If you own rental properties, you’re likely looking for ways to maximize your return on investment (ROI). One way to do this is by renovating your properties to increase their value and appeal to potential renters. In this article, we’ll explore the top renovations you can make to your rental properties to maximize your ROI.
1. Update the kitchen
Updating the kitchen is a renovation that can greatly enhance the value and appeal of rental properties, making them more attractive to potential renters. A modern and functional kitchen with new energy-efficient appliances, stylish cabinets and countertops, and a fresh coat of paint can create a desirable living space that appeals to high-quality renters. Research has shown that investing in a kitchen renovation can add significant value to a property, with some studies indicating that homeowners can recoup up to 80% of their renovation costs upon resale.
In addition to increasing property value, a well-designed and updated kitchen can also lead to higher rent prices and increased rental income. When potential renters see a modern and functional kitchen, they may be more willing to pay a premium for a desirable living space. Therefore, updating the kitchen in rental properties is a smart investment that can result in higher returns on investment in the long run. Overall, it is clear that updating the kitchen in rental properties is a renovation that can yield significant benefits for property owners.
2. Upgrade the bathroom
Upgrading the bathroom is an excellent renovation to consider for rental properties, as it can significantly increase the property’s appeal and value. A modern and updated bathroom can make a big impression on potential renters, and lead to higher demand and occupancy rates. To achieve a luxurious and spa-like feel, property owners should consider replacing outdated fixtures and faucets, installing a new vanity or sink, and updating the flooring and lighting. These upgrades can greatly enhance the bathroom’s functionality and design, and make it a desirable selling point for renters.
Research has shown that bathroom renovations can provide a high return on investment (ROI), with some studies indicating that homeowners can recoup up to 70% of their renovation costs upon resale. Moreover, a well-designed and functional bathroom can help attract high-quality renters who are willing to pay a premium for a desirable living space. Therefore, upgrading the bathroom in rental properties is a smart investment that can result in higher returns on investment in the long run. Overall, investing in a bathroom renovation is a wise decision that can help improve the property’s value, appeal, and profitability.
3. Replace flooring
Replacing the flooring in your rental property is a worthwhile investment that can bring significant returns. According to HomeLight, the ROI of replacing flooring can range from 70% to 100% depending on the type of flooring you choose. Old, worn-out flooring can be a major detractor for potential renters, so consider upgrading to options like hardwood, laminate, or tile. These materials can be more durable and easier to clean than carpeting, making them a popular choice for rental properties. Moreover, new flooring can help give the property a fresh, modern look. By investing in new flooring, you can attract high-quality renters who are looking for a well-maintained, updated living space.
4. Add storage
Adding storage to your rental property can greatly enhance its appeal and functionality. Lack of storage space is a common complaint among renters, so adding built-in shelves, closets, or storage units can help make the property more attractive. Consider optimizing existing storage spaces or adding new ones, such as under-stair storage or built-in shelving. Adding storage options can also help renters keep their belongings organized and tidy, which can lead to a more pleasant living experience. Finally, investing in storage upgrades can help you attract high-quality renters who are willing to pay a premium for a property that meets their storage needs.
In addition to enhancing the appeal and functionality of your rental property, adding storage can be particularly beneficial in certain situations. For instance, if you own an older home with limited closet space, adding built-in shelves or storage units can provide renters with the storage space they need. This can be especially important if the property has small bedrooms or lacks storage in common areas like the living room or kitchen. Similarly, if your rental property has a unique style or layout, such as a studio apartment or an open-concept living space, adding creative storage solutions like floating shelves or room dividers with built-in storage can help maximize the use of space while keeping the property visually appealing. By considering the specific needs of your property and renters, you can add storage solutions that not only improve the functionality of the space but also add value to your investment.
5. Install energy-efficient upgrades
Installing energy-efficient upgrades in your rental property can not only save renters money on utility bills but also increase its value and appeal. Consider options like energy-efficient windows and doors, updated insulation, and a programmable thermostat. These upgrades can help renters save on heating and cooling costs and reduce their carbon footprint. They can also make the property more attractive to eco-conscious renters who are looking for sustainable living options. By investing in energy-efficient upgrades, you can attract high-quality renters who are willing to pay a premium for a property that helps them save on utility costs and live a more sustainable lifestyle.
6. Improve curb appeal
When it comes to enhancing the curb appeal of your rental property, there are several specific areas you can focus on to make the most impact. For instance, pay attention to the condition of the exterior to the property, including the siding, roof, and windows. Any visible damage or wear and tear should be addressed promptly to maintain the property’s overall appearance. Additionally, updating the landscaping can be a relatively low-cost way to improve curb appeal. This can include planting flowers or shrubs, adding mulch or decorative stones, and ensuring that the lawn is well-maintained. Another way to improve curb appeal is by installing outdoor lighting. This can not only improve the safety and security of the property but also add a welcoming touch for potential renters arriving after dark.
Furthermore, consider the small details that can make a big impact. For instance, updating the mailbox or house numbers can add a fresh look to the property’s exterior. Adding a new front door or refreshing the existing one with a fresh coat of paint can also help improve curb appeal. Lastly, ensure that the property’s entryway is clean and welcoming, with a well-maintained pathway and perhaps some potted plants or a welcome mat.
By focusing on these specific areas, you can enhance the curb appeal of your rental property and make it more attractive to potential renters. A property that looks great both inside and out can not only help you attract high-quality renters but also command higher rental rates, leading to a greater return on your investment.
In conclusion, by focusing on these key renovations, you can maximize your ROI on your rental properties. By investing in upgrades that improve the overall appeal and value of the property, you can attract high-quality renters and increase your rental income.
- “10 Rental Property Renovations That Offer the Best Return on Investment,” Forbes, 16 April 2021. This article cites data from the National Association of Realtors that suggests homeowners can recoup an average of 77% of their kitchen renovation costs upon resale.
- “The Top 8 Renovations to Boost Your Rental Income,” Millionacres, 21 December 2020. This article highlights kitchen renovations as a key way to attract high-quality renters and command higher rental prices.
- “5 Renovations That Will Increase Your Rental Property Value,” Mashvisor, 20 May 2020. This article cites a study from Zillow that found that homes with updated kitchens sell for an average of 7% more than homes without updated kitchens.