It’s a good idea to renovate your rental property when it begins looking dated or there are clear signs of deterioration. You’ll find there are several benefits to making updates and upgrades. You can increase your rental value, find and retain residents better, and avoid any deferred maintenance that might be lurking in your property. Renovations make your property more attractive to good tenants, and they keep you competitive in a crowded Santa Rosa rental market.
You’ll have to budget for the costs, however.
While there are some affordable improvements that you can make during every turnover, you probably want to do more than paint the walls and clean the carpets. Decide how much you’re willing to invest, talk to a great team of vendors, and then spend those investment dollars wisely.
As a Santa Rosa property management expert, we’re often conferring with owners and investors about the best way to renovate rental properties. We can provide advice on when to renovate, why you should renovate, and how much you can expect to spend.
Let’s take a closer look at the costs and benefits.
Budgeting for Renovations: Costs and Considerations
Renovations and improvements are important, but that doesn’t mean you have to tear down the house and start from scratch. You don’t want to over-improve, because it will cost too much and leave you in a huge deficit. Investing $50,000 for an extra $5,000 in value doesn’t make much sense.
Be smart when you’re renovating your property. Choose upgrades and updates that don’t cost a lot but will reap a lot of rewards. Take note of the competing properties on the market. If every kitchen in your neighborhood has granite counters, you might want to put in granite counters, too. But, if no other rental properties seem to have stainless appliances and ceramic tile floors, save your money and spend it on more affordable updates.
Before you begin upgrading and updating, make sure you understand the scope of work you’re willing to undertake for your rental property. This isn’t a home that you occupy, and therefore you don’t need all of the best finishes and extra luxuries that you might desire in your own home. Rental upgrades are a bit different, and it can be easy to over-spend if you approach the project thinking about your own tastes and needs.
Decide how much you want to spend. That’s the first order of business. Keep the budget specific and strict, and decide which renovations are most important and within your budget. If you’re only willing to spend $1,000, you might limit yourself to paint and new fixtures and hardware. If you’re bumping up the budget to $5,000, new appliances may be considered. For $10,000 you can include new floors.
In order to earn back the money you put into this project, you’ll want to calculate what it will mean in terms of rental value and tenant selection. Make sure your ROI drives all budgeting decisions.
In addition to the money expenditure, you have to think about how much time you’ll spend. When will you do the work, and how long will it take?
- Renovate before you rent. If you’ve just acquired a home or you’re moving out of a property that you once lived in so you can rent it out, a few renovations will probably be required to get it ready for the rental market.
Update anything in the home that looks old or tired. Your kitchen appliances should not be 20 years old, and you don’t want your plastic window blinds falling down. Renovating your property before you list it will attract better tenants and reduce your vacancy time.
- Renovate during tenant turnovers. If your current tenant is moving out, it’s a good time to take a look at the property and make some changes that will increase your ROI and maybe allow you to charge more in rent. Make sure you work quickly. Have your maintenance team in place before your tenant moves out so it doesn’t take you too long to renovate and prepare the property. Whether you’re installing a new water heater, upgrading the appliances, or putting in landscaping, make sure you follow your budget and your timeline closely so you can get the home rented again.
- Renovate if you’re hoping to sell. When you’ve been renting your property for 20 years and you’re ready to sell it and do something else, you’ll want to make some renovations to prepare it for the sales market. This might include completely re-doing the kitchen, increasing storage space, or painting the whole house. Wait until your tenants have moved out, and then make all the changes your real estate agent recommends to sell the home quickly and for the price you want.
Once you have a budget and a timeline, you can decide what to do first.
Benefits to Santa Rosa Rental Property Renovations
Maintaining your rental property is a given. You know you have to provide a safe and habitable home for your residents.
In order to be successful as a landlord and investor, you need to go beyond basic maintenance. You need to keep the property updated and modern. Renovations will be required. Making these upgrades and updates are a good way to protect the condition and value of your property.
You’ll minimize maintenance costs and maximize your property’s value when you keep up with renovations.
Additional benefits include:
- Higher Property Values
One of the most significant benefits of rental property renovation is an increase in property value. Renovations can help you to improve the appearance and functionality of your property, and in doing so, its value will increase. And when you invest in the right renovations, you can enjoy higher rental rates, which will help you to recoup your renovation costs over time.
- Attracting Well-Qualified Santa Rosa Residents
When you keep up with renovations that are in high demand, such as smart home technology, security, energy-efficient appliances, and in-unit laundry, you can attract high-quality tenants who will be happy to pay higher rents for your property. It’s always better to have a larger pool of tenants interested in renting your home, and you can be more selective about who you approve. A properly renovated property will also give tenants a sense of pride in their home, encouraging them to take better care of the property during their tenancy. Happier tenants lead to lease renewals and higher ROI for you.
- Controlling Maintenance Costs
Renovations are necessary when you want to reduce maintenance costs. By making significant improvements, you can ensure that your property’s plumbing, electrical, and heating systems are up to modern standards while at the same time eliminating the need for frequent repairs. You’ll avoid deferred and unreported maintenance issues, which are always more expensive to address.
This attention to renovations can save you money over time, and also allow you to address all necessary improvements before issues become severe enough to require more extensive repairs.
- Better Energy Efficiency for Your Rental Property
Almost everyone is more concerned about conserving resources these days. Tenants find an energy-efficient home more attractive. Your renovations will provide an opportunity to make your rental property more energy-efficient. This can potentially lead to lower utility bills and decreased operating costs.
Here’s an example. By updating the insulation, replacing old windows, and switching to more energy-efficient appliances, you will significantly trim energy costs and reduce your property’s carbon footprint.
- Renovations Provide a Competitive Advantage in Santa Rosa’s Rental Market
In a competitive rental market, it’s essential to keep your property looking its best. With the right renovations, you can maintain an edge on your competition. By keeping your building’s exterior looking polished, updating your bathrooms or kitchen, or providing modern amenities, you can create an attractive alternative to other rental options in the area. This way, you can stand out and be the first option for quality tenants looking for a new rental home.
This is your investment property, which means you want to continue investing in it. Your attention to renovations and remodels will help you protect that investment and enjoy few other benefits through the lifetime of your rental property.
The renovations that will work best for you depend on your property. We’ll have to consider its age, its existing condition, and how it compares to other homes on the market.
We’ll also need to talk about your budget and the timeframe that you have to make these renovations.
There are a few updates we always recommend: fresh paint, hard surface flooring, improved landscaping and curb appeal, and more attractive fixtures, faucets, and lights. We also like some of the smart home technology that’s available. However, your property is unique, and different improvement projects will work best for you.
Let’s talk about them. We can help you make the best decisions for your investment goals and your investment property. Please contact us at Prestige Real Estate & Property Management. We manage homes in Sonoma County, including Santa Rosa, Windsor, Sebastopol, Petaluma, and Rohnert Park.
