With rising costs making it expensive to acquire new properties in 2022, 73% of property managers are focusing on ways to increase profitability on rental properties they already own by making existing rentals more appealing and competitive. The market value of existing properties has been rising, dramatically in some states, which leads to an increased value of real estate across the board.
If you’re looking to boost your rental’s revenue potential in the upcoming few years, renovations are a surefire way to start. In fact, a few easy tweaks can help attract ideal tenants while reducing your vacancy rate and boosting your property’s value.
Landlords should think of renovations as both a short and long-term investment. But just because it’s an investment, doesn’t mean your renovations should break the bank. In this guide, we outline five key rental renovations you can undertake to increase your property’s value.
Many small rental properties are getting on in years. They’re seeing increased wear and tear, or need updates in order to justify higher rent prices. However, in an environment where two-thirds of small-portfolio rental owners are not consistently earning a profit from their properties, setting aside a portion of rental income for property enhancements can be a difficult decision. When calculating rent for an existing property, renovations remain an effective way to boost property margins over time, generating more income in the long run.
With rising costs in mind, we know that landlords want renovations that both increase the value for renters and boost property value if you decide to sell later on. Plus, data shows that an increasing number of landlords are choosing to partner with property managers to ensure a painless renovation process.
The kitchen is the heart of the home. It’s where meals are prepared and shared, where friends gather, and where many homework assignments are completed. Families spend a huge portion of their lives in their kitchens, which makes it an ideal space to renovate. Plus, it’s a guaranteed income booster, as rentals with renovated kitchens can easily charge $50-$100 more each month. But don’t think you need to replace every appliance and break the bank. A new backsplash, updated countertops, or a new coat of paint on the cabinets can bring even the oldest kitchen some fresh, new life.
Another place people look for upgrades is the bathroom. With the right renovations, a bathroom can become an in-home spa, an escape from the worries of the world. Updating dingy tiles with a modern or vintage feel can instantly transform this small space. Plus, tiling is a project that many landlords feel confident in completing themselves. Another easy bathroom upgrade is a quality showerhead. Replace the standard showerhead with one that allows changes in water pressure, or include a rain shower head for an extra-luxury feel.
First impressions matter and there’s nothing like good old-fashioned curb appeal. A few hundred dollars invested in front yard landscaping will go a long way. Or a few thousand dollars to update a crumbling driveway will not only boost interest in your property but also your overall value. Plus, updating a property’s curb appeal can be completed over a weekend. Rent a pressure washer for an instant face-lift, invest in some lighting so the property pops at night, or add some color with freshly painted shutters or a new flowerbed.
If your property is older, taking care of the floors should already be on your mind. Older homes often have amazing, original flooring that should be cared for as a part of ongoing maintenance and an investment in future tenants. Whether maintaining vintage floors or simply sprucing up linoleum, what’s under your feet deserves some attention.
A fresh coat of paint can work wonders. Whether painting bricks outside for curb appeal or choosing a calming neutral color for the inside space, it makes a difference to your tenants. Be sure to stay away from the standard bright white and choose a color that’s versatile without being boring. Also, make sure to leave a quart of the new color under the kitchen sink for easy touch-ups between tenants. Here are some ideas to get you started.
Ideally, it’s best to renovate between tenants and keep yourself on a tight schedule so your property is not left unoccupied for long. Every day your property sits without a tenant is like burning money, after all.
Of course, renovating should not keep you from showing a property to potential tenants. In fact, people who see an in-progress property feel like they’re getting a sneak peek into a new and improved home. This behind-the-scenes look can increase your ability to line up a tenant while updating your property.
While not ideal, you can renovate during a tenancy. But be careful to coordinate and communicate thoroughly with tenants so you’re not intruding on their privacy or peace of mind.
Finally, while some landlords prefer to coordinate renovations themselves, a growing percentage prefer to turn the stress and hassle over to a rental manager. Fortunately, these days, property managers are making concerted efforts to expand their in-house repairs team to include painters, plumbers, and other professionals to work on property turns and renovations. This way, they can provide faster, and higher-quality rental renovations. Plus, with their connections, a property owner can recruit reliable contractors and specialists at lower rates, saving you even more money. You’ll be able to step back and relax while a property manager oversees the project.
Following these tips can help you get the most ROI, seriously boost your property value, and stand out to renters, especially in today’s tough rental market.