proper accounts are tendered). Gardening and cleaning/pest control costs may also be claimed.

Renovate wisely

The best places to add to the property’s value are the bathroom, kitchen and garden. When renovating the bathroom or kitchen, try to keep the fittings in their existing position as repositioning can drive up plumbing costs.

The most effective additions include outdoor living areas, decks and covered pergolas. These are relatively cheap to build and add significantly to rental appeal and return.

Often a cosmetic overhaul using paint, soft furnishings and landscaping can add thousands to resale value. Unless you are very experienced, consider hiring an interior designer or colour consultant to advise on a colour scheme.

Screen your tenants

While the choice of tenant may seem unrelated to building improvements, remember that a bad tenant can destroy your future capital gain while a good tenant can help preserve it.

NZ property inspectors Tidy Tenants (www.tidy-tenants.com) prepared this list of "Top 10" repairs and improvements to maximise the rental appeal and longevity of your investment property.

1) Broken or missing doorstops – 90% of holes in walls are from door handles.

2) Leaking or worn taps - the most common cause of water rates disputes (in regions where water rates are charged).

3) Missing light shades - without these, heat from light bulbs make light fittings go brittle, eventually falling apart and becoming a safety issue. Burnt and cracking paint around the light fitting also occurs.

4) Leaking toilet cisterns - as more modern cisterns overflow directly into the pan these leaks go unnoticed.

5) Mould in poorly ventilated rooms - installing extraction fans in bathrooms helps reduce mould.

6) Blocked spouting, guttering, down pipes and drains must be kept clear - the water often ends up in external vent covers or plastic spouting breaks from overloading. General water blockages become a breeding ground for mould on external vent covers, spouting, walls and pathways.

7) Keep floors sealed in bathrooms, kitchens and laundries - gluing down curled up lino in a bathroom is a lot cheaper than replacing rotten wooden flooring.

8) Keep wet areas sealed around kitchen benches, baths, hand basins, showers and laundry tubs - damage can occur in just three months: a bit of silicon and enamel paint is cheaper than replacing units, wallboard or structural framework.

9) Aged or mouldy exterior paintwork around windows and weatherboards - allows moisture to soak into woodwork and should be sealed to prevent premature aging.

10) Aged or faulty hot water systems, relief valves and pressure reducing valves – leaks can overflow out a roof pipe and enter the spouting unnoticed.

Make improvements between tenants

While keeping on top of maintenance issues during a tenancy will allow the landlord to maximise the property’s current potential rental return, a changeover between tenancies affords the perfect opportunity to improve its cosmetic appeal. Water-blasting the exterior paving stones, cutting back over-hanging trees that may obscure views, touching up the paintwork - indeed, fixing all the little things - can help you to achieve a significantly higher rent than you might at first have imagined. As with any business, attention to detail is the key.