In many markets, rental properties are still in high demand. With some of this demand having cooled in recent months, it is important to put the right work into your properties. Not only will the right work help you maximize your monthly rental amount, but it will help you reduce the chance of vacancy. Putting the proverbial lipstick on a pig is not enough to generate interest. You need to know your market and do work that people really want. If not, you run the risk of wasting money that would have been better spent elsewhere. Making improvements just for improvement sake is not the goal; doing the right work is.
With a rental property, every inch of useable space should be maximized. Instead of putting in high end appliances, consider adding an extra bedroom or bathroom. An extra bedroom alone should yield hundreds of extra dollars a month to your bottom line, if done properly. This means making sure it has a closet and permits are pulled by the town. It is also important that the room is large enough to feel like a bedroom. An extra bedroom just for room’s sake is counterproductive, and can actually hurt your cause.
Aside from an extra bedroom, the next most important thing you can do is focus on the bathrooms and kitchens. In much the same way that these areas attract homebuyers, they are also important to renters. Regardless of what area our property is in, prospective tenants want their rental to have a modern feel. If the place looks and feels outdated, they will find somewhere else, even at a higher rental amount. You don’t need to redo the house to give life to these areas. Little things like updating the cabinets and fixtures can go a long way. New appliances can also give the place a modern feel, but these can get pricey. Before you do any work, you should have a one, three, five and ten year plan for the property. This will impact much of the work that you do.
Another area that must be evaluated is the flooring. There is something about old carpeting that can make the rest of the property feel outdated. Even if it is clean you should still consider updating the flooring. Hardwood floors are not only easier to maintain, but much more modern looking. If you currently have hardwood floors, you should consider an annual cleaning or staining every few years. Most new hardwood floors can last several years, so this is an improvement that you should see a good return on. Home buyers and renters look at the floors and walls upon entering a property. Every few years, you should freshen up the walls with a new coat of paint. For as much as you spend on the rest of the property, this is a fairly inexpensive process that can make your property pop.
Most rental property owners focus solely on the interior of the property. This is certainly important, but you cannot neglect the exterior. Curb appeal is the first thing that renters notice upon arriving to the property. Fresh mulch, trimmed bushes, neatly cut grass and clean walkways may not seem like much but they can make a big difference. Again, a renter wants to feel like they are home and be proud of where they live. If the place has a nice static feel from the outside, they will be more inclined to rent for a prolonged period of time.
If you look at your rental property as an asset you want to do work that will give you the greatest return on your investment. This means having any work or upgrades you do make sense not just for today but for years to come. You need to be careful to stay away from fads and things that are hot in today’s market. You also need to think of what will appeal to the greatest number of renters. You may personally love to swim in the summer but not every tenant will feel the same way. If you have limited back yard space a pool may be counterproductive. Not to mention that they can be costly to maintain and are only useful for a few months out of the year. Instead of spending money on a pool your money would be better spent on a deck. Decks have proven to be one of the best exterior improvements you can make and one that will hold its value the longest.
Aside from a pool, the most popular waste of money on a rental property is with the upgrades that are made. Even though most tenants like to live in modern luxury, they are usually not willing to pay for it. Granite counter tops are nice, but they will not justify a significant rental increase. It is important to do your homework on other properties in your area and base your work on them. Regardless of how nice your property may be furnished, most renters look at other rentals in the area and base their decision on personal affordability. If you over furnish your home and expect above market rents you will be greatly disappointed. Once you aim too high, you reach a point that it would be cheaper for your renter to buy than rent your property. Keep your rental nice, but remember it is all about your return on investment.
Throwing money at your rental property alone will not solve the problem. It is how you spend that money that makes all the difference.
