Rental properties come with their pitfalls, but in the current renter’s market in early 2022, it’s a goldmine for landlords—if they play their cards right.
Apartment upgrades and overall rental improvements can help you gain a better return. Many landlords often think that $5,000 of upgrades that only lead to $100 more per month is a waste, but if you’re savvy, you utilize equity, understand the real estate market, and know what you’re doing, these investments have multiple ways they can earn you money now, and later.
These rental upgrades are about to change the way you earn money, and bring better tenants with great rental records right to your door. It’s a win-win all around, now let’s talk about actually getting it done.
1. Upgrade Your Floors
This is perhaps the best way to upgrade your rental property cost at the expense of one afternoon of hard labor (and maybe bringing your brother-in-law along if you pay him in pizza and beer).
Hardwood is the best option, regardless of if a tenant enjoys carpeting. They can bring their own placement or throw rugs into a home or apartment if they wish, and the worst is that you may have to throw those out if they’re left behind.
Hardwood, or a cheaper variant of a sturdy hardwood floor, is best because it doesn’t trap odors, it’s resistant to mildew and mold (in most cases), and scratches can be buffed out, which adds “character” to the floor.
The benefits outweigh the downsides, even if it is more expensive than carpet installation. You have to think of the long-term benefit as well.
2. Bright, Vibrant Paint Colors
Colors affect our mood. Even if you’re not an interior designer, you can look at dark painted rooms and admit to yourself that they look a little more bleak than bright rooms.
It helps prospects envision themselves living in that space. On top of that, brighter colors make a space feel larger than it actually is, so it gives the
3. Landscaping Upgrades
Between YouTube videos and enough HGTV shows, most of us can figure out some simple, stylistic landscaping upgrades that can be completed in a single afternoon.
Lay mulch, mow the grass, spread some grass seed, remove yard waste, and add a few features like bird baths or large ceramic planters to frame doorways.
For a few hundred dollars and tools you likely already own, you can do wonders with a yard. Consider installing a sprinkler system on a timer so you can maintain the lawn and it doesn’t dry out or die, depending on your area.
4. Install Energy-Efficient Windows
Windows aren’t the cheapest on the list, but if a tenant can save money on their heating and cooling costs because you’ve installed energy-efficient windows, they’ll be much more likely to rent from you as opposed to the next guy.
Yes, they are eating the energy costs, but in an energy-conscious world, plenty of newer tenants in 2022 want to rent homes that identify and live by their values.
This has economic and emotional selling points.
5. Spruce Up Kitchen Cabinets
Kitchens are expensive to renovate, so instead, you can freshen it up by removing cabinets and refinishing them.
Paint and/or refinish the cabinets themselves, but then separately upgrade the cabinet doors with a fresh varnish or new look. Consider upgrading the hardware as well, because some cheap handles or knobs can make a huge difference in how a kitchen looks and feels.
6. Tankless Water Heaters
These save money by being inexpensive compared to full tank water heaters, as well as reducing the risks of flooding, water heater disruptions, and being better as a safety precaution for tenants.
This is a selling point on rental properties, because it means tenants don’t have to wait for hot water or worry about it running out.
7. Low-Flow Appliances
Toilets, shower heads, anything that flows water; you can save money and help reduce the strain on plumbing with low-flow water features. While it’s not in every state, many states require that landlords pay for the water bill.
However, the benefit here is also a selling point to prospective tenants in states where they have to pay the water bill. Low-flow means low-cost, which you can (and absolutely should) market as a feature to your potential tenants.
8. Mirrors, Mirrors Everywhere
Just like when we talked about bright colors opening up a space, mirrors do the same thing. However, if it’s something that's simply hanging up, tenants may remove them and then “misplace” them.
Find a stylistic way to install mirrors, whether it’s a bathroom vanity, or installing mirrors on the wall in the living room to open up the space. Find a spot where daylight will reflect off of it to really open up a space during midday.
Just be sure it adds to the space and doesn’t turn it into a funhouse.
Implementing the least expensive upgrades possible can increase your home’s value, give you the ability to utilize the 1% rule, and generally just ask for more rental income each month.
Since these upgrades aren’t something you’ll have to entirely replace all too often, this can help you gain more ROI for the next 5-20 years, depending on how careful your tenants are.
Upgrading your rental property can also help you take advantage of increasing neighborhood prices. The population isn’t exactly going down, so if you’re wise and pick an area with an up-and-coming population or scene, you stand to gain money while you rent, and an increased price when and if you decide to eventually sell.
Rental Property Improvement FAQ's
No. You can never claim these as deductions on your taxes. Renovations do not count as repairs, so if you’re renovating a property to increase its value, it can help you when you sell by decreasing capital gains tax.
However, repairs are tax deductible at the end of the year, so if you’re renting out a property and have to make repairs (usually because the tenant didn’t protect the property the way they should have), those can be deducted.
The 1% rule in real estate, for rental properties, is that you should ask for 1% of your home’s total value when renting it out. For a $100,000 house, you would ask for $1,000 per month in rent, and so on.
However, with current housing conditions in 2022 and early 2022, many homeowners and landlords are actually renting at a decreased cost to account for the state of the economy.
The 1% rule isn’t a live-by, die-by kind of rule, so take it with a grain of salt, but also don’t undersell your property’s rental value to the point that you don’t turn a profit.
It should come as no surprise that the most valuable room to upgrade also happens to be the most expensive to upgrade: the kitchen.
The kitchen can account for 30% of your home’s total value, so if you go by the 1% rule in a rising and popular area, the kitchen will be your best way to gain a better ROI once you’re ready to rent.
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