Rental property management is appealing in part because it’s a relatively passive strategy. Once you have a decent portfolio of properties active and occupied, you can collect passive income in the form of rent and pocket whatever exceeds your expenses.
However, increasing the profitability of your rental property management strategy does require some active involvement. In addition to taking care of routine issues like filling vacancies and handling repair requests, it’s a good idea to proactively improve your rental properties to make them more attractive and potentially more profitable.
What are the best ways to improve a rental property, and how should you approach it?
Why Improve a Rental Property?
There are many valid reasons to improve a rental property:
· Value increases. Improving a rental property in a substantial way typically increases the value of that property. You probably won’t recover the full costs of whatever the renovation or upgrade was, but you might come close. For example, if the rental property is relatively old, upgrading the windows could help you increase the value of that property by several thousand dollars.
· Tenant appeal. Many landlords are primarily interested in improving properties for higher tenant appeal. When shopping for a rental property, tenants need to consider location and price, but they’re also going to consider the amenities and aesthetics of each available property. Even simple upgrades, like installing a new appliance or replacing the kitchen cabinets, can make a big difference in how your unit is perceived. This can help you fill vacancies faster and keep your tenants happier at the same time.
· Rental income increases. In line with this, many upgrades allow you to justify charging higher rent for your rental properties. A property with newer installations and greater conveniences is going to be worth more than a similar property without them.
· Issue prevention. If you have an older property, certain upgrades and improvements can help you prevent issues. For example, if the air conditioner is 20 years old and seems to be on its last legs, replacing that air conditioner could simultaneously increase the appeal of the property and prevent the need for a sudden repair in the middle of summer.
The Best Rental Property Improvements
Before we start exploring the best rental property improvements available, we need to issue a caveat: every property is different and every property manager is different. What works well for one property in one location may not necessarily work well for a similar property in a different area. Additionally, your goals may make some property improvements more appealing than others. Keep this in mind as you explore this list and come up with your own ideas for improving your rental properties.
That said, these are some of the best general upgrades you can make:
· Appliances. Consider upgrading your appliances, especially if they’re old or no longer in perfect condition. Walking into a kitchen with a new refrigerator and stove makes an excellent first impression, and most tenants will appreciate having appliances that work very reliably. On top of that, newer appliances are often more energy efficient, and as we’re about to see, almost any energy efficiency upgrade can be extremely valuable.
· Energy efficiency. Energy efficiency is becoming increasingly important for tenants – and the population at large. In addition to being more environmentally sustainable, higher energy efficiency lowers utility bills and allows tenants to save money. Consider upgrading the insulation of the property, installing new windows, and making other changes to improve the overall energy efficiency of the unit.
· Curb appeal. Curb appeal may seem like a superficial consideration, but it’s one of the most important improvements you can make if you’re interested in making a better first impression with your tenants and prospects. Even simple improvements, like replacing the front door or adding a fresh coat of paint to your vinyl siding, can help convince tenants that this property is the right one for them.
· Parking space. In many neighborhoods, parking is a rare luxury. Driveways and assigned parking spaces can instantly boost the appeal of your property.
· Storage space. Similarly, if there isn’t much storage space available in your property, consider adding more. Vertical storage solutions and external storage units can be extremely profitable.
· Lighting. There are many viable ways to improve the lighting of your rental property. You can install LEDs for energy efficiency, add more secondary lighting, and make changes to allow more natural light into the main living spaces.
· Security. You can also appeal to tenants by improving security. Smart security systems, smart locks, and physical barriers can all help you in this regard.
Improving rental properties can be expensive and time consuming, but it’s often well worth the investment. Not only will you increase the value of the property and justify increasing rent, but you’ll also retain tenants and prevent issues in the process.