Remodeling Your Rental Unit
If you are the owner of a rental unit, you may be wondering if a remodel is the best strategy for you. As the owner of a rental property, your goal is to cut costs while maximizing your return. Renovating or remodeling your rental unit can potentially be a great way to maximize your income.
Return On Investment
Kitchen and bath remodels tend to have the greatest returns on investment for rental properties, netting up to 85% returns. Painting has nearly a 100% return on investment. Remodeling a bathroom and kitchen can increase the amount you can charge a tenant by approximately $200 a month. Remodels should especially be considered if you are renting to long-term tenants. A tenant that is simply passing through will be less concerned about remodels than tenants who plan to stay in your unit for a few years. The longer the rental period of your tenants, the better return on investment you will likely see with your remodel.
Tips For Rental Remodeling
If you do decide to remodel your rental property, there are some important things to remember or consider.
- Don’t take on too much at once. It is easier to renovate one unit or room at a time, rather than remodeling your entire property. Remodeling the entire property at once makes the unit uninhabitable, whereas remodeling a little bit at a time still makes other parts of the property available to rent.
- Don’t wait for problems. If you maintain routine upkeep, you can avoid a “crisis phone call” from your tenants. It is suggested that you make improvements on a yearly basis, and that you arrange these remodels in advance. This also should help you to avoid taking on too big of a project at one time.
- Clarify your expectations for tenant improvements. Some rental agreements state that tenants can make improvements to the property if they receive your approval first, while other rental agreements do not let tenants make improvements at all. The lease agreement you have with your tenants should clearly indicate your policy regarding tenant-led improvements.
- Invest in the areas that receive heavy traffic. Believe it or not, flooring in the bathroom and kitchen is remarkably important, because it receives the most foot traffic from tenants. Consider investing in a flooring material that is easy to clean and durable. Quality flooring can last for a few decades, even if its initial costs are slightly higher than carpeting.
- Renovate between tenants. If possible, remodeling while no one is living in your property will give you space to complete your project. There will be no risk of damaging your tenant’s property, and you will be able to work on the project without having to worry about your tenant’s schedule and availability. The project will be easier to complete without distractions, and will also increase the value of your property before it is displayed to future tenants. If you must remodel while tenants are living in your unit, then communication is crucial. You should be clear on when you (or those hired for the remodel) will be in the unit, and how long the project is expected to take. You should also consider the tenant’s rent figure if you choose to remodel while they are occupying the space, as it may need to be reduced.
If you are considering renovating your rental unit, email us at email@example.com. Our experienced team will be able to help you meet your remodel goals!