Optimizing Your Rental Property: Small Upgrades That Bring Big Returns
Real estate investment is booming, and many investors see huge returns when buying and renovating rental properties. One of the most efficient investment strategies is to purchase a cost-effective fixer-upper and provide select upgrades to maximize rental returns.
While you don’t want to buy a money pit, some older homes are in prime condition and need just a few simple upgrades. Other homes are more turnkey, but some affordable additions can allow you to boost profits. What small upgrades can make big differences in your wallet?
Property Purchasing Methods
Before planning potential upgrades, the property purchase plays a huge role in the quantity and impact of your rental returns. Traditional mortgages or property loans can limit what you can do or purchase as an investment.
You may be unable to buy an investment property that will see promising returns with traditional home loans. Smart investment choices like DSCR (Debt Service Coverage Ratio) loans, which allow you to borrow based on potential income returns instead of personal finances, can give you a better loan that is more suited for investors in many cases.
Location can play a huge role in loan choice and amounts. Getting a DSCR loan in midwestern states like Michigan or Illinois is a smart choice since these places are near urban hubs like Chicago, which can, in turn, provide promising rental returns. Purchase your property wisely regarding location and financing before planning upgrades, big or small.
Smart Features
Smart features, or home automation technology, allow occupants to control appliances, lighting, and security from a simple app or device. Smart technology is convenient and can help homeowners reduce monthly utility bills with energy-efficient practices.
Smart kitchen and laundry appliances allow for more customization regarding temperature and power from any location. Security and air conditioning features can be scheduled and monitored from anywhere. Even the lighting can change color, brightness, and timing with automation.
Smart appliances and technology are user-friendly and affordable. You can select the most cost-effective upgrades without committing to an entire smart home, too.
Showerheads and Faucets
Tenants enjoy luxury and flexibility when it comes to home features. Simple swaps for showerheads and faucets can make any bathroom or kitchen look more luxurious.
Showerheads that are detachable or offer different spray types can appeal to larger audiences. Faucet heads that are extendable and have built-in spray options can make cooking a lot easier. Most faucets and showerheads are easy to swap out and are very affordable.
Small Kitchen Appliances
The inclusion of a microwave in a kitchen is very affordable yet allows you to go above and beyond for a tenant. Other smaller appliances like toasters, toaster ovens, or air fryers can make a kitchen space more versatile and appealing to tenants.
These appliances are small and cost-friendly but can really enhance a kitchen space. Keep in mind that many tenants have their own air fryers or electric kettles, so you should limit what appliances you purchase.
Hot Tub
Hot tubs can be a little pricey, but they’re fairly easy to install on any existing patio or deck for a luxurious backyard upgrade.
Tenants are willing to pay extra for features like a hot tub, which is less expensive than a full pool upgrade but can add similar charm and appeal. If you really want to go above and beyond, hot tubs are a good choice.
Storage Space
Built-in storage solutions are often a key factor in choosing a rental property. Many people have large wardrobes or bulky items that should be kept out of sight. If your rental property doesn’t include them already, consider installing open shelving on some walls, especially in areas like the kitchen, closets, or laundry room.
Built-in storage spaces like closets or cabinets are also a positive feature for most tenants. Adding some shelving or a storage shed to the backyard can easily add rental value.
New Paint
Paint can fade or chip easily, especially in older homes. While you don’t want to layer new paint over dirt or valuable features, a fresh coat of paint on the walls, borders, or exteriors can give any home a nice touch.
You can even paint doors or shutters a vibrant accent color to modernize the look and attract more tenants. Curb appeal can raise rental value easily.
Modern Lighting
Lighting in a rental home should be accessible, customizable, and attractive. Smart lighting can allow tenants to tailor it to their needs. Dimmers are affordable and can also add some customization.
Make sure the lighting is modern, updated, clean, and simple for swapping bulbs. If bugs have trapped themselves in the light fixture, get rid of them before showing them off. A fresh bulb or a new fixture can work wonders for rental value at little cost to you.
