5 Important Property Upgrades That Maximize Your Property’s Rent Rate
Whether you own a condominium, townhouse, duplex or single-family home maximizing your income is always a high priority for an investor. Implementing a good year-round maintenance checklist is a great way to protect your investment, lengthen the life of your HVAC unit and ensure your renter hasn’t damaged the property, but it won’t necessarily get you top dollar when competing against other properties on the rental market.
Your tenant has moved out and now your property is vacant. Before you do the typical make ready projects, put some thought into rental property upgrades. The standard is to slap some paint on the walls, give it a good detailed cleaning and shampoo the carpets. However, doing the minimum will usually lead to minimal returns in terms of money and time of tenant occupancy.
When dealing with your rental property, there are three goals every investor looking to grow their portfolio should desire to achieve
- Maximum rent
- Minimize operating expenses
- Increase the resale value
In order to get the best return on your investment, stay at the high end of the rental rates, improve your property value and avoid tenant turnover every lease term, you will need to invest in the right upgrades: upgrades that will entice tenants to stay through multiple lease cycles. As long as your rental home is structurally sound and in good condition, then you only need to add a few upgrades to make your home stand out. These upgrades will set your listing apart from others sitting on the market and getting it rented faster saves you money upfront.
To appeal to a renter you have to look at your property from their standpoint. Location is always key and a big factor when renters are searching for a home. Aside from that you’ll need to take a closer look at what features or upgrades will make a renter pay more money, stay longer and take excellent care of the property.
We will cover the top 5 upgrades renters are looking for in a rental property and are willing to stretch their budget to get.
When you drive through a typical neighborhood subdivision you can normally separate the homeowners from the renters pretty quickly. It all starts at the curb, the first impression of a home and a spot most investors neglect, is the exterior curb appeal.
Many investors forgo the much needed coat of paint, leave a dilapidated fence up, forget to power wash the driveway and fail to plant flowers or groom trees/shrubs. This is not a good sign to a renter and a potential reflection of how they see your maintenance style.
Yes, this goes for condos, townhomes and high-rises too. Single-family homes are not the only places where curb appeal is taken into consideration. Yes in condos and townhouses some property maintenance is out of your hands but you do have the power to complain and vote. You have a duty and obligation to ensure your monthly HOA dues are put to good use and that the board of directors is allocating enough funds for exterior maintenance. Driveways should be free of potholes, the landscaping should be well maintained, all areas of the property should have ample lighting and all fences working properly.
Additionally, there are a few things you can do to spruce up your exterior curb appeal even in a condo or townhome. Make sure all balcony and patio space is functional and safe. For unsightly patios add green turf and make sure there are no overgrown weeds. You might even add a patio table or extra lighting. Make sure your front door is painted and weather stripped and make sure all exterior storage is clean and usable.
Appliances, appliances, appliances are among the first things a renter usually looks at after entering a potential new home. In some cases it’s just as important as the location. Old, half functioning and mismatched appliances will not get you top dollar. They can also lead to more hassle down the road in the form of unending maintenance calls. Band aiding a problem or temporary fix, always costs more money in the long run. Invest in a good, high quality, matching appliance package and make sure it has a warranty. If your home is setup with washer/dryer connections you can always add a set to further increase the value of your rental property.
Upgraded countertops really add value to your kitchen and appeal to renters willing to pay more for upgrades. There are so many options to choose from that will add value and style. Cement and quartz are popular in the higher end markets but a good choice is always granite. Invest in durability, functionality and a style that will stand the test of time.
With cabinets sometimes a fresh coat of paint and new fixtures will go a long way. However, if you have the old particle board cabinets that have outlived their usefulness, then you should upgrade to a more modern and functional option. Remember storage space is a hot commodity and an appealing bonus to a rental property.
This is a big one and also a tricky one because everyone has an opinion and you won’t please all potential renters. It’s the battle of carpet vs. wood flooring and in the end, wood flooring always wins. For this purpose we are lumping all flooring together: laminate, hardwood, bamboo, plank and faux wood. The options range from reasonable to pricey but all flooring immediately raises the value and rent in a rental property.
Carpet is one of those items that may have to be changed out every other renter and that is expensive and has a negative impact on your annual rate of return. One Kool-aide stain or bleach spill can ruin a new carpet forever. However, some tenants like carpet, especially in their bedrooms and during winter. On the other hand the majority of renters may have a carpet allergy or a child with carpet allergies.
Some owners opt for a mix of the two by putting carpet in the bedrooms and flooring throughout. Others opt for a blend of wood flooring and ceramic tile. You most definitely should get rid of old vinyl or linoleum flooring in bathrooms and kitchens. It is unsightly and usually lower quality than ceramic or travertine tile and a major turnoff for renters.
Investing in higher quality light fixtures, adding new ceiling fans, upgrading all faucets (kitchen – bathroom), will give the rental property a more polished pulled together look. It will also give the normal wear and tear items higher durability if you purchase a quality brand. Tenants even notice door handles, locks, and window blinds. Spending a few dollars more to get the nicer 2 inch wood or even faux wood (painted or unpainted) blinds really adds a more lavish touch.
The benefits of adding rental property upgrades extends beyond appearances. Investing in better quality upgrades not only will maximize your rent, it will improve your annual cap rate or rate of return, improve your home’s value and the majority of the expenses will be tax deductible. Most importantly, it will allow you to develop a healthy, legal relationship with your tenants. When competing in an active rental market you need your property to stand out above other properties listed for rent. Quality upgrades done professionally will get your rental property filled faster and maximize the income on your rental investment.