If you’re a landlord, you generally want a return on your investment. Understanding how to increase the rental value of your property is one way you might succeed at it. While an increase in passive income is a fair goal, there are other reasons landlords may want to upgrade their property, such as tenant retention and increased property value.
If you’re worried that some of these improvements may cost more than you’re willing to spend, we’ve got good news: Even relatively minor changes to a property’s exterior could help you retain reliable tenants and keep up with the market, among other potential benefits. Let’s check out some of the reasons you might want to fix up the home, some common home upgrades and how to make them on a budget.
Why should you upgrade your rental property?
If you own a rental property, there are reasons to upgrade it beyond potentially increasing your rental income. Homeowners might want to consider some of these potential benefits of sprucing up their property:
- Tenant retention: Making your tenants happy can often go a long way in terms of tenant retention. Staying on top of maintenance and repairs, updating the home and fixing the rental up from time to time is a solid way to hold onto responsible, likable tenants.
- Increased property value: Upgrading your property doesn’t just increase your rental value, it may also increase its overall market value, leading to a potentially higher sale price and wider profit margins.
- Staying competitive: Well-maintained and upgraded rentals are likely to be more competitive in the market, i.e., they may attract a larger pool of potential tenants and hopefully fill vacancies faster. Additionally, an upgraded rental may be more likely to attract responsible tenants who are willing to pay more rent if a home looks good and has special (or at least up-to-date) features.
- Improved property maintenance: Some renovations and upgrades may make your life easier in the maintenance department by reducing effort and potentially saving on maintenance costs.
Common ways landlords upgrade their rentals
People sometimes complain about landlords dragging their feet over repairs, renovations or bringing their rental’s features up to date. The truth is a happy tenant is more likely to be a long-term renter, and long-term renters are good for landlords. Here are some common ways landlords spruce up their rental properties:
- Paint: Slapping on a fresh coat of paint is a relatively easy home upgrade, both inside and outside. Light, neutral colors may make the home feel brighter and more spacious while also covering up any minor wear that occurred over time.
- Upgrade flooring: Installing new floors (say, removing carpet or linoleum in favor of wood, tile or polished concrete) has the potential to take a place from drab to fab and can make the home feel more current.
- Upgrade lighting: Switching out old lighting for energy-efficient options such as LED bulbs or lights with dimmers is a relatively simple way to improve your property’s condition.
- Update appliances: A shiny new fridge (maybe with a cool ice maker?), an in-unit washer and dryer or even something smaller like a dishwasher is another way to boost your rental value and potentially make tenants happier.
- Update countertops and cabinets: If the rental’s countertops and cabinets are looking dated, old or generally showing the wear and tear of heavy use, it may be worth it to start shopping for replacements. These are pillars of the kitchen, and the sleeker they look the better the room (and the rental as a whole) may feel.
- Make the home “smart”: If you’re connected to the Internet, maybe your home should be, too. Smart home features such as lighting, security systems and keyless entry are all features many renters might find appealing.
- Spruce up that outdoor space: A little landscaping goes a long way, whether maintaining a lawn or planting decorative plants like flowers or bushes. Keeping any gardens, rooftops, or backyards clean, well-lit and attractive may inspire tenants to use them more frequently, which could improve their quality of life and the way they feel about their homes.
- Add space for socializing: People like having spaces outside their apartment to socialize, so investing in garden furniture, a courtyard, a roof patio or even a theater (if your rental property is large enough) could help cater to those desires.
- Up the curb appeal: Coming home is ideally a positive experience, so updating and lighting entryways, mailboxes and gussying up sidewalks with some planters or solar lights are a few ways to make tenants feel good about returning to what should feel like a sanctuary.
Potentially easy home upgrades on a budget
As much as you might want to completely revamp your rental properties, the truth is that home upgrades can sometimes be on the expensive side. If you’re looking to improve your tenants’ experience and increase rental value without spending a king’s ransom, here are some options for renter-friendly upgrades upgrades on a budget:
- Wash exteriors instead of painting: While painting a small space like a studio apartment probably won’t break the bank, painting the exterior of a larger building is a bit more of a financial undertaking. Power washing the exterior (depending on its material) is one way to make it look rejuvenated without dropping quite as many dollars.
- Freshen up fixtures: If you’re not ready to do a total kitchen overhaul, consider painting the cabinets, replacing fixtures or installing a new backsplash. These lower-budget upgrades make a space look fresh without as much of an investment.
- Invest in “easy” plants: An attractive outdoor space doesn’t have to cost you. Investing in hardy, low-maintenance and low-price plants reduces the need for regular landscaping while still improving the look of your property.
- Let there be light: Installing new lighting may sound intimidating and expensive, but there are relatively inexpensive home kits that make energy-efficient, modern-looking lighting more accessible.
- Upgrade floors in common areas: Floors in need of an upgrade? Try replacing them in high-traffic areas like hallways and living rooms instead of doing a complete renovation. This will be easier on the tenants during the installation and makes the space look fresh for a fraction of the price.
- Help tenants manage their stuff: Storage space is sometimes a hot commodity, especially in big cities where small apartments are common. This can lead to clutter. Installing shelving and closet organizers may help attract tenants or improve your tenant’s current experience.
Considerations for owners looking to increase rental value on a budget
As you can see, there are many ways for owners to spruce up their property without going broke. That said there are some considerations to keep in mind before you take the leap:
- Make sure it’s a worthwhile investment: If you’re looking to make home upgrades on a budget, try to stick to it, and calculate the return on investment (ROI) for the project ahead of time to ensure it will be cost-effective. Increasing rental value ideally comes with a profit and not a loss, please seek a professional for real estate advice.
- Do your research: Savvy property owners may be tempted to hire the least expensive laborers, but sometimes it’s worth it to drop some extra dough for someone you can trust to do the job well. Do your research and ask the locals to find a good contractor. You don’t want to have to hire a second worker if the first one does a bad job.
- Check local laws: Before making any updates to your rental property, it helps to make sure they comply with local laws and regulations.
If you’ve ever wondered how to increase rental value, we’ve got good news: It doesn’t have to be a huge undertaking. Upgrading a property is something that helps both the owner by increasing the rental value, as well as their tenants, by making their dwelling more comfortable or efficient. Many of these upgrades can be done on a budget, which means you could have a happier tenant and more income potential for a relatively small investment. If you’re considering working on your property to increase its rental value, it’s best to do your due diligence, work with someone you trust and ensure ahead of time that the return on investment works in your favor.