One essential question that often perplexes many Virginia Beach real estate investors is whether there is such a thing as too much property rental rehab. Can you really go overboard when renovating your rental property?
Whether you're local to the area or invest here from out of state, the simple answer is yes, it's possible. Let's explore why the right renovations are crucial when updating rental property! Our property management experts explain it all in this blog.
Let's face it, we all appreciate the appeal of a sleek, modernized rental property — complete with the newest amenities, polished countertops, and high-end appliances. However, when it comes to rental properties, 'fancy' doesn't always equate to more rent.
A common pitfall many rental property owners fall into is overdoing their property rehab projects in the hopes of attracting higher rents. While a newly rehabbed property may indeed attract prospective tenants, they may not necessarily be willing or able to pay a higher rental price for the privilege.
Contrary to what many might believe, renters typically lean towards affordable quality. They seek comfortable living spaces that offer value for their money.
Our property managers can tell you that while luxurious amenities can certainly add appeal, inflating the rent too much can deter a substantial portion of potential tenants. This is especially true if your rental property is located in an area where most tenants are price-sensitive.
Instead of approaching property upgrades with an eye toward what you might want in your ideal home, think about what renters look for (and will pay for) to rent a home in that location. Upgrading a home to be the best, most expensive home on the block might show nicely, but it might not attract renters who can afford the high rental price you'll need to generate an ROI that justifies the pricey upgrades.
So, does every rental property need a full-blown rehab? Absolutely not.
Sometimes, the smallest improvements can significantly enhance the appeal of your property. These improvements can range from a fresh coat of paint, new hardware in the kitchen and bathrooms, or simply providing a clean, well-maintained space for tenants to live in.
The advantage of such improvements is that they are less costly than a full rehab while still potentially increasing your property's attractiveness. So, before you decide to gut and renovate your entire rental property, consider whether more minor, cost-effective upgrades might do the trick.
Property owners must examine the potential return on investment (ROI) before embarking on a rehab project. Does the cost of your intended rehab align with the potential increase in rental income?
A property manager recommends considering the rental rates for the area. If your property's rent after rehab significantly exceeds the average rent in the vicinity, finding tenants willing to pay the premium may be challenging. Balancing the costs of renovation with realistic rental rates is key to ensuring a good ROI.
What kinds of property updates can be ideal for delivering quality homes that renters want without overspending on costly upgrades? Here are a few ideas!
Quality laminate or tile flooring (instead of hardwoods).
Laminate countertops (instead of granite)
New cabinet hardware for cabinets
New bathroom faucets and light fixtures
New doorknobs and hinges
Smart locks
New appliances
These upgrades deliver quality and durability without becoming costly property rental rehab options. Additionally, potential tenants will appreciate updated features that don't price a home they want out of their range.
For insights into the upgrades that can help you find quality tenants and generate the returns you need, experienced real estate management companies can help!
While rental property renovations can certainly add value and attract tenants, there can be too much of a good thing. Over-rehabbing can result in inflated rental prices that could potentially deter prospective tenants and negatively impact ROI.
However, by focusing on providing affordable quality and considering the local rental market and potential ROI, property owners can ensure that their rental properties are attractive and profitable. Remember, sometimes less is more when it comes to rental property rehab!
When in doubt about the best upgrades for a rental property, consult a rental management expert like Osprey Property Management! We have years of experience in property rental rehab and helping investors optimize returns. We can provide invaluable advice and property management services to help you determine whether a full rehab is necessary or if minor improvements are the best choice to find good tenants and set a competitive rental rate.
Reach out to our team to learn what renters look for in a Virginia Beach rental home! Then, learn more about building a profitable rental property portfolio with our free guide, "Real Estate Investing: How to Grow Your Portfolio."