1. Property Renovations Boost ROI with Higher Monthly Rent
When you determine a monthly rent price to charge tenants, it’s normally based on the rental market and the condition of the property, so you really can’t go any higher without justification. That’s when the question – “Should you renovate your rental property?”, comes into play. If you would like to kick it up a notch, and charge more rent, then property renovations make perfect sense. As for the cost, you will eventually make that up in the higher rent that you receive. After the renovation costs are made up, the higher rent will factor into a higher ROI.
2. Rental Improvements Increase Property Values
Renovations completed on your rental, especially when it was a below the market value property when purchased, can significantly increase its value. You can also call this “forced appreciation”. A property may naturally increase in value over time, which could take years, and can be based mostly on the market value. However, you can cut to the chase and instantly increase the value of your rental property with the right renovations.
Here are just a few renovations that can increase your property value:
- Replacing Old Windows
- Upgrading the Kitchen – Countertops, Cabinets, Flooring, Tiling
- Replacing Shabby Garage Doors
- Bathroom Renovations
- A Professional Paint Job – Exterior and Interior
Increasing the value of a rental property is a positive thing for obvious reasons, but there is something else that you can take advantage of when you raise the value. Serious investors who want to grow their portfolio can buy a property under the market value, perform the necessary renovations, and then utilize the increased value of the rental by refinancing it, and then taking out a loan. This is then used to fund another real estate investment.
3. Quality Upgrades Attract Good Long-Term Tenants
Some of the same items that increase the value of the rental property can also increase your chances of gaining a great long-term tenant. Serious renters who are looking for a place to call home for an extended period of time are more likely to sign the dotted line on properties that have curb appeal, quality windows, a nice kitchen and bathroom, and so on.
First impressions mean everything, so a professional paint job can reel them in, and have them feeling good about your rental. Quality tenants who make your rental their home will help keep your ROI on track because nine times out of ten, they will care for the rental as if it were their own.
4. Reduces Future Repairs and Operating Costs
One thing to factor in when trying to answer the question – “Should you renovate your rental property?”, is if the main mechanics of the house are in good shape or not. Not renovating certain aspects of the property when needed, and having to constantly repair or patch up deteriorating elements, can end up being costly in the long run. It’s best to take inventory of what needs to be included in the overall renovation of the property, so you can ensure that your operating costs will be kept to a minimum in the years to come.
- You will want to replace your roof if it’s in bad shape or close to 20 years old.
- Good quality windows can help keep the electric bill down.
- Ensure the electrical is up to code.
- Plumbing should be in good shape to avoid busted pipes and leaks.
