How to Increase the Value of Your Rental Property
As a homeowner, you likely know that making certain renovations may help increase the value of your property. But when you’re also a landlord, updating your property may make it more appealing to potential renters and allow you to increase monthly rent, according to Zillow. If you’re contemplating on making renovations to your rental property, read on to learn what factors help determine rent prices and what upgrades tend to offer the biggest returns.
What Factors Determine Monthly Rent?
Before you decide on upgrades, you may want to determine how much you can charge for your property’s monthly rent. Take a look at your local market and compare your property with other rentals in the area, says Zillow. Getting familiar with the cost of rentals when their property is the same size as yours, or has similar features (such as the number of bedrooms and bathrooms, or a garage), can help you set a guideline when determining your rental price. If you find that your property is in better condition and contains more features or upgrades, you may be able to increase the cost of rent at your place, Zillow says. As you consider upgrades, you may want to compare the rental cost of homes with similar features to the ones you’re considering, to help you decide whether they are worth the investment.
Renovations With the Biggest Return
Certain home renovations may put a percentage of what you spend back into the value of the property — the average renovation adds about 65 percent of its cost back to the value of the home, says U.S. News & World Report. For example, if you spend $500 on an upgrade, you would potentially increase the value of your home by 65 percent of that cost on average, or $325. According to Remodeling magazine, these are some renovations that have the highest potential for return:
- New garage door: 98.3 percent
- Upgraded front door: 91.3 percent
- New deck addition: 82.8 percent
- Minor kitchen remodel: 81.1 percent
- Siding replacement: 76.7 percent
- Window replacement: 74.3 percent
- Bathroom remodel: 70.1 percent
If you’re a landlord getting ready to remodel, remember that you can boost the value of your property while also making your place more desirable to renters. Be sure to do your research and choose renovations that are suitable for your property, location and budget.
Originally published on April 20, 2016.