As a real estate investor, your main goal is to provide safe and adequate housing for tenants while maximizing rental returns. If you’re renting out an outdated home with little modern upgrades, you’re putting yourself at a disadvantage. Investing doesn’t mean just buying the property; you’re investing in its growth and expansion, too. You can maximize rental returns with some popular home upgrades, putting you closer to financial freedom and career success. Where should you start in terms of upgrades if all tenants have varying tastes?
Renewable Energy
One of the most widely appealing home upgrades is switching to a renewable energy source, such as solar or wind energy. While these upgrades require the installation of solar panels or wind turbines, you can provide tenants with clean, unlimited energy that will save them tons of money on utility bills. Younger, environmentally friendly tenants will be attracted to your property in droves! While these upgrades cost upfront, rental value will skyrocket.
Efficient Appliances
If committing to a full solar upgrade isn’t for you, starting smaller may be a better alternative. Major home appliances like water heaters, refrigerators, HVAC systems, ovens, washers, dishwashers, and dryers can use a lot of energy to run, especially if models are older. Upgrading to more attractive, efficient appliances is safe, cost-friendly, and aesthetically pleasing to modern tenants. Swap out the older appliances for new ones, and see how big your rental returns will get!
Larger Property
A large property has a lot of potential for gardening, farming, and outdoor amenities tenants can enjoy. You can install these upgrades over time as you generate more rental income to maximize profits. If you’ve already purchased a property, you may be able to buy adjoining land to increase the property size. If you haven’t purchased a home yet, try to look for options with sizeable properties or yards for potential upgrades and expansions. You may be limited to the amount of acreage you can buy with traditional property loans. You may want to consider investor-friendly financing options, like DSCR (Debt Service Coverage Ratio) loans that determine loan amounts and eligibility based on potential rental income instead of your personal, current finances. DSCR loans for larger properties in warmer states like Mississippi, Florida, and Georgia are perfect for outdoor enthusiasts and gardening tenants. Your rental income will go far in these locations.
New Flooring
The more tenants cycle through your property, the more your flooring will wear down. Thankfully, installing cost-effective and rental-friendly flooring like vinyl planking can reduce the cost of updates while giving tenants peace of mind from brand-new flooring. Hard floors are easier to clean between tenants or for pet-owner tenants than carpets. Tenants who prefer soft flooring can decorate the space with rugs, appealing to many preferences.
Patio or Deck
Outdoor entertainment is more popular than ever. Many homeowners are fleeing outdoors to fire up a grill or pizza oven. If you provide ample space for outdoor living, like a beautiful patio or scenic deck, tenants will pay top dollar to live there. Consider installing or cleaning up the deck space between tenants to maximize your returns. On a flat surface, even a small patio can make a home more valuable.
Versatile Bathroom
Older homes tend only to have one bathroom, and it’s typically smaller, with no room for storage or counter space. Thankfully, there are many DIY-friendly or affordable ways to spruce up your rental property’s bathrooms. Swapping an older toilet for a newer model can reduce plumbing issues. Larger bathtubs or luxurious showerheads can make tenants consider your property over others in the area. Instead of a pedestal sink, make a quick upgrade to include a sink with cabinets and adequate counter space. If the home only has one bathroom, double sinks may be a worthwhile investment. Bathrooms are one of the most important rooms in the house; don’t skimp out, and your returns will speak for themselves.
Pool or Spa
If you want to go above and beyond in the world of entertainment space, you can install a pool or spa in the rental property’s backyard. Pools and hot tubs cost a lot of money to install, and you’ll need to include pool maintenance on your list of property management tasks. However, pools and hot tubs are highly sought after, and you can increase rent to circumvent the costs. If you really want to improve your rental value, you can’t go wrong with a pool.
Fencing
If your rental marketing plan will cater to pet owners or parents, fencing is an excellent and cost-friendly choice for investors to consider. A fence makes a property private and secure, allowing owners to take their dogs out for play or bathroom breaks conveniently. Fences can also keep children supervised and contained in the yard. Many affordable fencing options can easily boost property value.
Finished Basements
In many states, basements are promising additional rooms that usually serve as storage, entertainment space, or an extra bedroom. If your rental property has an unfinished basement, consider adding some finishing touches. You’re wasting rental income potential without completing all the rooms! Tenants can choose what they do with the extra space, but you can see high returns regardless.
Home Security
A safe home is a valuable home. Security and safety upgrades are major contenders for most tenants, especially parents. Consider installing security or smart cameras that tenants can use. Security systems also provide peace of mind. Fencing, video doorbells, or locked mailboxes are all affordable and decent security upgrades you can give to your property to boost value and keep tenants safer.
