In the United States, individuals own approximately 41% of rental properties and manage the day-to-day operations. Therefore, it’s natural for property owners to make the mistake of renovating as if it’s their full-time home. While improvements can boost a property’s rental potential, landlords need to consider what truly needs updating. Ultimately, they should choose to begin this process during a time that suits their needs and goals.
Here are seven factors to consider before beginning renovations on your rental property.
Examine Your Situation
Ask yourself why you want to renovate the property. If it’s a brand-new purchase, some owners may wish to update the space before listing it. Others may be looking to add value or become more competitive in the market. Additionally, it may be time to renovate if you’re regularly making repairs or your tenants are complaining about lackluster features in the space.
Regardless of your reasoning, it makes sense to examine your situation financially and methodically before making decisions. Consider these seven questions before you begin.
1. Are You Between Tenants?
You can complete small renovations and upgrades if you’re willing to work with your current tenant’s schedule. Otherwise, you should try to complete all refurbishments between tenants living at the residence. This way, you can avoid noise complaints and unnecessary scheduling hassles. Plus, it means you can increase the monthly rent before beginning a new lease agreement.
Before making plans to list your property, make an estimated timeline of how long you expect the repairs to take. You’ll need to factor in shipping times as well as install periods. Depending on the product, you may need additional time for the materials to acclimate to the home’s temperature and humidity.
2. Where Do You Stand Financially?
Repairs cost money — even if you plan on doing most of the work yourself. Therefore, the best time to begin renovations is when you have the necessary funds. You should set a budget before buying any materials or meeting with a contractor. Once you’ve decided this, you’ll be able to determine what you can afford to update. From there, you can work to find affordable materials and complete all of the tasks while staying on schedule.
Remember that with rental properties, time is money. The sooner the property is rented out, the faster you’ll get another check.
3. What Time of Year Is It?
Peak rental periods vary based on your location. In general, summer is a popular month for people to move and begin renting properties. As a result, you can typically list your apartment for a higher price because the market is more competitive.
However, if you live in a college town, your tenants may be students. In this case, your rental periods would probably follow the school schedule.
Either way, you should aim to have the repairs completed before peak season begins. Ideally, complete the repairs directly before peak season so you don’t have a rental lull between when the repairs finish and new tenants move in.
4. Does the Property Regularly Need Repairs?
If your tenants are continually contacting you because the property needs repairs, it may be time for an update. In the long run, upgrading appliances can save you more time and money than constantly repairing outdated ones.
You might want to complete some of these renovations while the tenant is still at the property. Waiting to fix a leaky pipe would lead to larger problems if it’s not handled quickly. It’s always best to consider the potential long-term impact and importance of the repair before deciding what to do.
5. Is Your General Contractor Available?
Mid adult carpenter marking wood while building deck
Unless the project is small or you’re very handy, you’re limited to starting renovations when your general contractor is available. Otherwise, you will need to find a different contractor or specialist who can complete the repairs.
Since some seasons are busier than others, it’s wise to reach out as soon as you know the work you’d like completed. That way, they’ll be able to pencil you into their schedule.
6. Does It Attract Tenants?
If your rental property isn’t attracting much attention, you should look for ways to make it more appealing. Prioritize essential updates so you can get your property rented out as quickly as possible. The longer it sits vacant, the more money you lose.
If you are unsure where to begin, contact the previous renters and ask what they liked and disliked about the space. From there, you’ll have a better idea of what to update.
7. Are You Planning to Sell the Property?
If you’ve decided it’s time to sell, the best thing you can do is plan some cost-effective renovations to increase your property value. You should focus on creating value at the lowest cost and stick to a neutral, timeless design.
Homebuyers want a property they can imagine themselves in, so be sure to choose a design that appeals to the masses. Additionally, remember to highlight that the residence has rental potential for those in search of investment.
Best Areas to Prioritize During Renovations
What renovations you decide to pursue will vary based on your timeline and budget. You may feel compelled to complete more extensive updates to fit your target audience’s preferences before listing it as a rental. If you’re simply between tenants, you may try smaller updates such as changing out appliances or updating the curb appeal.
Keep reading to discover which renovations are worth your time.
Remember to take a look at the neighborhood before beginning renovations. It’s possible to overspend and make your property look too fancy, which can cost you in the long run.
Easy kitchen updates include:
- Painting the cabinets.
- Installing new countertops.
- Upgrading the appliances.
- Updating the flooring.
Bathrooms quickly become expensive if they’re not managed wisely. Consider which elements will add the greatest value to your rental. For instance, adding a half-bath will allow you to charge a higher rental fee than if you simply changed out the vanity in the existing bathroom.
When choosing to complete a major renovation, consider ways to simplify the process. For example, placing the new bathroom directly above or below the existing one will reduce plumbing costs.
Adding an additional bedroom can also add rental value to your property. If possible, update the existing spaces rather than building a new addition. In some situations, you may be able to finish an existing attic or basement space to better use the available square footage.
When choosing to update appliances, you should look for those which are cost-effective and easy to repair. If you select a designer product, it might cost more time and money to find replacement parts when it eventually breaks down. You may even be able to find lightly used preowned appliances for sale online for a fraction of the original price.
5. Curb Appeal
Curb appeal is crucial because it’s the first impression potential renters get of the property. It’s also something that landlords can easily update with a little time and money. Best of all, you can complete landscaping regardless of whether the property is empty or rented.
Ultimately, it’s a simple way to spice up your accommodations and draw in a wider potential range of renters.
Trust Your Instincts
As a rental property owner, you need to rely on your instincts. If you feel something truly needs an update, do not put it off. In the long run, it pays to make these repairs and reap the benefits.
After renovating the property, you’ll be able to list it at a higher price and make more money each month. When in doubt, review these seven questions and five popular renovation spaces to determine your next step.