Rental Property Renovations: Identifying Cost-Effective Choices
When someone owns an older rental property, one of the things they'll want to do is make sure it's up to modern standards. That way it will rent for a higher price, and will attract people who will take good care of it, too. So, which renovations are the right ones? That depends on the type of property and the area in which it's located, along with a few other factors. But one thing is clear, and that is that some renovations are much more cost-effective than others. If they aren't good choices financially, renovations can hurt a property owner's bottom line.
Rather than take the chance of getting in over their head, property owners will want to take a careful look at what they can do in order to reduce the chances of spending too much. If they're going to put large amounts of money into their rental properties, it needs to be in a way that will give them a lot of return on their investment. Then they still benefit from the renovations, and so do their renters. Everyone wins, and they aren't damaging their bank account in the meantime. A lot of times people make renovations to properties based on what looks good to them, but a rental property needs to be about the money all the time. What works for the renters and is cost-effective for the property owner is what needs to get done where renovations are concerned.
How to Pick the Best Renovation Choices
Some renovations simply have to be made. For example, if the kitchen hasn't been changed since the '60s, or if the carpet is from 20 years ago, it may be time for a change. These kinds of upgrades can mean the owner can get a much higher rent for the property, so the return on investment is there. Kitchen and bathroom upgrades are usually common choices for big value and good returns. So is new paint and new flooring. DIY home improvement projects can be tempting, but not all simple fixes are worth the cash — even if the initial investment is minimal. Generally, things like windows and doors aren't really necessary upgrades unless they're badly damaged or otherwise problematic. They may help save on utility bills, but they aren't going to give back a lot of their investment in higher rents or other types of benefits.
Rental Properties Mean Focusing on Value
The focus of any rental property owner should be on value. That way the owner can get what they need from the money they put into the properties, and the renters who choose to live there can also have a good experience. Renters aren't going to stay in a property that isn't clean and updated, or where they just can't feel at home. That's important to consider, too, since a property owner will want to get good renters into a property and keep them there. When they do that, they get a better investment return because they don't have a high level of turnover and the associated costs that comes with it. Those turnover costs can add up if renters don't stay long.
Finding good renters can take time, and the longer a property sits vacant between renters the more likely it is that the properly owner is losing money. With cost-effective renovation choices, a property owner will be able to get longer-term renters into the property in many cases. That's good news for the owner, and can help increase the return they get on their investment. Over time, that will lead to a better and more reliable source of income, helping the property owner feel more secure.
Emotions Should Not Play a Role in the Changes
In a personal residence, homeowners typically change things based on what they like the best. But when it comes to a rental property, that's not going to be the way to handle things. Keeping emotions out of the changes that are being made matters, and focusing on the money and the cost of the renovations versus the value is the way to go. That way a property owner can get the best choices for their bank account, and continue to build their security based on property ownership and rentals.
At the end of the day, no rental property is exactly the same. What renovations landlords choose will vary based on their specific situation, but the underlying reasoning will always be the same.
This blog post is written by a guest writer, John James of Two Rabbits Media.
