If you’re looking for a way to invest that’s stable and allows you to leverage the cash of the bank rather than your own money, investing in real estate is probably the best option. Rental properties make a very popular investment because you can charge rent to cover the cost of the mortgage and utilities while building equity into the home.
Rental properties are smart when you buy in a great location that can sustain a rental. When deciding where to buy an investment property, Houston is a great market. Phoenix, Seattle, Colorado Springs, Orlando, and Las Vegas also hold great opportunities for rental property ownership.
Once you’ve made your purchase, make it attractive to potential renters. Making updates is a great way to justify charging higher rents and will attract more interest from high-quality tenants. But you want to only make updates that will ultimately pay for themselves. Consider these renovations that are worth doing.
Never underestimate the power of a good first impression. As tenants walk up to the building you’re renting, they’ll notice the grass, flowers, trees, and the rest of the landscape. If it has fallen into disrepair or lacks appeal, their first impression will already be dented before they’ve even seen the unit.
Landscaping is a simple update that usually costs less than $500, and it can have a direct impact on your tenant vacancy rate. Filling rentals is much easier when it’s beautiful outside.
- Exterior Painting
Another essential element of making a good first impression is the exterior house paint. Peeling or faded paint makes a property look unkempt and unloved. No one wants to live somewhere that looks like they don’t keep up with maintenance.
A classic, exterior paint job can lead to a 155 percent return on investment, meaning that not only will you appeal to renters, but you’ll also raise your property values.
- Kitchen Improvements
Kitchen remodels can get out of hand quickly. Before you know it, you can spend $20,000 or more on a beautiful kitchen. However, unless the space was in extremely poor shape before, this price tag is a little too hefty to pay off on a rental.
Make updates to your kitchen, but focus on producing results within a reasonable budget. Marble countertops aren’t necessary for most rentals and you don’t have to hire a custom cabinet builder. Oftentimes, you can simply reface old cabinets and install other affordable updates that will make your kitchen comfortable, attractive, and functional enough for your tenants.
- Minor Bathroom Upgrades
A major bathroom overhaul usually doesn’t pay for itself in the long run, but a few minor updates will. You’ll likely be able to keep the original shower, bath, toilet, and sink fixtures, although an updated vanity is always nice.
Focus on minor changes that can make a big difference. Re-painting, installing a large mirror, re-flooring, updating the backsplash and wall tiles, and other simple improvements will make a bathroom look more enticing without breaking the bank.
- Flooring Changes
The type of flooring you use depends on the type of property you’re updating. If it’s a higher-end property, go with hardwood. Tenants love the classy look, and it’s relatively easy to maintain. Choose light wood floors to minimize the appearance of scratches.
It’s more affordable to install vinyl, laminate, or carpet, however. If you’re working on a lower-end rental, these new floor options will look nice, but the installation cost won’t exceed the value.
- New Windows
Replacement windows add a lot of value to any property for multiple reasons. First of all, new windows look much better both inside and out. You don’t realize how much of a difference this really makes until they’re installed.
More importantly for your tenants, updated windows reduce utility bills. Old windows are drafty and make your HVAC system work harder, which raises heating and cooling costs. You can brag about lower utility rents, which tenants love.
Finally, vinyl windows have a 74 percent return on investment, which means you’re not losing as much money as you might think. It certainly pays off in higher rent and better tenants.
- Replaced Hardware
Here’s another small renovation that makes a huge difference in the overall appearance (and functionality) in a property. New hardware on cabinets, doors, lights, and detail work add a beautiful, finished touch to most surfaces.
Updated fixtures like lights, switches, and faucets also improve your home. These are basic, affordable updates that will easily pay for themselves in added value and tenant appeal.