Currently 17% of all Americans live in apartments, while another 36% rent homes. With renting being as popular as it is, as a landlord, you might be wondering how you can best take advantage of this market and increase your rental property value. To make the most out of your investment, there are a couple of major points to consider. Kitchen and bathroom updates and renovations remain two of the most attractive and sought after home remodels that can garner you a higher rental profit. These updates, combined with improved landscaping can help you drive a larger profit and justify a higher rental price. Because nearly 85% of all homes in America were built before 1980, getting rid of the old and bringing in the new is one of the best things you can do as a landlord. To give you a better idea of the specific benefits and changes you should make, here the three major points to keep in mind.
Kitchen Renovations
Kitchens often offer the most in terms of a ‘wow’ factor both in homes and apartments. Outdated or dingy kitchens won’t do you any favors when showing off your apartments or home properties to prospective renters; however, crisp, clean, and modern updates help capture a renter’s attention and make them more likely to agree to a higher price tag. However, before you jump into demo day, it is important to consider what your personal goals are and what exactly you wish to accomplish. Set a budget and anticipate what you can afford, as well as what you plan on renting the property for when all is said and done. This way you won’t have to worry about going in gung-ho and losing money in the long-term if you’re renovations become too expensive to justify.
- What is the End Goal? If you’re planning on holding the property and solely renting it out, investing in durable materials should be priority number one. You don’t want materials that will wear out quickly or stain without the proper upkeep. After all, you can’t be sure exactly how your tenants will go about housekeeping. However, if you’re fixing up the property with the end goal of eventually selling it, you can consider higher quality materials that will appeal to buyers in the real estate market.
- What Can You Realistically Price Your Rental At?
Even minor kitchen renovations have the potential of garnering an ROI of up to 81%. That said, pricing too high can drive renters away instead of reeling them in. To get the most accurate estimate, check your local area to see how much apartments and rental homes with renovated kitchens are going for in contrast to those without. This can give you a good idea of what the best amount will be. Alternatively, you can seek an appraisal to get a professionals opinion on the overall worth of the property. This, in particular, can be useful if you ever do consider selling. - Adding 10% to Your Budget
Consider what you can afford and set your budget accordingly. Once you have this number, add an additional 10% to ensure you can cover any unforeseen problems that can arise during the renovation process. You can never sure what you’re going to find when you start ripping out countertops and walls and you don’t want to get stuck halfway through a renovation only to discover your budget won’t cover the whole cost. This is especially true in older apartments that you bought and have never renovated before. - What is Considered a “Good” ROI?
The ultimate goal of your kitchen renovation is to increase your overall ROI, and your target goal will depend on your personal situation and alternative options. If you stick to your budget you can stand to increase your returns fairly substantially when compared to other options. To figure out the exact worth, consider the increase in rent, the reduction of maintenance costs, and the potential for attracting higher quality tenants. The boost in income can be furthered by the reduction of future maintenance costs, while high-quality tenants have a better chance of caring for the property reducing the risk of damage or the need for repairs once they move out.
Bathroom Renovations
As with kitchen renovations, updated bathrooms are something that can boost rent and bring in quality tenants. However, when updating current bathrooms it’s important to ensure that they can stand up to everyday wear and tear without getting dingy.
If you’re not aiming to install tile walls, take measures to protect the paint from water damage that can occur from condensation and splashing. Water-resistant glazes are best for ensuring that the walls will stand up to the moist conditions without growing mold or becoming waterlogged. While this will cost more upfront, it saves you from having to replace everything down the line.
For vanities, you have two options. Floor-mounted vanities are most commonly found in both old and modern homes; however, if you choose this option you should consider reinforcing the unit with additional wall supports to ensure it can stand up to people sitting or climbing on it. Wall-mounted vanities allow for more space overall, however, you should ensure that it is seated flush with the wall during installation to prevent water seepage or mold growth from dripping water.
You should also take care to replace any old tubs, showers, sinks, or tiles that are dirty, stained, or cracked. These features can quickly take away from the allure of newer features and leave the bathroom looking half-finished. Settle on durable materials that are resistant to staining and will last you the longest without the need for additional upkeep or maintenance. Neutral colors are popular for rental units as they provide a “clean slate” on which tenants can add their own personal touches.
Lighting is something else to consider updating, especially if your current configuration is dark or outdated. LED lighting is becoming more popular for homes and can provide a bright clean light that lasts longer than traditional options.
As with kitchen renovations it’s important to set a budget for your bathroom updates with an additional 10% threshold to accommodate any unfortunate surprises. This goes doubly if you’re planning on moving around any plumbing fixtures.
Additional considerations can include installing water-saving showerheads and toilets, updating old plumbing, and adding extra storage space. Sometimes the smallest touches can do the most to bring together a room and make it more appealing to renters looking to get the most from their new home. The most important things to keep in mind are installing durable materials, sticking to neutral colors, and establishing a modern clean aesthetic.
Landscaping Your Rental Property
The outside of your property is just as important as the inside. Both homes and apartments can benefit from well-planned landscaping and care. While renovating the interior can draw interest from renters, if the outside lacks curb appeal you’ll have a harder time bringing in high-quality tenants who want the most bang for their buck. As a landlord, here is what you should keep in mind when considering landscaping improvements.
- Curb Appeal
Take a look at your property and note what you could add that would really make it pop. You can draw inspiration from neighboring homes and apartments, or you could bring in a professional landscaper to get their opinion on the best options for your property. Remember to keep in mind your desired budget, as well as the ease of upkeep if you’re not planning on hiring a property manager to oversee maintenance. - Adding Shade
If your property doesn’t have any shade-giving trees, consider having some added. Not only does this offer a nice spot for tenants to sit out, but it can also lower the cost of air conditioning if the shade covers parts of the building. On the flip side, if trees or bushes are in awkward places, you should consider removing them or moving them to other locations where they will be better suited. - Leaving Space for Kids and Pets
While not all landlords accept pets, if you do, leaving an area outside for them to run about can be a great bonus for tenants with pets. This also extends to families with small children who want an area where they can play safely. Ensuring you have an open area on the property that allows for this can benefit renters and make your apartments or homes more desirable overall. - Keeping Gutters Clean
Unclean gutters aren’t just unsightly, but they can damage the roof and lead to sagging and water damage. Installing guards along gutters can help mitigate debris build-up, and reduce the number of times cleaning is needed throughout the year. Likewise, you should take into account the state of your current roof to ensure that it is in good condition and without any damage or signs of aging, both of which can decrease curb appeal and safety. - Break Up Linear Patterns
Harsh lines can quickly make outdoor spaces seem rigid and uncomfortable, adding curves to your landscaping can offer a smoother and more professional appearance that tenants will enjoy. This can be done by adding curved flowerbeds with stone or concrete liners that wind around the perimeter and help break up the otherwise sharp linear angles that most homes have. - Hire Landscapers
For either the install or the upkeep, hiring a team of professionals can be a boon overall. Not only will this prevent you from having to worry about watering and mowing, but it ensures that your landscaping stays in the best condition possible. You don’t want to spend hundreds creating the perfect outdoor space only to have it become neglected and worn down. Prevent this by hiring professionals to care for your space, the cost of which can be factored into the increased rent prices.
Landscaping and the upkeep of your property’s exterior is essential for ensuring that you draw in quality tenants and justify a higher rental price. Even something as simple as installing fencing can grant you a 65% return on investment, with full landscaping increasing ROI anywhere from 200-400%. Quality landscaping is something to seriously consider if you want to make the most out of your rental property and ensure that you maintain a home or apartment building that renters will be excited to live in.
Keep In Mind
Every property is different, and each will have its own considerations and problems. There is no one size fits all renovation plan and taking stock of your current budget, desired rent price, and ROI goals will help you create a realistic renovation plan that works to bring in the most profit. This likewise extends to apartments, where individual units will need renovations at different times.
As a landlord you also have to keep realistic expectations about how well your renovations will hold up. This is why stylish and durable materials work best in apartments and rental homes. You never know how well a tenant will care for the property both inside and out. While security deposits can give you a safety net to work with in case extra repairs are necessary once a tenant moves out if you splurge on expensive but weak materials, you could risk losing money if a replacement is needed. Additionally, having to replace materials can cause you to lose time that could otherwise be used to move in new tenants. Working with a professional renovation team can help mitigate these risks and ensure that you use the best materials for your apartments and homes.
If you are a landlord looking to increase your profits and bring in more rental income, updating outdated kitchens and bathrooms is one of the smartest things you can do to increase profit. Coupling this with creative landscaping that helps boosts curb appeal and provides a comfortable outdoor space for tenants, can easily allow you to price your property higher and draw in more decerning renters that are willing to pay more for updated and cared for features.
