Tips to Increase the Value of Your Rental Property

By on May 1, 2017

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When renovating and cleaning a rental property, it is often difficult to cut costs while maximizing your return on investment (ROI). Here are some relatively inexpensive tips that will help you improve the rental property, while maximizing its income potential.

Clean and Repair before Replacing

The problem a lot of landlords face in this regard, is that they will rush in, clear out the contents of the house, paint the entire interior, lay down some new carpets and then usher in some tenants as quickly as possible. While this sounds quite sensible, bear in mind that this is expensive and rarely does the entire house needed to be overhauled. Maybe you don’t need to replace that stove or paint that wall, after all. Sometimes, the cheapest and most dramatic improvement you can make on a rental property is simply cleaning it up. Perform a thorough cleaning at every turnover. If you don’t know how to clean, pay for a professional maid service.

Carpets

Landlords often have a strict schedule in which they replace the carpets every 7 years or so. Though it is recommended to follow a general life-expectancy chart, try to clean the carpets before opting for new ones. A professional can often make even the dingiest of carpets look clean, and will only charge a fraction of the cost of a new carpet.

When time comes to replace your carpet, consider switching to laminate or composite wood – this will save you a fortune long-term (won’t have to get carpet professionally cleaned every time a tenant moves out). Laminate cleans easily and looks newer much longer than carpet and tenants seem prefer it (particularly in the main spaces).

Ceilings

Ceilings rarely need to be painted. Unless the tenants/previous occupants were heavy smokers or extremely messy cookers, the ceiling will probably look clean.

Walls

Paint the walls at least every 5 years. If you have a small or luxury rental property, go ahead and bring in a contractor to do a quick, professional paint job after each tenant. For landlords on a shoestring budget, try out scuff removers and a thorough cleaning to refresh the wall in between re-painting.

Fixtures

Check for door handles that stick, running toilets, old and inefficient lighting, leaking faucets, missing blinds and worn wood finishes. Making a few inexpensive fixes or replacing broken items will help update the property, appeal to potential tenants, and reduce after-the-fact maintenance.

Focus on the Bathrooms and Kitchen for Major Renovations

A beautiful kitchen will attract a high-quality tenant. Kitchens and bathrooms usually provide the greatest wow factor for potential tenants. Nobody wants to washing in a dirty or moldy bathroom or cook in an outdated kitchen. If you are going to upgrade any specific rooms in the property, I would start with these two.

In addtion, if you plan to sell your property in the next 5-10 years, a nicely updated kitchen or bathroom will usually give you about an 80% return on investment – which is higher than most renovations. To save money on renovations, check with custom cabinet shops before you hit the chain stores; wholesalers and makers sometimes get stuck with parts or even entire units due to changed specs or errors, and they may be willing to unload them very cheaply.

That old, weathered and dirty washer dryer may be preventing you from getting top rental dollar. You would be shocked how much new appliances can add to your monthly rent. Spending money on new appliances (ovens, ranges, fridges, dishwashers and most importantly, washer and dryer) can easily add $100 per month to your rental income.

Adding Extra Bedrooms

A formal dining room or family room may be wasted spaces which could be earning serious rental income. Converting these rooms can cost as little as the cost of a new door or perhaps $1,000 for small structural changes, but an extra room can boost your rent by $150 to $200 per month.

Go Green

Installing solar panels may boost your property’s rental returns. Aside from potential tax rebates, you could collect more in rent by saving your tenant from paying hefty utility bills. And consider using any rebates from the solar energy to invest in a heating/air conditioning unit — your tenants see a place of comfort and you may be able to increase the rent by $100 per month.

Furnish or Stage the Space

Give Tenants a Vision. When a potential tenant tours the property, they are asking themselves a very important question: “Can I see myself living here?” If the property seems desolate and vacant, consider staging the unit with furniture. Furniture rental stores will price their pieces by the day, week, or month; Stage rooms to help potential renter mentally place their furniture. Include the furnishing with the rental and you can expand into short-term rentals, vacation leases, divorcees and even list it on travel websites like AirBnB.

Consult with Your Real Estate Advisor

Tenants are not necessarily looking for a sleek, overly styled rental, but rather a functional living space where they will feel comfortable and will enjoy spending their time. Strive to deliver a quality property to potential tenants. If you follow these simple tips and don’t go overboard with the renovations, you should be able to update a small rental property for less than $15,000, including the kitchens and bathrooms.

Speak with your trusted financial advisor, contractor and realtor to determine which home improvements are going to bring you the most rental income and long-term return on your investment.

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About David Leighton

FSN real estate investment journalist - Property can still be a great way for someone to secure or grow their portfolio. Any smart investor with a good education and understanding of the opportunities in the the market can buy their dream home, rental unit or commercial parcel. David wants you to have the tools and resources to make informed decisions in your real estate investments. Connect with David on !

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