Investing in a rental home often means getting a great deal on a property that needs some upgrades. With the overall goal to make your investment property appealing in order to get the highest rent rate possible, it is sometimes necessary to go beyond fixing the required damages that exist; sometimes, you need to take it to the next level and update and renovate your property for added allure.
Keeping upgrade costs low while greatly improving your rentals should always be your long-term rental strategy. However, having a budget and planning for the right upgrades are what will make you the most money in the long run. Today, we will look at some strategies to decide whether to upgrade your newly acquired rental property. In addition, we will discuss four rental property upgrades that may be a waste of time and money and are unnecessary for you to make to maintain a positive cash flow.
Contents of This Article:
- Should You Upgrade Your Rental Property?
- 4 Property Upgrades That Are Not Worth It
- Need Help Managing Your Rental Property?
Should You Upgrade Your Rental Property?
When you purchase an investment property that needs some extra attention, oftentimes, the biggest decision will be to what extent you should upgrade or renovate the property’s current condition. And no, we are not talking about the required repairs needed to provide a safe and habitable home for your future tenants. Rather, we are talking about modern improvements made to the property that add extra charm and allow for higher monthly rent rates.
Here is a sample list of important things you ought to consider before making the decision to renovate your Montgomery County rental:
- Cosmetic upgrades are the most noticeable improvements and the ones tenants are likely to appreciate – things such as fresh paint, new flooring, and attractive landscaping.
- Appliances are another rental home hotspot – ENERGY STAR appliances are preferred, and modern styles are the most attractive.
- The condition of your property’s windows and doors influences a tenant’s decision to rent because they can be seen from both the inside and outside of the home.
Of course, the above is not a comprehensive list of things to consider before deciding whether to upgrade your investment property. Rather, this list gives you a general idea of what to think about before embarking on the renovation journey.
4 Property Upgrades That Are Not Worth It
Although upgrading your rental property can have many benefits, the truth is that some things are better left alone. Here are the rental property upgrades that most often result in lost money and time.
- Landscaping
- Closet Renovations
- Windows and Doors
- Hardwood Flooring
Landscaping
Curb appeal is a big part of placing high-quality tenants in your rental property and securing a solid monthly rental rate. However, investing a lot of time and money into your front and back yards can actually backfire.
If you invest a lot of money into your rental home’s landscaping, you risk these two main things:
- Possibly turning away potential tenants that may be a perfect fit for your home. Yards are subjective—some tenants may not like an overdone landscaping job and thus turn down leasing your property.
- Some tenants may not agree to maintain such an extravagant landscape, forcing you to maintain the landscaping yourself by spending additional money on a maintenance service.
In the end, when it comes to landscaping both your front and back yards, it is best to keep things simple and neat. That way, your home is still inviting but not expensive to stage initially or maintain.
Closet Renovations
Having enough closet space is something every prospective tenant is searching for in a rental home. However, upgrading that welcoming walk-in closet your rental home has will not come cheap. In fact, most people have no idea just how expensive closet renovations are. Estimated to cost upwards of $4,500, a simple closet upgrade can put you deep into the red for a space that is not crucial to the life of your tenants.
Plus, most people are looking for big closets with lots of space. Sure, storage options, built-in organizers, dressing areas, and even closet islands are fancy, but chances are your monthly rent collection will not recoup the cost of investing in a fancy closet for some time.
Windows and Doors
Remember, windows and doors are seen from the home’s interior and exterior. That makes them an important part of the overall appeal of your rental home. However, that does not mean you want to foot the bill for completely upgrading them.
Changing out every window of your rental can quickly become a costly endeavor. Though your old windows may be leaky, drafty, or even just unsightly, it is important to carefully consider the cost of replacing them. Get a professional to evaluate the condition of your windows before deciding to what extent you will renovate them. Who knows—you might be able to get away with simply replacing the sashes for visual appeal. In the end, if you can avoid spending tens of thousands of dollars on replacing the windows of a home you don’t get to enjoy yourself, do so.
On that same note, opting to upgrade your front door can be relatively costly as well. Though fiberglass doors are trendy right now, a steel frame door may cost save you $500 and have the same rate of return as the more expensive fiberglass one.
It is best to opt for a front door that matches your rental property’s architecture and will add character to your home. Doing this, rather than shooting for the fanciest thing on the market right now, will add a special charm prospective tenants will enjoy while also saving you money.
Hardwood Flooring
Installing hardwood flooring throughout your rental home can definitely make for a nice first impression. However, this type of flooring is extremely expensive and typically requires professional installation, thus costing you more money.
And, while hardwood flooring looks great, many tenants prefer the softness carpet brings, especially in the bedrooms. Plus, if your tenant has children, there is a chance they may prefer carpet in the living areas as well.
In addition, hardwood flooring scratches easily. This means that replacing large sections of flooring each time new tenants take up residence in your home will be necessary. This also means more money out of your pocket will go into your flooring budget on a regular basis, which is counterproductive to a positive cash flow.
If you decide that you need to upgrade your flooring, try a more cost-effective type, such as laminate, linoleum, or even tile.
Need Help Managing Your Rental Property?
If you own a rental that is in need of some property upgrades, make sure you carefully budget for and plan your renovations. Depending on things such as property location, surrounding competition, and going rental rates, you may not want to invest a lot of extra cash into an already decent property.
If you are new to the rental property business or find your portfolio growing in size and need a high-quality property management company, contact Bay Management Group today. Not only are we experienced in all aspects of managing rental properties, but we can also help guide you when it comes to adding extra curb appeal to your rental property. This includes whether to make upgrades or leave well enough alone and how to price your rental home at the highest rate possible.
Get in touch with Bay Management Group now. With the ability to take on all that comes with managing your investment property, you will save both time and money and have the peace of mind that your rentals are well cared for and are generating a positive cash flow.
