How to Renovate for Higher Rent
Are you deciding whether or not to renovate your rental property? Determining whether you should remodel your rental property and how much to renovate is no easy task. Every landlord wants to get the maximum income from their rental property. Although regular maintenance and updates are required to protect your investment, they won’t necessarily earn you top dollar, especially when competition is tight in your market. Florida is one such market that is seeing a boom for single-family and multi-family units.
As a rental investor, you generally have three goals when it comes to rental properties. These goals are: increase your resale value, reduce operating costs, and maximize rent.
With the right upgrades to your rental property, you can secure a higher quality tenant, increase your lease renewals and obtain a higher rent. Quality tenants are more likely to pay rent on time, take ownership pride in the property, and simplify your life as a landlord.
It is vital that you research the types of updates that will yield higher rents for your particular property. Today’s renters want fresh and new designs that maximize space, add functionality, and are energy efficient. Here are some property upgrades that you can do to maximize your property’s appeal and value.
Flooring
Wood, tile, and stone flooring can be a tremendous long-term investment. When you look at the total life span of your floors, wood, tile, or stone are the wiser choice. Wood, tile, and stone are easier to clean and maintain for both renter and landlord.
Carpet can become easily ruined, and you may end up replacing, cleaning more than you would like, negatively impacting your annual rate of return. Renters can easily add an area rug if they want a warmer look and feel. Keep in mind that some states require landlords to switch out carpets after a certain number of years. Wood, tile, and stone flooring are also excellent choices to prevent allergy and asthma issues.
Choosing to update your floors can be a significant investment but can update your rental property aesthetically for your potential renter. Be sure to consider how much foot traffic, sunlight and wear and tear the floor will endure. There are several floor types that you can choose from:
Appliances
Appliances are one of the first items that prospective tenants will look for when looking at a potential rental property. Your appliances must be maintained and working correctly, but you want to ensure that they are of good, high quality. Some tenants are also looking for appliances to be eco-friendly and add to the design element of the rental home or apartment. Adding higher-end models can attract more lucrative tenants that can allow you to charge higher rent. The higher-end appliances tend to be quieter, more efficient, stylish, and require less maintenance. Not only is purchasing new appliances a great way to entice tenants, but they can also serve as a tax deduction.
Some of the appliances that prospective tenants are looking for when looking at rental properties:
- Dishwasher
- Refrigerator
- Gas Stove
- Microwave
- Garbage Disposal
- Washer and dryer
- Low-flow toilets
- Smart home items like temperature control, doorbell camera or lighting.
Kitchen and Bath
We recommend overhauling your rental property’s kitchen and bathroom areas if it is older than five years. Kitchen and bathroom upgrades offer a tremendous upside and added value to your property. Some popular upgrades include:
- Upgraded countertops (quartz, granite, cement)
- Tiled backsplash or accent wall
- Modern hardware & fixtures
- Soft, recessed-lighting
- Modern cabinet styles
- Paint older cabinet styles
- Stand up shower with dual shower heads
- Footed Tub
- Low-flow toilets
- Garbage disposal
- Added bathroom storage
If your budget does not allow for a complete remodel of the kitchen and bathroom areas, changing hardware fixtures, switching up the countertop or backsplash, or re-grouting the counter, tub, and shower areas can make a significant impact as well.
Other Design Changes
A fresh coat of paint can update any area in your rental property. A light natural color can give the impression of a larger space when combined with the proper lighting.
You also want to consider removing walls or half walls to create a more open space. We tend to be spending more time in our homes, and it is nice when you are cooking in the kitchen and able to see your loved one working at the dining table or sitting watching television.
Updating windows to something more modern and efficient can also lend to charging a higher rent. More modern and efficient windows can decrease the utilities for landlords and renters. Add new window coverings such as wood or metal instead of plastic. Faux wood or metal make your property look more upscale.
Another tip is to change out the outlet covers and switch them so they’re new and fresh looking.
Curb appeal is critical; it is the first impression your potential renters will have when considering your property. Most renters prefer hassle-free landscaping. Update the landscaping to something aesthetically pleasing yet low maintenance. Another added feature would be sprinklers.
Tax Advantages & Reducing Maintenance
Renos can be an excellent option for landlords experiencing continuous high maintenance and repair bills. These updates and renovation can also serve as a tax deduction.
Sec. 179 of the Internal Revenue Code allows taxpayers to “deduct the cost of certain property as an expense when the property is placed in service.”
Sec. 179 allows landlords to deduct the cost of personal property items they purchase for use inside rental units, including appliances, carpets, hardwood floors, drapes, and blinds. For example, if you spend $10,000 on new appliances for your rental asset, you can deduct the entire amount that year under Sec. 179.
In the end, you want to keep property renovations simple. Keep in mind the size of your rental, where it is located, and your competition. You also want to remember that this is a rental property, and you don’t need to renovate it like you would your own home. You must also consider your return on investment with any updates and renovations you are thinking about making.
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Riken Construction and Design, LLC. provides our clients with the highest level of quality construction and consulting services at fair and market-competitive rates. Our pledge is to establish lasting relationships with our customers by exceeding their expectations and gaining their trust through exceptional performance by every member of the construction team. To fulfill our goal, we treat all employees fairly and involve them in the quality improvement process to insure responsiveness and cost-effective work practices. Our clients count on our dependability, our drive, and our integrity. We take great pride in our accomplishments and build on them every day. To learn more about Riken Construction, call us at321.363.4904 or email info@rikenconstruction.com.
