Spending Money to Make Money: How Improving Your Property Can Increase Your ROI
It’s a fact – in order to get the best rents from the best tenants, your property needs to look its best. A property that is neglected and not kept up to date cannot and will not bring the rents you need in order to make your investment reach its maximum potential.
Making a great first impression
According to a 2021 Cost vs. Value Report compiled by Zonda, a leading provider of data to the residential home building industry, exterior improvements provided the highest return on investment (ROI) for property owners. In fact, the No. 1 ranking improvement was the replacement of the garage door with 94% of the cost recovered when the home is sold. When you’re going for curb appeal, an updated, attractive garage door with an opener will help create a great first impression.
Whether you are managing a single-family home, apartment or condominium, the second thing your potential renter notices when visiting your property is the building’s front door. If you can afford it, a steel door is a great security feature that can also provide better insulation. If you cannot afford to replace the door, a fresh coat of paint in a contrasting color will do wonders. Adding a smart lock security system will make the home seem more up to date and is an inexpensive upgrade that tenants are sure to appreciate.
Window replacement is also high on the list of improvements that will benefit your bottom line, providing both exterior and interior gains. Replacing single-pane windows with energy-efficient double-pane vinyl windows can change the whole look of your investment property. It will also create better insulation, cut down on ambient noise and add visual appeal.
Upgrading a kitchen on a shoestring
It’s widely acknowledged that the rooms most likely to impress or disappoint are the kitchen and bathrooms. Unfortunately, these are also the most expensive rooms to renovate. However, it’s possible to perform a few decorating tricks that will increase the home’s appeal without hurting your ROI.
The cost of upgrading a kitchen can skyrocket if you move plumbing fixtures and gas appliances. By all means, replace sinks, faucets and worn-out appliances, such as gas stoves and refrigerators with icemakers, but keep them in the same location.
The most expensive item in a kitchen remodel is the cabinetry. If the cabinets are old and tired but the boxes are in good shape, don’t replace them. Reface them with new doors and hardware and a fresh paint job. It will cost you a fraction of the cost of new cabinets and the results are very satisfying.
If the cabinets are in good shape overall, a new coat of paint is a must. This is a good time to add a neutral color. Shades of grey and blue and even black are particularly popular right now for lower cabinets with white for the uppers. New drawer knobs, pulls and faucets in a matching style will pull the room together and give it a fresh, modern appearance.
After the condition of the cabinets, the next most noticed items are the countertop material and the backsplash. You might think that you can’t afford the popular luxury stones, such as quartzite, onyx and marble, but your local stone company will have seconds and remnants that can lower your cost considerably. The current trend of mixing materials can work in your favor when purchasing remnants. Consider using butcher block, quartz or granite for a section of the counters since they are less expensive than natural stone and don’t require as much maintenance and care.
The same savings on remnants and close-outs can be found at your favorite tile store. That stale backsplash is a great opportunity for brightening up the kitchen. To save money, pick a limited area where the new tile will make the most impact, such as over the stove or around a window, and paint the rest of the walls. Those stone leftovers can also be run up the wall to serve as a backsplash.
Out-of-date, worn-out bathrooms can send your prospective tenants running. Many of the tips for renovating a bathroom on a budget are similar to those that are recommended for the kitchen. As in the kitchen, you’ll want to keep the same floorplan to avoid very expensive charges from your plumber and electrician.
For an economic but effective renovation, consider simpler cosmetic fixes, such as replacing broken tiles or fixtures, updating an old backsplash, or installing new countertops. New light fixtures will brighten the room and bring it up to date. Remove a large over-the-sink mirror and substitute it with a smaller, framed one.
Consider vinyl, linoleum, laminate and tile as affordable choices for a new floor covering. Another way to avoid an expensive replacement is to refinish tired, chipped sinks and bathtubs by having them re-glazed by a professional. They’ll look like new and you will have avoided the additional expense of removing and replacing them.
You can source bathroom vanities for very little at your local big box store. However, if yours are in good shape, you can refresh the existing cabinets with a little paint and new hardware. The vanity counter is a perfect place to use those stone remnants from the kitchen. It’s very current to have the kitchen and bath countertops all match.
More money-saving ideas
Nothing makes a home more inviting than a bright new coat of paint in a light neutral shade that blends well with any style. If you already have neutral wall colors that are in good shape, you can paint just the trim, molding and windows with a washable, durable satin or gloss finish for a low-cost renovation that produces a dramatic change. Be sure to fill any cracks or holes in the walls from past tenants and choose a paint that is easy to clean.
Transforming a dated room into a modern living space by removing old carpet and replacing it with real wood flooring is very impactful. But as beautiful and timeless as natural hardwood is, it comes with its own drawbacks. It is expensive, scratches, fades over time and requires regular maintenance. On the other hand, today’s laminates are cost effective, attractive and scratch-resistant. They come in a multitude of colors and patterns and are easy to install.
Be strategic as you look around your rental property, deciding what you want to revamp so tenants will visualize your place as someplace they want to live. Choose neutral colors and traditional finishes which will stand the test of time rather than going with trendy alternatives that you will have to change in a few years.
“The key to getting the most out of your investment,” says Mischa Fischer, chief economist at Angi, “is finding the right balance between affordability and visual impact.”
How AAOA Can Help
The American Apartment Owners Association (AAOA) assists landlords, property managers, real estate owners and brokers across the country with managing their properties. AAOA offers a variety of services to assist with new applicants including a tenant background check or tenant screening and state-specific landlord forms such as a rental application or rental agreement. The association also offers resources from educational webinars and landlord tenant law to approved providers for insurance and financing. Contact us today to learn more.