Here are five tips for renovating rental properties. Pay attention or you could lose money, tenants, or both.
Whatever you do, make sure you obtain the correct permits before you carry out any renovations on a rental home. It’s OK to replace a kitchen or add a new bathroom, but once you start knocking down walls or adding extra rooms or a porch, you will need permission.
Penalties for illegal renovations are punitive. City housing officials can force you to remove all traces of a renovation, even if the work was carried out many years previously. It isn’t worth the risk, so do it by the book. Cutting corners to save a few dollars will always come back and bite you.
Think about the type of tenant you are hoping to attract. An upmarket condo in a smart beach area is very different to a small family apartment in a cheap neighborhood. The type of work you do will reflect this. For example, it’s pointless spending a fortune on an expensive kitchen and bathroom if your target tenants are blue collar workers on the minimum wage. The rent you will need to charge to cover your costs is going to be much too high. On the other hand, upmarket executives will expect the best of everything in any property they rent, so low-cost fixtures and fittings won’t cut it.
Have a budget in mind and stick to it. This is a business, so blowing your budget could impact other areas of the business.
There comes a time in any landlord’s career when selling up is the only sensible option. Perhaps you need to release some capital to pay a few bills or the bottom has dropped out of the buy-to-let market. Either way, you need a hassle-free way of freeing up your cash as quickly as possible.
“Selling your house takes more a lot more time and effort than many people can afford," states Henry Camacho from Max Cash Home Offers. "Our Days On Market Tool can give you a realistic expectation on how many days it takes to sell your house in your zip code.”
Once you know how fast properties are selling, consider carrying out some renovation tasks to make the property more attractive to buyers. A nice modern kitchen or bathroom could be just the ticket.
Expenditure falls into two camps: revenue and capital. Make sure you know the difference and speak to your accountant if you are unsure. Once you have done this, keep detailed records of everything you spend, as it may be tax deductible.
Treat your properties like a business asset, as that’s exactly what they are. Keep them well maintained and when the time comes to sell, you can reap the rewards.