Looking to increase your ROI and attract high-value tenants? These six home renovations may provide an answer.
Rental property ownership can be lucrative, but success often relies on attracting high-value tenants. Alongside the location of the property, its size, and local market conditions, quality tenants are likely to prioritize homes requiring little extra investment to meet their needs.
From remodeled kitchens to freshly painted fixtures, practical and visually appealing renovations may increase the value of your home by as much as 69%, according to Today’s Homeowner. The figure represents a significant boost to your ROI. For first-time rental property owners and experienced landlords alike, this article will explore six home renovations to attract high-value tenants and increase the profitability of real estate investments.
1. Remodel the Kitchen
The kitchen is often seen as the heart of the home, so much so that the average person is said to spend around 400 hours per year in this space alone. According to Zonda Media’s 2023 Cost vs. Value (CVV) report, remodeling your kitchen to meet modern standards and requirements can result in an ROI of between 30%-80%. Profits for rental property owners are likely to increase over the course of a long-term tenancy, the report said.
How much you spend on remodeling your kitchen will vary depending on the current condition of the space. Inexpensive improvements include installing a new backsplash or new cabinets. However, to transform your property, you may consider a complete remodel. Typically, installing a kitchen island, modern energy-efficient appliances, and stone or porcelain countertops will add the most value.
2. Replace Worn Flooring
Upgrading tired and worn flooring is another consideration that can significantly increase your home’s rental value. Depending on the property’s age, carpeted floors are likely to show signs of wear and tear, like discoloration or markings in high-traffic areas, issues that may deter high-value tenants. Consider refinishing the rooms with durable, dark-colored nylon carpets.
Alternatively, hardwood floors remain popular amongst high-value tenants, though purchasing and installing new hardwood flooring can be quite expensive. If you do choose to pursue this option, make sure to treat the wood properly after installation. Also, teach new tenants how to clean the boards appropriately. Doing so will enable most hardwood flooring to last a lifetime.
3. Install Smart Home Technology
Smart building technology is becoming increasingly popular amongst tenants, with one survey suggesting 82% of renters want at least one smart device installed in their homes. Smart devices worth considering include video doorbells, wireless CCTV cameras, and door entry systems designed to provide tenants with 24/7 property security. Moreover, integrated systems offer even greater benefits.
You can connect smart building management systems to your property’s existing HVAC and lighting systems. Using smartphones, tenants can program unique HVAC controls to suit different seasons and adjust each system remotely. Experts suggest this could save tenants between 10%-15% on their energy bills.
4. Consider Outdoor Structures
Any home renovations that add more usable space to your property will likely help you to attract high-value tenants. Well-maintained decks, patios, and fire pits all provide tenants with additional space to entertain guests and relax.
Simple decks and patios can be inexpensive to install and easy to customize with weatherproof outdoor lighting and garden furniture. Such features also add visual appeal during viewings. Additional factors to consider include replacing or refinishing old fence panels or installing a shed for extra storage. You may also think about designing a BBQ area if the property is located in a suitable environment.
5. Improve Curb Appeal
First impressions count a lot when it comes to attracting high-value tenants. So, it only makes sense to consider your property’s exterior when discussing home renovations. Primarily, ensure that your lawn is well-maintained and that all bushes and shrubs are pruned into shape. If your front garden is bare, consider adding a flower bed, potted plants, or a simple rock garden.
However, you’ll need to think about repaving your driveway to add the most value to your rental property. Installing an aesthetically pleasing and functional paved driveway can add between $10,000 to $20,000 in property value. Also, it will help attract high-value tenants looking for off-street parking.
6. Replace Old Windows
Replacing old windows with modern hardware can be beneficial in a couple of ways. For one, large, clean, and unscratched windows will ensure the interior of your property looks bright and spacious. They can improve the visual appeal of the space and attract high-value tenants during viewings.
In addition, modern vinyl double-pane windows can help to reduce energy waste when heating properties significantly. A U.S. News report says modern energy-efficient windows can help tenants save an average of 12% on their energy bills, making your property more desirable to renters.
How to Prioritize Home Renovations
Before allocating funds toward home renovation projects, property owners must consider which improvements are necessary and which will provide the most value. Projects like repainting rooms and updating lighting fixtures are inexpensive, though they may provide value far beyond your initial investment. Full remodeling jobs should be subject to detailed plans.
Assess the Property
Begin by walking around the property and listing any irregularities or fixable issues you observe. It can help to place yourself in the mindset of a prospective tenant to understand which problems appear the most concerning. Look for worn carpets, cracked tiles, broken fixtures, and subpar painting work, jotting down records of the issues in a document for later reference.
Widen your Scope
Now you’ve considered the smaller issues, broaden your assessment to account for larger tasks like full room remodels and structural works. Prioritize structural problems like sloping floors or cracked windows as they may indicate a more serious issue; then consider cosmetic changes. Make sure to discuss the pros and cons of cosmetic improvements to ensure they’ll add value.
Create a Plan
Cross-reference both lists to begin forming an actionable plan. If smaller jobs are tied to rooms you intend to remodel, the issues will be effectively resolved. Larger jobs like room remodels should be prioritized, as their completion may impact your ability to address smaller tasks. With the said aspects in mind, you can create a plan to perform home renovations efficiently.
Investing in rental properties continues to be an attractive prospect for many Americans, but to ensure a decent ROI, property owners must be selective over their chosen tenants.
Home renovations like kitchen remodels, smart technology installations, and the expansion of outdoor spaces will add value to rental properties, making homes more attractive to high-value tenants.