Successful real-estate investing requires owners to keep an eye toward creating value in the property. The successful investor judges the property’s potential profitability and makes a determination, based on thorough market research, whether he or she can spend a reasonable amount of money to boost the value of the property perhaps by two to three times its current market price.
In this article, we’ll look at eight improvements you can consider making to rental property that could easily boost the rents you receive and the value of the property.
1. Make it sparkle!
Consider this the trickle-down effect: Cleaner units attract higher-quality tenants, and investors pay more for properties with better tenants, because better tenants mean lower risk, less trouble, and surer rent collections.
Rental units that aren’t meticulously maintained turn off top-quality renters. They go elsewhere. Meanwhile, there is likely to be a high turnover among tenants willing to accept units with dirt-encrusted windows and light fixtures, stained carpets, grease-layered stoves, and dust-laden window blinds; they are likely leave your property in worse condition than they found it.
When you thoroughly clean your property, you not only attract better-quality tenants, but also you show tenants the degree of cleanliness you expect.
Likewise, when you plan to sell the property to another investor, a spotless unit will sell more quickly and at a higher price.
2. Update color schemes, patterns, and fixtures
Nothing “dates” properties like out-of-style color schemes. (Remember turquoise and mauve, anyone? Or, going back a few more decades, harvest gold or avocado?)
You can easily add to the appeal of your units with modern color schemes or special touches like moldings, mirrors, upgraded plumbing and light fixtures, or patterned tile floors.
The rule is not to get too creative or add a too-personal flair, but to dress up your units enough to make them stand out from the competition.
3. Create more usable space
If you can figure out how to create more usable space at your property, you will increase its appeal to tenants and, therefore, its value.
Keep asking yourself, “How can I use or create space to enhance sales appeal or generate more income from these units?”
Maybe you can convert an attic, garage, or basement into additional living area, or perhaps enclose a porch or patio, add a second story, or build an accessory apartment.
Think about remodeling the living area within the units so that every storage and living space within the apartment is sized proportionally to market tastes and preferences. You might be able to reduce the size of large rooms by adding walls or separate areas, for example, or perhaps you can combine small rooms to make larger areas.
Prospects are typically reluctant to pay top rents or a top asking price when room or floor areas are perceived as “too large” or “too small.”
4. Create a view
Whenever you can find properties that have failed to capture a potential view of a lake, ocean, mountain range, park, or woods, you have discovered a great way to add value to a property. Add a window or French doors to create a whole new view.
5. Capitalize on creativity
Profitable improvements begin with creativity and imagination. Rather than rushing into slapping on a fresh coat of white paint and laying down conventional beige wall-to-wall carpeting, add a splash of color or texture.
6. Eliminate an unattractive view
Some buildings devalue because they look directly onto an alley, another building, or perhaps power lines.
If you can eliminate the negative view and convert it into something attractive by changing the location of a window, creative landscaping, or by adding decorative fencing, you will add value to your property.
7. Amplify natural light
Tenants and investors prefer properties with lots of natural light. Consider adding or enlarging windows, swapping solid doors with glass inlays, or installing skylights.
You also can make the units appear more spacious with lighter-colored paints, carpet, and window treatments. You can paint over brick fireplaces or tear out that low, false ceiling.
8. Reduce noise
Tenants pay a premium for quiet. Consider insulation, caulking, trees, shrubs, and soundproof windows to enhance quiet. The more you can muffle or eliminate noise from outside or an adjoining apartment, the better.
Before you buy a multi-unit building, test the soundproofing between units. If you can hear a television, people walking or talking, or toilets flushing, beware.
Unless you can figure out a solution to the noise problem, you will hear multiple complaints and contend with high tenant turnover.
James Kobzeff is a real estate professional and developer of ProAPOD Real Estate Investment Software, a real-estate analysis tool used by investors and other professionals around the country. Visit www.proapod.com.
Tags: property improvements, real-estate investing, rental income, upgrades, view