If you’re a landlord who wants to maximize your rental property’s return on investment (ROI), it’s critical to stay current with new tenancy trends. It’s wise to be aware of tenants’ expectations, regardless of whether you’re just getting started and looking for investment opportunities or you’re already managing a substantial portfolio. As the needs of tenants evolve gradually over time, if you want a steady flow and an increase in the ROI, it’s crucial to stay up to date and satisfy current expectations. However, it’s not always obvious how to accomplish this goal. To help you improve your income property’s ROI and thus ensure your rental is always occupied, we’ve consulted experienced real estate investors and found out what five upgrades you should consider investing in.
What do we mean by your income property’s ROI?
Before you find out which five upgrades can help you improve your income property’s ROI, you must understand what we mean by ROI first. Real estate experts utilize return on investment (ROI), a crucial performance indicator, to gauge the performance of an investment property. In other words, your property’s ROI will show you how profitable it is relative to the entire cost.
However, many real estate investment beginners mistake mixing ROI with adding value. Even though both factors go hand in hand, they are different. ROI means comparing the profit to the cost of the property. Adding value, on the other hand, relates to increasing the rental rate potential through modifications and enhancements.
Which home upgrades can help you massively improve your income property’s ROI?
When you purchase an investment property, you should aim to keep a healthy cash flow and draw in top-notch tenants. If you want to ensure you have an easy time getting tenants, it’s essential to invest periodically in improvements. So to boost the ROI of your investment property, here are five upgrades you should consider investing in.
#1 Add more square footage
The recent covid-19 pandemic made many renters spend more time than ever in their rental properties. In a limited and often cramped space, finding a spot for homework or setting up a home office can be very difficult. Therefore, one of the best ways to raise your investment’s value is by adding more space to your rental home.
Consider finishing a basement or attic, adding a bedroom, a sunroom, etc. However, make sure to consult with an experienced real estate expert and check the local market’s pulse before embarking on a project as significant as this one. They’ll be able to help you analyze rental prices for other apartments on the market that have the extra room you intend to provide. In any case, tenants will always value the extra space.
#2 Invest in new flooring
Due to heavy traffic, flooring in your rental property is highly susceptible to damage. On the other hand, it’s also among the first features of the house that a prospective tenant or buyer will notice. So, investing in quality flooring is a must if you want to profit more from your investment.
Spend some time learning about the flooring options that might be best for you and your budget – hardwood, tile, better-quality carpet, laminate, concrete, or vinyl. A newly renovated floor throughout your rental will undoubtedly result in a higher ROI, regardless of the design you choose. Anyone wishing to rent a property will find new floors to be more durable, attractive, practical, and enticing.
However, do remember that renovating your floors will involve extensive work, regardless of how big or small your property is. Plus, you’ll also need to prepare by moving your furniture and decor to a storage unit; thankfully, experts can help you out in a budget-friendly way. If you research furniture movers, we’re sure you’ll quickly find a reputable local company that doesn’t charge a small fortune.
#3 Give your investment property a fresh coat of paint
Similar to how new flooring can completely transform a room, so can a coat of paint. It has the potential to make even the most ancient structures appear modern. Tiny touches may have a significant impact, so don’t overlook the potential of something as simple as replacing the cabinet knobs and pulls in your kitchen and bathroom. By making these simple updates, you may increase your rental property’s ROI with little to no outlay of cash.
#4 Focus on energy efficiency
Going green doesn’t only demonstrate that you are a responsible landlord, but it also enables potential tenants to save money. Eco-friendly energy options will make your property much more appealing! And if that’s not enough, going green doesn’t require extensive upgrades. For instance, you can switch to LED light bulbs, only use energy-efficient appliances, and think about spending money on plumbing fittings that use as little water as possible. If you want to invest more, installing solar panels is another excellent option. Imagine you are a landlord who includes the cost of electricity in the rent, allowing you to raise the rent by $200 a month even though your tenant doesn’t receive an electric bill for most of the year. After a while, you’ll be able to raise your regular income significantly. This is especially true if you decide to invest in a multi-family property.
#5 Boost the curb appeal
Lastly, let us not forget the importance of the first impression. In fact, besides their monthly rent, potential tenants will mostly remember your rental’s aesthetic. That’s why boosting curb appeal is essential if you want to improve your income property’s ROI. You can consider planting some hardy, native trees, shrubs, and flowers or investing in a personalized path, deck, or patio. Tenants will be able to enjoy the outdoors in the evenings if you install some basic but efficient lighting around the property.
Final thoughts
Investing in these upgrades will surely help you improve your income property’s ROI. Don’t give up if your budget doesn’t allow you to spend too much because even minor changes can make a big difference. Therefore, you shouldn’t delay these upgrades; start working on improving your income property and simultaneously boosting your income!
Photos used:
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https://www.pexels.com/photo/white-printer-paper-590011/
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