Renovating a rental property can increase a home’s rental value and provide owners with more cash flow and larger returns in the long term. However, constantly pouring money into your rental property can get expensive and if you’re not careful, it will actually hurt your cash flow.
Look for opportune times to make renovations to your rental property. Today, we’re looking at some ideal situations in which a renovation may make sense, and we’re considering which renovations are the most cost-effective for real estate investors.
Renovate Before You Rent the Home
If you’ve just acquired a home or you’re moving out of a property that you once lived in so you can rent it out, a few renovations will probably be required to get it ready for the rental market.
Check the condition of the floors and the walls. Fresh paint gives the entire home a feeling of newness, and prospective tenants will notice. Don’t bother with touch-ups or cosmetic work; paint the entire wall. The floors should be free of any imperfections. If you have carpets that are stained or worn in areas, replace them. Put in hard surface flooring to make the home look cleaner, more modern, and easier to maintain.
Update anything in the home that looks old or tired. Your kitchen appliances should not be 20 years old, and you don’t want your plastic window blinds falling down. Renovating your property before you list it will attract better tenants and reduce your vacancy time.
Renovate Between Tenants
Another good time to invest in renovations is during periods of turnover. All landlords want their good tenants to renew their lease agreements year after year. But, if your current tenant is moving out, it’s a good time to take a look at the property and make some changes that will increase your ROI and maybe allow you to charge more in rent.
Make sure you work quickly. Have your maintenance team in place before your tenant moves out so it doesn’t take you too long to renovate and prepare the property. The longer it takes to do the work, the less money you’re earning on the property. The goal is always to keep turnover days to a minimum. Whether you’re installing a new water heater, upgrading the appliances, or putting in landscaping, make sure you follow your budget and your timeline closely so you can get the home rented again.
Renovate When You’re Ready to Move On
If you’ve been renting your property for 20 years and you’re ready to sell it and do something else, you’ll want to make some renovations to prepare it for the sales market. This might include completely re-doing the kitchen, adding more light, increasing storage space, or painting the whole house. Wait until your tenants have moved out, and then make all the changes your real estate agent recommends to sell the home quickly and for the price you want.
Renovations are an important way to make your rental property competitive and attractive to good residents. It’s important to balance the cost against the outcome.
We would be happy to advise you on how to make the most of your proposed renovations. Please contact us at McCaw Property Management.