Best Rental Upgrades to Increase Rents
Real Estate Investor · Sacramento, CA · Member since 2011 · 12 posts · 1 vote
What are some of the best upgrades to make on a rental property in order to increase rent? Our unit is in the worst shape of all 4 and therefore is rented for the least in the complex. This is our first rental and it is hard to not get excited about making it nice. I need some advice about what makes sense when upgrading. Thanks in advance!
I think you're seeing some of the patterns here and I will pile on as well.
Here is what I would do to get the most bang for your buck.
Paint is first. Hit the trim too. Do a nice neutral tan or gray with white trim and the thing will pop. New electrical devices and plate covers (switches, outlets, etc). New $5 white blinds.
Light fixtures.
Then I'm a big believer in two things:
1) Fix the worst features in the house to turn the biggest negative into a positive.
2) Over-upgrade at least one or two items - no matter how minor - so something in the house POPS! It can be a couple really nice ceiling fans. A granite top in one of the vanities. A really nice tiled in bath/shower. Maybe some crown moulding in the master bedroom and entry room (livingrm or family rm depending on the house). A backsplash in the kitchen.
Not saying do all of that. But depending on the house, do one or two of those. When I'm showing houses and I can have those 2 items in the house to really sell it, my close rate is 10 times better than when the house has nothing special in it. It may be very nice but having one or two features above their expectations can really bring the rest of the house up significantly.
I personally like having one feature in the entry room and one in the kitchen if I can. Those are really the two rooms that people notice. First impression when they walk in. And the kitchen.
And I know that people say that bathrooms and kitchens sell homes and that applies to rentals too. But I haven't gotten anywhere near the positive feedback on the bathroom stuff I've done compared to the kitchen stuff. So I would always say kitchen first.
Maybe some updated countertops. If you get the in-stock laminate and your contractor knows how to make the cuts, its not very expensive at all. But it can really bring your kitchen up quite a bit if you have some dated countertops in there today.
btw: I agree with some of the posts on that one rental. Wow. Looks like a model home there. Well done. And I bet you have an incredibly high occupancy rate on your homes too.
That is the one lesson I think we all learn quickly. Don't be cheap with rentals. You're not saving yourself money. Cheap/poorly rehabbed rentals are going to have high turnover. And turnover is the root of all evil when it comes to buy/hold investing.
Make it right. Don't make it new (or you'll go broke) :-). But make it right. And if you can make it look like @Hilary Tuttle did there - do it. You'll get your money back and then some in the long run.....
Thanks for the post. I got a lot out this and added a few ideas to my list.
For those of you who add washer dryers do you pay water or do they? do you figure that water in.
For us in historic apartments we got 50-75 more once the floors were refinished and the place painted but I am not sure that is the amenity or improved condition. One apartment was stripped of wallpaper and plastered for the increase cost plus we did the kitchen. The best bang for the buck has been refinishing floors. Redoing kitchens takes a while for payback.
I think you're seeing some of the patterns here and I will pile on as well.
Here is what I would do to get the most bang for your buck.
Paint is first. Hit the trim too. Do a nice neutral tan or gray with white trim and the thing will pop. New electrical devices and plate covers (switches, outlets, etc). New $5 white blinds.
Light fixtures.
Then I'm a big believer in two things:
1) Fix the worst features in the house to turn the biggest negative into a positive.
2) Over-upgrade at least one or two items - no matter how minor - so something in the house POPS! It can be a couple really nice ceiling fans. A granite top in one of the vanities. A really nice tiled in bath/shower. Maybe some crown moulding in the master bedroom and entry room (livingrm or family rm depending on the house). A backsplash in the kitchen.
Not saying do all of that. But depending on the house, do one or two of those. When I'm showing houses and I can have those 2 items in the house to really sell it, my close rate is 10 times better than when the house has nothing special in it. It may be very nice but having one or two features above their expectations can really bring the rest of the house up significantly.
I personally like having one feature in the entry room and one in the kitchen if I can. Those are really the two rooms that people notice. First impression when they walk in. And the kitchen.
And I know that people say that bathrooms and kitchens sell homes and that applies to rentals too. But I haven't gotten anywhere near the positive feedback on the bathroom stuff I've done compared to the kitchen stuff. So I would always say kitchen first.
Maybe some updated countertops. If you get the in-stock laminate and your contractor knows how to make the cuts, its not very expensive at all. But it can really bring your kitchen up quite a bit if you have some dated countertops in there today.
btw: I agree with some of the posts on that one rental. Wow. Looks like a model home there. Well done. And I bet you have an incredibly high occupancy rate on your homes too.
That is the one lesson I think we all learn quickly. Don't be cheap with rentals. You're not saving yourself money. Cheap/poorly rehabbed rentals are going to have high turnover. And turnover is the root of all evil when it comes to buy/hold investing.
Make it right. Don't make it new (or you'll go broke) :-). But make it right. And if you can make it look like @Hilary Tuttle did there - do it. You'll get your money back and then some in the long run.....
@Alicia Katnik-Canney agree with @jon
@Jon Holdman that it really depends on the market and what the property is capable of bringing in based on competition. That said, I like renovating from the outside in vs. inside out. Meaning I'd focus on the outside signage and landscaping first. After that I'd look at the light fixtures, etc. that @Jeffrey K. mentioned. Perhaps putting more focus on water-saving devices vs. upgrades.
Here are the improvements I've made over the last three years as compared to the increased rent, with one caveat. Rental prices in my area have jumped up in the time I have owned my duplex, so all of my increases have some of that included:
--Originally rented out my 2/1 side 3 1/2 years ago for $850/mo.
--Tenants moved out after 13 months because they bought a house, rented it out to new tenants two weeks later at $950/mo. Didn't really do any improvements between the two, but rents in my area went up.
--While those tenants lived there, I replaced the siding, exterior insulation, and windows for that side. Although huge improvements, I don't think any of those items command a rent increase. It was more badly needed and overdue maintenance. But certainly perks I mention to set me apart going forward now.
I realize to most of you exterior insulation as a "perk" sounds crazy, but NOLA is filled with 100-150 year old houses (mine is over 100 years old) and most of them do not have this...or the double paned windows I put in.
I also added a large storage shed in the backyard for my tenant's use. That was $500 plus a chunk of my husband's time.
--Added a fire pit in the backyard. That was for me. I live on the other side of the duplex, but my tenants and I share the backyard.
--After those tenants moved out, coincidentally also at 13 months and they also bought a house, I took 7 weeks to:
--put in new kitchen cabinets and countertops $3,000. The old cabinets were in terrible shape and the old laminate countertop had a huge cut in it I'm assuming from when it was installed. Up to this point, I had been "discounting" my rent (in my own mind) based on comparables because of the kitchen condition. Countertop is porcelain tile. Also added a backsplash that shines and looks like copper, but is actually plastic. Cool stuff.
--Added a dishwasher for $350, while I was totally replacing the cabinets anyway. I know a lot of BPers say not to put in dishwashers...and that certainly makes sense for lower end and even mid places. For my market, B property middish end, dishwashers are not necessary, but set my rental apart for a fairly low cost.
--New medicene cabinet $100. A super cute big one to replace a smaller than normal old one that no longer closed.
--Repainted and put in new shower surround with new faucets.
--Put in two ceiling fans $120 total. Very popular and typical to see here in the South. I don't think it adds to the rent, but makes the place more attractive.
I now rent the other side for $1200/month.
So, bottom line, after:
--kitchen reno $3000 (outside labor/materials)
--Ceiling fans $120 (materials)
--New interior paint $400 (materials)
--Storage shed $500 (materials)
--Dishwasher $350 (materials)
--Medicene cabinet $100 (materials)
I now rent my unit out for $350/month more than I did 3 years ago. Again, some of that is also due to increased rental rates in my area. I'd guess that portion would be $150-$200/month...about half and half.
I'll also be the first to admit some of the improvements are small costs that don't necessarily equal more rent...but make the unit more attractive to renters and sets it apart.