Upgrade your income by updating your investment property
If you’re one of the many Americans who has invested in rental properties, you may have already discovered how you can profit through real estate. Millions of people have found that owning property has given them greater control over their investments and wealth, according to LandlordStation. Many landlords have learned how to optimize their properties for higher rents — and you can too.
When most people buy their primary home, they have a few renovations in mind to improve its livability and resale value. This is important with primary homes, but it’s also important with rental properties. If the home you’re renting out has a few blemishes or unattractive features, your rental income will reflect this. However, you can increase your profits by improving the rental unit.
Renovating for a higher income
Paula Pant, a landlord who rents out several homes in Atlanta, wrote for Afford Anything that she and her husband recently experienced the first month of negative income in their landlord experience —but she wasn’t upset about it. That’s because they had invested money into one of their units to improve its appearance and livability. As a result, they can now increase the rent on the unit by $395 per month, bringing them $4,740 every year, money they weren’t receiving before.
Pant and her husband spent $13,648 on renovations, which included:
• Upgrades to the kitchen
• Swapping carpeting and linoleum for hardwood floors
• Knocking down a wall to create an open floor plan
These kinds of upgrades can certainly increase your profits, though a major renovation isn’t the only way to do so. Landlordology explained that a few low-cost upgrades can also increase the value of your unit. For example, having a carpet professionally cleaned can make it look new again. This will cost less than replacing the flooring, but still provide tenants with an upgrade.
The two rooms with the greatest potential to wow the next tenants are the kitchen and the bathroom. If you want to do extensive remodeling, these are the two best rooms to start with.
Another positive upgrade tenants value is in-unit laundry. Multifamily Executive noted that investing in a stackable washer/dryer will attract tenants and give them a reason to shell out a little bit more in rent each month without sacrificing much space.
Remember, tenants don’t view your home like you do. They probably won’t get sentimental about the little details and may not care if some part of the house gets damaged. Therefore, it’s important to keep your spending in check. Over-renovating can result in unnecessary spending.
Multifamily Executive explained that the right renovations have the potential to increase rent prices by 10 to 30 percent. However, there are other factors at play when determining rent: The neighborhood the unit is in, the tenant profile of the area, and age of the building all play a part.
If you’re a landlord or thinking about investing in real estate to rent out, it’s important to think long term. As Pant noted, upgrading an apartment that is merely acceptable into one that is optimal has the potential to improve your earnings significantly. If you have invested in property, don’t stop there. Continuing to improve that property has the potential to boost your profits further down the road — something every investor loves to hear.