Owning and operating property is a constant battle to keep units in tip-top shape to make them attractive to current and prospective tenants. But where do you start? What renovations will attract good tenants, while also increase the value of your property?
Kill two birds with one stone. There are many creative ways landlords can boost their rental yields and the value of their rental properties at the same time. Most are based around the same theory: give the tenant something they want and are willing to pay more rent to have.
Here is a valuable list of low cost improvements that you can make to your properties that will ensure they are not only more appealing to prospective tenants, but also in many instances increase their value and your rental income.
10 Tips to Increase Your Rental Income and Property Value with Low Cost
1. Clean
Making sure your property is clean will have an immediate return on the value of your property. This includes both the outside and the inside. Garbage, dirt and strange odors are not attractive features. Tenants want a unit that feels new. They know they are not the first to occupy a space, but they want to feel like they are. Before showing your rental property to prospective tenants, have it professionally scrubbed so it shines!
2. Paint
You will be amazed by the difference a fresh coat of paint can make. It can revive and brighten a tired space. Paint the walls, ceiling, etc. if they are looking shabby. Put up new wallpaper if it is peeling or torn.
3. Do all the repairs
If it’s seen to be broken, it is devalued, and raises questions about the quality of the property and the quality of the landlord. Tenants are your customers, consider their needs.
4. Change fixtures
Replacing anything that is touched, e.g. door handles, light-switches cover and cupboard handles is an easy way to breathe new life into a space. Test them for how they feel as well as how they look before you buy.
5. Change the light fittings
Shedding some light on the property can improve things, and attractive fittings even more so.
The shape and shininess of appliances can make or break a tenant paying top dollar for your property. If the appliances in your rental property are not brand new, you need to make them look as close to brand new as you possibly can.
7. Install a burglary alarm or other security devices
Occupants want to feel safe, and know their things are too. Good locks and grille on doors and windows are highly recommended.
8. Open up rooms to make them bigger
A pokey kitchen could be opened up to the dining room by removing non-structural walls, and likewise, the living hall may benefit from removing the connecting hall wall to open it up. Seek opinion and help from your contractor or interior designer.
9. Stage the property
De-cluttering a space and giving each room a function can add value because tenants lack imagination. Proper placement of furniture, size of furniture and amount of furniture is also the key.
10. Make appropriate changes
Make only changes appropriate for the market you are aiming for. A mansion in a slum will not rent for as much as it costs you, and will not attract the kind of tenants you want, so don’t over-do it.
Moderate/High Cost Ways to Increase Rental Income and Property Value
Fortune favours the brave. Dare to offer a point of difference in your rental property and you stand a higher change to watch more money roll in. These are changes you can make to a property that can have an average to high cost depending on the extent of renovation done and materials chosen.
1. Change flooring
Updating carpet or adding parquet flooring or tile adds value to a property. Floor coverings make a huge proportion of the visual effect. Consider replacing worn out carpet and refinishing parquet flooring or tile if a good clean does not do the job.
2. Reduce noise
People want to feel like their home is an oasis. There are many ways to reduce noise such as adding insulation, installing double pane windows and doors, installing carpets and rugs to minimize footsteps and placing plants to further absorb noise.
3. Update kitchen
The kitchen is critical in making your unit stand out to tenants, even if they seldom use the kitchen. The changes do not have to be drastic or cost a lot of money. Small changes like re-facing cabinets or investing in new and stainless steel appliances can make a huge difference. You could also consider changing the floor or changing countertops. If a larger undertaking is needed, brand new cabinets, granite counter tops, kitchen islands, new lighting fixtures and high quality flooring will transform your unit.
4. Update bathroom
Don’t risk the dreaded “and then we walked into the bathroom” words from prospective tenants. It’s often the last place a potential tenant will walk into. Be sure you leave prospects with a good thought in their heads, that this is where they want to call home. This also does not have to be a huge investment; a new faucet or sink, a refinished bathtub, elegant fixtures, better lighting, or new flooring will instantly give the unit a cleaner and newer feel.
For example, it could be taking down a wall between a kitchen and living room. It could be rearranging a kitchen to create more usable space. It could be adding a bathroom to the master bedroom to create a suite. It could also be swapping the location of two rooms, such as a living room and a dining room to create a better flow from the entrance. It could also be taking space away from one room to add it to another room, for example, taking some space from an oversized living room to create a pantry for the kitchen.
6. Create additional bathroom
Most people can appreciate the trials and tribulations of sharing one bathroom. If your property has additional space, why not create a second bathroom or ensuite? The best part about adding a bathroom is that you will not only receive a much better rental return, but the property value will increase substantially. The downside is that creating a bathroom is one of the most difficult and costly property alterations as all of the plumbing must be changed, unless you already have provisional plumbing which can be utilised to save costs.
7. Add an extra bedroom
That formal dining room or dead space could be earning you serious money. Transform it into an extra bedroom and increase both your rental yield and property value. One of the best renovations to attract good rental returns is adding a bedroom, which eventually increase the property value as well.
8. Add storage
Additional storage space – whether inside or outside the house– is another forgotten feature that can add significant value to your property. Built-in wardrobes or extra storage space can be a major bonus for your tenant. For tenants, storage space is always important, so it’s worthwhile considering putting built-in wardrobes into the property if it doesn’t already have some, or other alternative storage such as a cupboard under the stairs or a shed in the backyard.
Do Not Over-Improve Your Property
While you want to improve your property and increase the value, you also want to be cautious so that you do not over-improve your property, as improvements cut into your ROI. You don’t want to spend an amount of money on a renovation where you will not see a return on your investment. For example, putting high-end appliances in a home in a middle class neighborhood would be an over-improvement.
Before you renovate, do some research on your area to find out how much the property will be worth after the renovations. Once you properly gauge this new value, you can deduct the price you paid for the home and what you are left with is the maximum budget you should spend for the renovation and any other costs such as financing charges, closing costs, and holding costs if the property will sit vacant while the renovations occur.
Keep in mind that tenants are looking for a new place to call home. What are things you want out of your home? Probably that it is clean, new, and something you are proud of. So when making renovation decisions, see the unit as if it were your own home. Imagine you will need to cook, eat, shower, and sleep there. When it meets your living standards, it will meet your ideal tenant’s standards.
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