Owning an investment property or rental involves more than just paying the mortgage and collecting checks from your renter. To maintain and grow your investment, you need to be putting time, money, and effort into maintaining and upgrading the property. Remodeling accomplishes several objectives: it makes your rental attractive to great renters, it boosts the long-term value of your investment, and it keeps your long-term renters happy.
Are you ready to re-invest back into your rental or investment property? In this article, we review several high-impact, value-boosting renovation projects tailor-made for rentals and investment properties.
Start by remodeling the kitchen
When most people hear the word “remodel,” they tend to think first about the kitchen. In most homes, it’s the first space to get renovated. This makes sense: the kitchen, after all, is central to modern life. Families cook, bake, and spend time together in the kitchen. An upgraded kitchen should be beautiful, practical, and inviting.
On average, U.S. homeowners who remodel their kitchen see a 80.5% return on their investment. However, as a property manager, you should be able to beat that average. After all, your decisions in this space are solely driven by ROI: while a homeowner might “splurge” on an upgraded oven or a more expensive tile they really like, your priority is getting the most out of your kitchen remodel for the least amount of money.
To get the most long-term value out of this project, invest in high-quality materials. For the kitchen countertops, go with either quartz or granite. Granite countertops, in particular, are aesthetically beautiful and can stand up to a good deal of use and abuse from renters. They are impervious to heat damage, resist staining effectively, and are difficult to damage. Whether your main concern is adding value or creating a kitchen that will last for years to come, adding prefabricated or slab granite to your investment property’s kitchen is the right call.
Maximize your ROI by making strategic compromises. While opening up the kitchen and removing interior walls will add value to the property, it also adds a lot of upfront costs. Get some quotes from local contractors before making your decision: you don’t want to go through the trouble of changing the layout of the property if you’re not going to get anything out of it.
Flooring is another area where property owners can potentially cut costs. Most kitchens feature tile, but it can be expensive and difficult to install correctly. Today’s vinyl and laminate floors have comparable water-resistance and durability, but are much easier to install and cheaper to purchase.
Renovate the master bathroom
Once you’ve completed your kitchen remodel, it’s time to move onto the master bathroom.
A mid-range bathroom remodel has an average ROI of 63.5%. Again, just as in the kitchen, the key to maximizing your ROI is deciding what is important to the project, and what the property can do without. Layout changes significantly escalate the cost of any bathroom remodel. You’ll need to bring specialized contractors, plumbers, and electricians in to move pipes and wiring, and ensure everything is up to code. You’re not likely going to get that money back, either in rental income or when you sell the property.
The better bet is to work within the creative confines of your current layout. Focus on the shower, vanity, and flooring. For the shower, replacing a hard water-stained frosted glass door with a modern, frameless glass one can transform the entire space. Add decorative shower tile and replace the shower head and fixtures. If you’re remodeling your bathroom and kitchen at the same time, consider ordering some extra granite or quartz to use for your bathroom vanity: the same durability and beauty natural stone brings to the kitchen can also improve your master bathroom.
Getting the most value possible out of a bathroom remodel often comes down to the little things: lighting, mirrors, paint, and flooring. Just make sure your design choices fit within a unified theme—a farmhouse-style wash basin vanity and a sleek, contemporary shower might not go together—and that you avoid luxury upgrades. You’re just not going to see a healthy return on a whirlpool tub upgrade. Save that for your own home!
Make other property improvements
Here are some of other high-impact property improvements you should consider:
- Whether you’re planning on renting your home out or listing it, paint the interior and exterior before you do so. New paint is one of the least expensive, most impactful changes you can make to an investment property.
- Complete any essential projects and preemptively deal with potential problems. If you know the property’s garage door is only a year or two away from needing to be replaced, take care of that now as part of your remodel. Statistically, some of the highest-ROI projects are those that involve replacing essentials, such as window replacement, siding installation, and more.
- Adding a built-in grill or seating to the property’s backyard can really make your investment property more appealing. If the rental’s backyard is currently barren, consider planting shade trees: they’ll help keep the property cooler and bring life to the yard.
To get even more ideas for value-boosting property renovations, check out this infographic:
Best of luck!