There is a lot that goes into owning a rental property. Between staying on top of expenses, finding good tenants and maintaining the property, there is a lot to keep you busy. Regardless if your goal is monthly cash flow or you are looking to hold the property for the foreseeable future, there are things you should do to increase your returns. With rental demand still high, there is plenty of competition out there and unless your property stands out, renters will look elsewhere. With a rental property, it is often the little things that can have the greatest impact.
There are only very few rental properties that can sell themselves. These are the unique rentals that are located in the right area – each of which can name their own rental price. For all the other ones, you need to create value or offer something that other properties can’t. Many landlords think that if they follow the market and keep their price in line with the area that renters will come every year. Renting is not the same as selling your home, but you do need to make it desirable. Price is usually the most important factor with prospective renters, but if you can do little things to make your home stand out you can get the price you want without have to worry about finding tenants.
It is important that you know who your competition is. Renters will typically look at multiple homes in an area and stack them against one another. If you do not know what other properties offer, you can end up spending money on work that is unnecessary. The amount of work you do is the biggest thing that separates your rental from the others. You don’t need to make your home into a castle, but renters want to live somewhere with a modern feel. All things equal; you will have a much easier time finding tenants if the house is updated rather than if you kept the bathroom intact after you bought.
You may think it is unnecessary, but the appliances you provide and the condition they are in is often a deciding factor. First off, start with the obvious and make sure you offer a washer/dryer and a dishwasher. If your tenant cannot do laundry in the house, they will reduce the price and demand accordingly. Even if you have to pay to have the plumbing put in, it will pay for itself over time. As far as appliances go, you don’t need stainless steel, but you should definitely replace them with newer models. Just like with a home you would sell, bathrooms and kitchens are important – even more so in a rental. If you only have one bathroom, you need to take steps to make it stand out. This could be something as small as new fixtures or as big as a new tub. If you go for used appliances in the attempt to save some money, you will see the consequences when you try to find a tenant.
As far as amenities if the property doesn’t have a large yard or driveway parking you need to compensate for that. Two things you can do are looking for efficient heating and add central air. Neither of these options will be cheap but just like with appliances they will offer a great long term return. If you can convert your oil heat to electric you can save your tenants hundreds of dollars over the course of the year. You can make your money back either through rental increases or you will have a happy tenant that wants to remain in the house for as long as possible. Central air is another amenity that your tenants will desire. Air conditions and fans can add to an electric bill just as much as using the central air but the difference is enormous.
Every lease or every other lease you should look at the condition of your rental. It is a good idea to get rid of rugs and replace them with hard wood floors. There are plenty of great wood flooring options that stay clean and hold appeal much longer than carpets. If the carpets are dirty they give the impression that the rental is dirty and thus demand will be reduced. The same is the case with the walls. Every few years you should add a fresh coat of paint to the halls and living room. Even your best tenants can get fingerprints on the wall make it look more worn that it really may be. By using a nice satin finish you can make the walls pop and give off a great first impression to all prospective tenants.
Once you make the right updates, your rental property should be good for several years. The key is to look at your rental through the eyes of prospective tenants in relation to what else is on the market. If you make the right updates and it has a clean look and feel it will be much more desirable than other rentals on the market. This will allow you to increase your rents every few years without out pricing the market. With the right updates, you can get the rental price you are looking for.