Many homes listed on the market that can successfully serve as rental properties are listed as a fixer-upper, or in need of TLC. In other words, you may have some work to do to get it ready as a rental property. Remember, rental properties must have occupants to collect rental income. So, it is your job to add value and make sure that your rental property attracts renters.
However, when remodeling a rental property, you must remember that it is very different from remodeling your residence. You want to make sure that the home meets standards, is attractive to tenants, and allows you to maximize the rental income without doing it in excess.
A few tips on how to remodel your rental property for maximum value:
1. Set a budget; It is effortless to get caught up in the excitement of remodeling the home, but your goal is to get the house in good condition to attract renters, not to be on the cover of Architectural Digest.
2. Meet with a qualified construction management company or general contractor or who specializes in remodeling; Don’t necessarily go for the ‘cheapest’ bid. In remodeling, what you pay for is what you get.
3. Kitchens and bathroom remodeling always add value; It would be best if you update these two areas of the home to meet basic standards. You should probably plan to spend the bulk of your budget in these areas. Not only will it attract more potential renters, but it will also increase the overall value of the home.
4. Don’t forget curb appeal; Exterior paint, fresh mulch, pressure washing, and flowers are a great way to jazz up the outside of the home!
5. A fresh coat of paint can do wonders; Consider painting every room in the house with a very basic and neutral color. Just because you like purple walls does not mean your potential renters will.
6. Add newer appliances; Take an inventory of the appliances. Are they in good shape or need of updating? Consider washer/dryer, refrigerator, microwave, dishwasher, cooktop and oven. Rule of thumb, if you wouldn’t use it, update it. Appliances are a necessity—also, the newer the devices, the less likelihood of repairs in the future.
7. Kitchen countertops and cabinets; The kitchen is considered the ‘heart of the home’. People spend a great deal of time in the kitchen. Updating and upgrading countertops and cabinets is a safe investment and will add much value.
8. Flooring; In a rental property, it is best to have hard surface flooring. It looks modern and is easy to clean. Consider engineered hardwood or laminate. Remove all carpeting, especially if you are going to allow your renters to bring their pets.
9. Don’t forget the simple fixes; There are inexpensive things you can do to make the home look fresh and new. Replacing dated cabinet handles and doorknobs or adding window treatments or blinds can give the house a new look and feel.
10. Energy efficiency; Discuss with your contractor ways to make the home more energy-efficient. Some ideas include upgrading windows, adding a tankless water heater, or even using energy-efficient light bulbs.
These are just a few tips on how to remodel for a rental property. Again, when you work with a licensed and experienced remodeling firm, they will be able to guide you through this process and offer valuable tips and suggestions.
Tips on how to find the right property management firm
Now that you have remodeled your property and are ready for tenants, you will want to consider hiring a property management firm. Where do you begin? The process can be a little overwhelming at first, but it is much easier than you think. While there are many different types of property management firms out there, use these simple tips to help you find the right one for you and your property.
1. Ask for referrals; Your friends, colleagues and local Realtors are an excellent place to start your search for the ‘right’ property management company. Most people are more than happy to share their opinions and experiences with you. Be prepared to hear the good, the bad and the ugly!
2. Interview three firms; Once you have collected your data and compiled your list of potential property management firms, set up interviews with each firm.
3. Experience matters; One of the first things you will want to find out is the level of experience the company has in managing properties. How many years have they been in the business? What types of properties (and how many) do they currently manage? How do they collect rent? How do they qualify potential tenants?
4. Problem solvers; Being a landlord comes with its own unique set of challenges. It is essential to know how your property management firm handles challenges and problems. How do they handle bad tenants? Late payments? Property damage? Are they proactive or reactive to issues and challenges
5. Understand ALL fees and expenses; Be sure to read the lease agreement and ask questions about fees and costs. What is the property management firm responsible for, and what are your financial responsibilities?
6. Marketing strategies; The days of running newspaper ads looking for tenants are long gone. Digital marketing, social media, and website advertising are the preferred method of marketing these days. Ask the property management firm to share its marketing strategy with you.