With any investment property, you're looking to increase your value and improve eventual return on investment (ROI). But with rentals? It's not just the long-term returns you're looking at.
Improving your property's value can justify higher rents, too -- increasing those monthly profits and your passive income stream as well.
Are you looking to raise your rents this year or just improve your property's value and marketability? Here are four things to consider.
1. Invest in appliances
Having a quality refrigerator, washer, dryer, and dishwasher on-site can all justify higher rent prices and make your property more valuable. These also open the door to a wider net of tenants, as not too many will bring their own appliances, nor will most have the cash to buy these valuables on their own.
If you're worried about affording appliances for your place, you can look to alternative sources, like outlet stores, surplus stores, or even ReStores, which are low-cost supply stores offered by Habitat for Humanity. Estate sales, model home auctions, and online tools like Nextdoor and local Facebook groups can also be helpful resources.
2. Update the kitchen
The kitchen is by far one of the most important spaces in a home -- particularly since the pandemic. It's where we eat three meals a day, and in smaller units, it might even be where we work, study, or do our homework. For a tenant, it also might be the room that puts your property over the edge.
If your kitchen area is dated or just looks worn and tired, you might consider a remodel. You don't have to go crazy, either. Updating the countertops, refacing the cabinets, and installing appliances (see above) is often enough to make an impact. In fact, according to Remodeling Magazine, a "minor" kitchen remodel is one of the highest-ROI renovations you can take on as a property owner. In the long run, it recoups about 72% of your costs and adds an average of nearly $19,000 to your eventual resale value.
3. Replace the floors
If your property has old carpet or dated linoleum, it might be worth a quick update -- ideally to something a little more timeless and durable. Doing so can make your home more photogenic (i.e., better listing pics) and more marketable (who doesn't want a pretty home that requires less cleaning and upkeep?).
Your best bets are vinyl, hardwood, or laminate, though it really depends on your home's style, location, and budget. Talk to a real estate agent in your area to find out what types of flooring might be popular in your area. A local contractor can also help you choose something that's durable for your area's climate.
4. Add extra living space
You can charge significantly more for rent with an additional bedroom, as this expands how many people can live in the property (not to mention how many roommates can split the rent).
While this doesn't mean you should necessarily build a custom addition or add a second floor to your property, it should get you thinking. Could you close off that loft area and expand your livable square footage? Is there a way to make your attic, basement, garage, or dining room a bedroom (or even a master suite)? If so, gets some quotes from a contractor. If you can increase your rent by hundreds per month, it just might be worth it.
Rents are on the rise
Even without some choice upgrades, it might still be time to think about increasing your rents. Nationwide, rents are on the rise, and with housing inventory down and demand up, many would-be buyers are finding themselves forced back to renting -- even if just temporarily. There's also inflation to consider, which warrants a rent bump by default.
Take some time to do a quick comparative analysis of rents in your area. Are you still on par with what similar properties are leasing for today? If not, it might be time to think about a change.