Your tenant of 8 years just moved out and you are suddenly realizing that the market rent is nearly 50% more than what they were paying! Other houses with similar square footage are going for monthly rents that would double your cash flow on this property if you can charge similarly. However, the popcorn ceilings, shag carpet, beige walls, and yellowish-white trim are basically singing Mr. Roboto by Styx. In other words, this is not a “top of the market” rental property. In order to charge top rent, you know that you will need to make some improvements. But where do you start? Projects like this can often pick up momentum to the point that you have not only updated everything, but customized everything to the point that with a perfect tenant it would take 5 year plus to recoup your renovation costs. This obviously defeats the purpose of making any improvements at all. So again, where should you start?
We have broken the typical thrifty rental renovation down into 5 simple categories to get you pointed in the right direction.
- Paint and DrywallStep number one is to get rid of that dated popcorn ceiling texture and repaint the interior of the home. Depending on where you live, you can expect the entire popcorn reversal process to cost between $3-$4 per square foot. This does not include the additional cost of trim, door, wall, and ceiling paint which should be and additional $2.5-$3.5 per square foot. Yes, this is an investment. But speaking from experience, doing an entire remodel to the exclusion of popcorn reversal is not the way to go. If you need to stretch your budget, this is not the area to skimp on.
Step two is to eliminate the constant headaches associated with carpet! Every time a tenant moves out, you will need to steam clean if not replace the carpets. For this reason we highly recommend converting to vinyl plank. It is scratch resistant, easy to clean, water resistant, and classy. You can expect to pay between $3.5-$5.5 per square foot for this item. This will include materials and labor and the final cost will depend on what material you choose.
Next priority is to replace those dated light fixtures, fans, faucets, toilets, and shower trim. If your investment property is older, there is a chance that there is fluorescent lighting in the kitchen. In this case, we also recommend converting to recessed LED lighting. When selecting fixtures for the home, don’t feel the need to get too custom. Even builder grade chrome or brushed nickel fixtures will be a huge update. You are not necessarily trying to “wow” anyone or make a statement. The goal is simply for a potential renter to not notice the fixtures at all.
4. Kitchen updates
This item is unspecific intentionally. You can decide based on your budget how far you want to go in the kitchen. And this will depend greatly on what the most dated part of the kitchen is. If the appliances are old and discolored, replacing them with matching finish appliances including the refrigerator, dishwasher, range, over-range microwave, and sink/faucet may be the best thing you can do to increase desirability with renters. If your budget allows you to go further, cabinet paint, countertops, and backsplash will make a huge difference in a renters willingness to pay market or above market rent.
Updating the bathrooms is also a high value remodel item to address. Again, this is an area in which customers can lose their way with over customizing things. The goal is for the bathrooms to be clean and up to date. Not necessarily fancy or custom. We recommend first and foremost, a new tub/shower with a subway tile surround. If you want the shower to be a little more classy feeling, 3”x12” subway tile is the way to go. Otherwise, 3”x6” is sufficient Additionally, new vanities, vanity tops, and mirrors will round out this part of your project.
Remember, nothing about this remodel project needs to be custom or fancy. You are not going to treat this remodel as if it were your own house. The goal is to invest in long lasting, up to date improvements that will justify charging market or above market rent.