(Photo: John Schilling)
No matter how great your rental property might have been upon purchase, there eventually comes a time where a rental property no longer “catches the eye” and you’ll have to renovate your rental. A property that once commanded high market rents, curb and interior appeal that kept vacancies low, and minimal maintenance is turning tail and doing just the opposite. Although you’ll be reluctant to spend your hard earned cash flow, renovations and preventative maintenance can keep your future cash flows high and your vacancies low!
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Renovations Don’t Have to be Expensive
Although “renovation” is a word that likely strikes fear in the center of your wallet, it doesn’t always have to cost an arm and a leg to do some improvements and decorations to your property. Knocking down a wall to open the living area up, painting the walls lighter, and installing some extra lighting to liven the place up can be done cheaply. Small improvements such as these can sway a tenant who’s on the fence or justify your above-market rent.
This Isn’t Your Home
When renovating/decorating our own homes, we can get a little carried away. We gold plate the faucets, we buy steam dryers, granite our countertops, and marble our bathrooms. Although some large upgrade may help you slightly on your home value, most of these do nothing for the market rent you command or your vacancy rate. Treat this as an investment and don’t try to create an immaculate home that suits your expensive tastes. This is a rental property and tenants aren’t expecting a rental to be a dream home.
The Tenant Might Pay for it
This is not something to bank on, but sometimes a tenant may feel strongly about a certain renovation or upgrade to improve their living space and pay for it too. Renters with families or elderly individuals may plan to live at your property long enough to reap the benefits of a renovation. It’s often not serious enough to be a deffered maintenance issue or a dealbreaker, but it’s a “nice to have” for the tenant that is worth pitching in a few bucks of their own money. A lot of improvements a tenant will make are “decorations”, i.e., they are temporary and will leave with the tenant’s departure, but a few permanent decorations such as repainting the walls could give your rental a fresh look. Reserve the right to inspect the paint job to ensure it is done to your workmanship standards and for extra precaution, require that your property manager or a painter of your choice handles the job instead of the tenant.
Minor Renovations that Pack a Punch
1. Create an Island – A mobile island in the kitchen, for example, a piece of movable furniture, could add a lot of functionality to the kitchen if there is enough room.
2. Wall Decals and Removable Paper – Although this isn’t the best option for everyone, if you have a family-friendly rental in a great school district, consider adding some fun decals to help the family visualize a “big boy/young man cave” for their son, or a fairy tale enchanted forest bedroom for their youngest daughter. Don’t spend too much on this, but a couple cheap decals could help get an edge on the competition. Even if you don’t need the eye candy, temporary wall art can help cover up imperfections on walls without a complete coat of paint.
3. Kitchen Update – Along with the island mentioned above, extra shelves and a fresh coat of paint on the cabinets could set you apart from the other rentals. The kitchen is often the most disappointing part of a low to mid-range rentals since big kitchens = big rental bucks.
4. Faucets and Outlet Covers – Although you don’t want platinum state-of-the-art faucets, a repair to a leaky faucet or inoperable sprayer can be a cheap way to improve quality. Painting outlet covers or adding stainless steel covers can help make the place look like less of a “rental” and is another cheap way to stand out from the crowd.
5. Minor Landscaping – Since the exterior “curb appeal” is what the potential renter will first see, make sure the grass is mowed, bushes are mulched, and any walking stones or broken concrete is repaired (this is also important from a safety perspective.) The goal is cleanliness and safety, not to be the neighborhood winner of the parade of homes.
So remember, renovations and improvements to a rental property can increase the return on your investment and keep your vacancies and maintenance costs low. It is also crucial to the safety of the rental to repair or replace outdated or broken items in your rental. The most important rule to go by is that the place should be inviting and livable, and not your or the tenant’s dream home.
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The information presented does not consider your particular investment objectives or financial situation and does not make personalized recommendations. This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, AssetRover recommends consultation with a qualified tax advisor, CPA, Financial Planner or Investment Manager.