To Upgrade or Not to Upgrade? How Nice Should Your Rentals Be?


How nice should you make your rental properties?

Imagine that it’s time to renovate or improve your properties, and you need to make some choices. Do you buy the cheapest Project Source bath vanity, or spend an extra $100 – $150 on something nicer? Do you buy the American Standard basic kitchen faucet, or spend an extra $50 giving your sink a little face-lift?

Obviously, your choice will depend on the neighborhood and type of home that you’re remodeling. You don’t want to over-improve your properties. There’s no reason to put granite countertops in a Section 8 rental.

But at the same time, I’m an advocate of generally making the home slightly nicer than you “need to.” What do I mean? I like the notion of renovating a unit so that it’s one (reasonable) step above-and-beyond comparable units in the same neighborhood.

Here’s why.

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Benefits of a Nicer Place

#1: Potentially Higher Rent / Lower Vacancy

Imagine that all the other houses on the street have white appliances and plastic tub surrounds. You offer black appliances and 4×6 ceramic tile around the tub. The added cost is negligible – perhaps an extra $1,000 in cost differential. But it allows you to charge an extra $25 per month.

Within three-and-a-half years (at roughly 92 percent occupancy) you’d recapture that upgrade, and anything additional would be profit. If the lifespan of your appliances and your tile job is around 8 years, you’d capture five years of additional profit, more than doubling your initial investment.

Okay, that’s a decent reason but – in my opinion – not a very compelling one. You might be able to get a better cash-on-cash return in an alternate investment. Besides, setting the rent is more an art than a science. So let’s move on and look for other reasons, as well.

#2: Lower Vacancy

In the rental business, almost nothing is more expensive than vacancy. (Okay, having a terrible tenant is more expensive, but that’s another article for another day.)

Reducing vacancy rates is a bigger motivator, in my opinion, than raising the rent. If slight upgrades shave your average vacancy rate from 10 percent down to 8 percent, the upgrades are well worth it.

Of course, you won’t have a crystal ball that allows you to know how your upgrades correlate to your future vacancy rates. You might know the current vacancy rate of your home and of the comparable market, but you won’t know what the future holds. So I generally look at a “one month” rule of thumb – meaning I’ll spend one month’s rent making a unit a little bit nicer than the comparables.

If a $1,000 upgrade on a $1,000/month unit lowers your vacancy by just one single month, that averted vacancy will compensate for the added expense. Anything else is a bonus.

Vacant houses are also less likely to get broken into, robbed, and vandalized. So reducing vacancy also reduces the risk of losing your profit due to crime. Think of it as an alternate type of insurance premium.

#3: Better-Behaved Tenants

What if you can’t raise the rent, and vacancy rates are too intangible for you to wrap your head around? Then here’s my third argument: You might attract higher-quality tenants.

You’re probably familiar with something called the “Broken Windows Theory.” The theory states that if a window is broken in a home, people will continue to trash the home in the future. In other words, if a property looks marginal, people will treat it with disrespect. But if a property looks fantastic, people tend to be more careful with it. They treat it with a greater degree of respect.

The Broken Windows Theory is another reason why I prefer to give my units slight upgrades, the kind that make them a little bit nicer than the neighborhood competitors. I want my tenants to see their home as a nice place to live, and treat it accordingly. I’m trying to set an example, establish a norm.

Again, I’ll repeat the caveat that I’m not suggesting that you over-improve a property. Don’t put Bosch appliances in a war zone.

But a fresh coat of paint, a hearty power-washing, swapping out the carpet when it looks old and frayed – I encourage most landlords to do this, especially if your properties are in more stable neighborhoods with decent tenants. (If your properties are in a war zone, I’m not sure what to tell you.)

Photo: Jeremy Levine Design

About Author

Paula Pant

Paula Pant quit her 9-to-5 job, invested in 7 rental units, and traveled to 32 countries. Her blog, Afford Anything, shares how to shatter limits, build wealth and maximize life. (At, she shares EXACT numbers from all her rental investments -- costs, cash flow, cap rate; it's all published for the world to read.) Afford Anything is a gathering spot for a tribe dedicated to ditching the cubicle. Read her blog, and join the revolution.


  1. Totally agree. When I first got into the business, my goal was renovate it cheap as possible. 6 years later, I have learned that spending more on upgrades most certainly reduces vacancy and gets a higher rent. I know try to have the nicest rental house in the area; I never want to hear a tenant move out b/c they found a nicer house. Since I adopted this philosophy, our houses almost always rent quick and for at the top of market or above market rent.

  2. Paula, in my market just a few simple things make my rentals “better” than others:
    1. Being clean. There’s a lot of rentals that are offered that are just plain dirty. Amazing but true as I’ve heard this over and over.
    2. Smells better. This goes along with #1. When I show off a place, I plug in a scented air freshener. A good scent makes the place feel inviting.
    3. Paint colors other than “landlord white”. In so many rentals, the landlords use plain white because it’s the cheapest paint. I use a beige or a light brown color which still goes with everything, but it gives the place a more upscale feel.
    4. New outlets, switches, and wallplates. Most of the time the ones in rentals are grimy and dirty. All fresh new ones is cheap and makes the place feel “new”.
    5. Curtains versus dirty, broken mini-blinds. You wouldn’t believe that even the pictures advertised online for apartments and houses show broken mini-blinds! I go with curtain rods and curtains from Goodwill or another thrift store. It makes the place feel more upscale as well, and I save money over constantly replacing mini-blinds. (Plus its better for the environment when mini-blinds don’t go in the garbage.)

    A lot of what I do doesn’t cost a whole lot, but it beats the competition. I do tend to try to charge near the top of the price range.

    • New outlets and switches make a HUGE difference, and they’re so cheap!!

      I put neutral-colored curtains in a few units, but some tenants asked if they “had” to keep the curtains (I guess they got picky about the design, color, etc.), so I switched to the 2-inch blinds (the nice, sturdy blinds, not those cheap plastic 1-inch varieties.) They’re a little more expensive, but they look amazing and they last for a really long time — I haven’t had any breakage yet.

      I definitely agree about picking a paint that’s a beige tone (or, if your unit doesn’t get much natural light, try using a very subtle light yellow like Behr’s Ivory Invitation. I like that color so much, I even used it in my personal residence). This makes the walls look much, much nicer.

  3. We have been in business for two and own right single family homes. When we purchased the homes, each one was fully renovated with high end looks, but with moderate budgets. No cheap stuff. We are getting high end rent and have stayed rented. Another thing we have done is taken over the lawn care. Before they were barely lawns. Now they are green, no weeds, simply plush lawns. We also maintain the flower beds and plant in season fresh Flowers. The outsides look as good, if not better, than the insides. We were totally surprised by this small act. Tenants love coming home to a beautiful landscaped Lawn, with fresh Flowers. A few have told us they have had to keep the inside looking as good as the outside!! So, add this to your list of up grades. For us, it had worked out well.

  4. Paula, I like your post (and your home blog as well). You’re hitting on one of my all time favorite topics.

    Randy’s comments illustrate the importance of setting a tone with well-maintained curb appeal. This is an “I know that already” topic, but all landlords need to realize the important of protecting/maintain their front lines (yards).
    Doing so benefits your vacancies/cash flow, property’s security, neighborhood morale, tenant’s sense of customer appreciation, and fights against the neighborhood decline cycle as well. It’s beyond me why any landlord would assign such an important task to their tenants.

    Now regarding your comment about working in a “war zone.” The dynamics are more complicated, but the general way forward involves doing exactly what you suggested. Make your place the nicest one on the block (inside and especially outside). Set an example – Yes, show some leadership.

    Reverse the Broken Windows Theory and create a Disneyland clean property (and pick up a little in front of your neighbors’ place as well.) Parlaying the goodwill you create will do more for your rental’s cash flow than any interior upgrade possible could (but do interior upgrades as well).

    Ok, getting off my high horse now.

    • I really like this philosophy and have been working it into my properties when I have the spare cash. When I cleaned up one of my rougher properties in a 2 out of 10 neighborhood, the contractor had 2-3 different people stopping by daily to see when the unit would be available. Fresh paint outside, new railing to match new built homes, cleaned up mulch, brand new artificial grass and bars replaced with an affordable security system ($15/mo). The place looks stunning. The inside matches the exterior. By far the nicest looking home on the block.

      There are good folks in all socioeconomic backgrounds. Those good folks will find the better properties and keep them nice. Its results in a win for good tenants, a win for the neighborhood/city and a win for the landlord.


  5. Great comments!!! Make sure they are in your check list

    For Rental units you must know your market. Look what other units have and what they are renting for. If all rental units in the range of $1000 have Formica counter tops don’t put in marble.

    Always have credit checks and job referrals. Protect your investment!!
    Make sure tenants have rental insurance.

  6. Nice post and this holds true for the most part… But it still depends on your tenants. Crap tenants are garbage no matter what kind of house you put them in. That extra 1k you spent adding tile around the bath tub that you plan on recouping in 3 years becomes a loss when you have to replace it in 2. 1k a month rent in most parts of the country still includes a lot of shady renters. Increasing the cosmetic look of the house might bring you a slightly better rent but the individuals looking at the neighborhood where the house is located are looking there for a reason… they can’t afford more. They might sign the lease for the increased amount but will end up bailing cause they couldn’t afford it. Most of these people have never had that nice of things…so their not going to know how to take care of them.

    In higher rent districts this would work well… but in low to moderate I think your going to get into trouble. You can’t build a million dollar home in the gehtto and expect top dollar for it. Location, location, location. This has been my personal experience. I enjoyed your post so thank you and enjoy your travels!

  7. Hey Paula,
    I think the article mispoke in on spot:
    “Vacant houses are also less likely to get broken into, robbed, and vandalized. So reducing vacancy also reduces the risk of losing your profit due to crime.”

    I think you mean Vacant homes are MORE likely to get broken into so reducing vacancy also reduces crime.

    Love the article – this helps me put things in more of a quantitative perspective as it is hard to make these types of decisions.

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