Remodeling Your Rental Property to Boost Income
Many people buy residential property that they have no intention of ever living in. Maintaining rental property is a popular strategy for ongoing long-term income. This is a type of strategy that is common among people of widely diverse economic levels. Many people with relatively modest incomes will try to get a good deal on a property that has attractive rental potential, and then use the income from that property to help pay towards the mortgage or expenses of their own home.
Rental property can also represent an investment because it provides continuing ongoing returns. As with any other type of investment, however, it requires careful decisions and a smart strategy.
First of course you want to select the right property to use as a rental situation. Focus on locations where there is high demand for rental units, and where tenants are willing to pay decent rental amounts.
Then you want to evaluate the property itself based on its potential to attract good tenants, and to fetch a nice monthly rent. The specific features and qualities that tenants seek in a rental property can vary greatly by area, so you will want to do your research. You also want to consider the type of residents and renters who tend to gravitate toward that area. Single professionals will want much different things in a rental than a large family with kids would.
If you have or are planning to buy a rental property, think about whether it can bring you the best possible rent in its current condition. There may be relatively simple improvements or renovations you can make that will have a major impact on the rent you can ask for the place. For example, giving an old, outdated kitchen a makeover can make a big difference in the appeal of the place, and the interest you will get from tenants.
If your main group of potential tenants consists of families with kids, it might be worthwhile to reconfigure the space to add another bedroom. On the other hand, busy professionals might be more attracted to a place that offers a home office. In some cases, you may even be able to accomplish your goal for the property by building a home addition.
No matter what the specific contents or layout of a property may be, the overall condition is what tenants will notice most. It will be much more difficult to attract the best renters to a place that hasn’t been maintained, needs repair or is just plain outdated. Investing a little bit of money on an overall makeover can significantly improve your ability to attract high-quality tenants, and to get a better monthly rent amount.
As with any other type of property renovation, you will want to give this project a lot of thought and have a detailed plan before you start doing any work. In the case of a rental property, you will want to run the numbers and compare the amount you may invest into a renovation against the potential increase in rent, to determine how long it will take for you to see a payoff for your investment.
Again, you also want to plan your improvements or upgrades in consideration of what tenants will want most. This isn’t about your own personal preferences or tastes—the goal is to appeal to tenants who will be looking to rent in that area. Browsing the rental listings for your area will help you get an idea of what your competition (other landlords) is offering, and what seem to be popular features among renters.
RW Remodeling is a Phoenix home remodeling company that has renovated many rental properties in the area, and our staff can advise you as to which improvements can help you get the most bang for your buck.