Tips for Renovating Your Rental House

Considering renovating your rental property in 2023?

It’s right to give yourself some time to evaluate the potential and choose the renovations that will make a difference to renters and to your bottom line.

Whether it’s a fixer upper you’ve purchased or you just need to maintain your property asset, renovation supports your profit goals.  Should you be able to find a renovation firm with some spare time, you might even be able to afford some substantial and affordable improvements.

The construction industry has hit on hard times but you’ll want to book the projects now.

Stats do support the possibility of higher asking rents, longer tenancy, and more revenue.  Certainly high income/wealthy renters are in the market for rentals with character and extra amenities. They may expect those amenities.

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The Cost of Your House Renovation

According to a Houzz survey, 55% of homeowners renovated their home in 2021, and 55% expected to do so in 2022.

The median spend overall was $18,000 per project whereas recent buyers spent up to $30,000. Most of their expenditures were on interior remodeling with kitchen, bathroom, and living rooms topping the list.  Plumbing, electrical, roofing, exterior paint, and HVAC costs were also among the expenses.

Certainly HVAC and nice flooring are desirable to renters, yet many of these features desired by homeowners may not be the right fit, even though they’re cited as helping to reclaim the expense in terms of resale value.  Yet rental houses offer more than just resale value.  Perceived rental value gains can be substantial at a time when housing is in very short supply.  Homes with good amenities are rare.

The features that work in an apartment renovation are different.  Comfort and utility are still important, but houses are a different kind of living space, and occupied by more people including children.

And what are the 12 renovation/remodeling features renters most want to experience in the house they’d like to rent from you?

1. new window blinds
2. new carpeting
3. new hardwood flooring
4. new kitchen appliances
5. kitchen countertops
6. new laundry appliances
7. new windows
8. new wood deck
9. open concept design
10. new kitchen fixtures
11. adding a bedroom
12. attractive landscaping

Yet you may not be certain whether the end value really worth the investment.  The final dollar value can be calculated, however in general, and your best renovation value can be achieved via:

1. higher asking prices for rent
2. attract better quality tenants (high credit rating, high income families)
3. lower maintenance costs
4. reduced management time and effort
5. more satisfied tenants who are actually expecting better value for their money (tenant experience)
6. great demand for the renovated house or rental apartment within it
7. interest rates low making it the right time for financing remodels or renos
8. prepare the home for sale if this is appropriate to your business goals

Kitchen Reno. Pic courtesy of Unsplash.

The costs of maintenance and upkeep is often prohibitive. And finding reliable, affordable maintenance and service contractors to do fixes is tough. If you haven’t suffered through a costly burst water pipe, roof leak, or plumbing issue, you’re fortunate. The upcoming catastrophic type losses could hurt you financially.

With aging buildings, the inevitable repair and replacement costs have to be faced. Some US and European landlords are finding their aging rental houses and apartments are proving too costly to hold onto simply because of high maintenance expenses. Conclusion: Sell or Renovate.

With government subsidies for going environmentally friendly and energy efficient, there are ways to ease your expense. And the final reward is a unit that will rent at a much higher rent price, along with much lower maintenance bills. Wouldn’t zero maintenance be an ideal thing for you?

And the tax deductions could be a nice incentive. And if you can’t afford a complete overhaul, then doing a reno room by room is still a route to consider. Yet, just as with renovating an apartment, getting the job done quickly can lower costs overall.

House Reno Planning

Before you decide to hire a reno contractor, there’s a few checkpoints to review to ensure your reno strategy is solid. These may force you to conclude the renovation isn’t feasible financially unless some major commitments happen. It may come down to whether you believe in the local rental property market and a positive economic outlook.

If that looks dark, then a better business decision would be to fix/upgrade what you can and manage your units professionally with a good property maintenance software solution. You may be able to cut down on the troublesome repair expenses.

How To Plan Your House Renovation

If you’re committed to going forward, start with basic research:

• which rooms, features, mechanical and exterior elements are in the worst state of repair
• which renovation items are affordable for you?
• should you spend more than 15% of the home value on kitchen/bathroom renovation?
• is this a do it yourself project or something only for a renovation contractor?
• what is the total cost including financing charges that you can carry?
• will you need new appliances and which offer the heavy duty reliability you need (maintenance cost)
• how will current tenants respond to upgrades or will you announce the rent rise due to overhauling the house and wait until their lease is up, or they leave?
• tenant rights: will bylaws allow to you to reno while tenants are living in the unit? do you have special circumstances cited in your rental lease?
• will you have to give the tenant a discount while work is being conducted?
• should you offer to help the tenant move onto another rental, at least during the renovation period?
• will structural changes be needed (moving plumbing and electrical)
• should you replace siding, roofing, and use stone veneer for modern look?
• what costs could occur when you open the walls up and discover items the local regulations will cause you to cover (knob and tube wiring, pipe leaks, foundation cracks, etc)
• which styles are most practical for your target tenants?
• what do tenants say is the worst thing about the rental? (insulation, floors, storage space, outdated bathroom and kitchen)
• in this particular case, which upgrades will offer the best boost (kitchen, bathroom, flooring, fixtures, overall open design, painting, room expansion, improved HVAC, adding an office, deck and outdoor improvements)

You can draw up a more precise calculation of the full renovation costs at remodelingcalcultor.org.

Another reliable resource is on the This Old House TV show website and their return on remodeling cost chart.
If your house rental renovation calculation suggests the full renovation is not affordable, you will have to focus on improving the key rooms and features only. Those items are those the reduce maintenance, support high rent, and increase the value of the property.

Don’t forget to review your business model and your revenue strategy and how your renovation and remodel fits into the tenant experience and what will help you attract the right tenants.

Further reading: Compare Review, Rate Software | Landlord App | Property Management Apps | Apartment Renovation |  Property Management Company | Tax Strategies |  Property Management | Rental House Advertising | German Rental Housing | US Rental Housing