You’re a property owner. You wouldn’t buy a property with a leaky roof just because it’s got a fresh paint job, and prospective renters deserve the same considerations. Invest in your property for the long-term, and good renters will show their appreciation by investing in your equity.
Building as a guide for rehab
When a building is first going up, everything starts with a stable foundation. Think of your capital investments the same way. Safety and security are the number one concern of any human being. When you’re ready to invest in your property, inspect it for issues that could post safety hazards. Are there water intrusion concerns? Replace rotten siding and structural components before even considering new kitchen counters. Once your investment is safe for those who will depend on its solid foundation and sturdy walls, it’s time to move on to amenities that will stand the test of time.
Keep improvements neighborhood-appropriate
Renters expect an affluent downtown loft to look very different from housing in a middle-class residential neighborhood, and rents usually reflect those expectations. When improving a property’s marketability, it doesn’t make sense to over-improve beyond what the market will bear. Maybe instead of granite, laminate countertops would be a better investment. Or, on the other end, renters in your neighborhood may walk away from a property with carpet, preferring hardwood or laminate.
Improve your property structurally, make it safe and secure, and then make it attractive when compared to what else is available in the area. Foundational improvements are those that improve a property’s value, not just its marketability. Base your rehab investments on what makes sense to tenants and the market, and back away from any big-ticket expenses that won’t add value to your property’s bottom line.