Maximize your ROI without breaking the bank

A fenced in yard, central air conditioning, an extra bathroom, an exposed brick chimney, in unit laundry, off street parking, WHAT exactly are renters looking for? What amenities will they pay more for? 

Everything from time of year to the neighbor next door to your investment property can impact how much you can rent your property/ies for. Here are a few small things that you can do to increase your rent, lower your vacancy, and maximize your ROI. The most important thing to remember is that residents who are able to pay peak rental prices are mainly attracted to a property due to the "wow" factor. Think about what cosmetic items you can update, you'll get more rent from a new kitchen than if you upgrade all the plumbing/electrical throughout the home. 

In my experience, the following amenities can add $50/month to the rental value of your investment property:

- Fenced in Yard (only if you allow pets)

- Garage (attached or detached, especially in states where it snows)

- Stainless Steel Appliances (check out your local scratch and dent store, you can often get a set for $1500-$2000)

- New Paint (try Grey or White for a modern look)

- In unit Laundry (not coin-operated)

These next items typically add $25/month to the rental value:

- Central Air Conditioning

- Off street parking (parking pad, uncovered parking)

- Allowing pets (studies show over 60% of renters own pets, you are still able to charge a pet deposit in addition to raising the rental price by $25)

If you've got a little more liquid cash to play with, try the following for increases of $100-$500/month in rental value:

- Updated bathroom (new paint, new flooring (try Vinyl Plank or re-finish those hardwoods!), new vanity (do a double vanity for maximum rent), new toilet, add a few outlets, updated bathtub with tile surround, new light fixture/vent/fan)

- Updated kitchen (new paint, new flooring, updated appliances, butcher block or granite counter-tops, upgraded cabinets (try white ones from IKEA for a great look at an affordable price), subway tile back-splash, add a dishwasher, add a few outlets, tear down a wall and add an island if possible)

- Finish an unfinished basement

- Add additional bathroom

- Add an additional bedroom (if you have two living rooms, or a dining room that could be converted into a bedroom, it's likely worth doing so)

Last summer, I had an investor who wanted to increase his rental value while still ensuring a great investment. I had the kitchen updated (kept the white appliances, but did new paint, new flooring, new cupboards, and new counter-tops), replaced the old vanity in the bathrooms, and did all new vinyl plank flooring throughout the unit. The total cost was around 10K for the upgrades, and the rental value went from $850 to $1200. 

If your investment property is currently rented out, and you're not able to start a project, here are some things you can do to lower vacancy and help it stay rented while increasing your ROI.

First, NEVER wait to market your property until the current resident has moved out. This guarantees you at least a few weeks of vacancy that is easily avoided. Renewing is always cheaper than finding new residents, so I contact my residents between 3 and 6 months before their lease expires, and offer them a renewal package. This includes a property upgrade that costs the investor between $100-$200 that the current resident can choose if they sign the renewal lease. These upgrades can include a new light fixture in the kitchen, new carpet in a bedroom, a new paint color in the living room, etc... The renewal price should still be an increase from their current rental price (check out your local market to adjust your rental price accordingly), so the upgrade will be paid for by their increased rental rate, while giving the residents more of a sense of the rental being "their home", and also improving your investment.

If the residents have decided to move to a different area, buy their own house, or simply do not want to renew, you now have a 3-6 month heads up that you'll need to find new residents. In most states, you can enter the property for showings with a "reasonable notice", in Michigan, I give my current residents at least a 24 hour notice of any showings. This way, you're able to market the home for the date it will be available, and have prospective renters sign a lease BEFORE it ever goes vacant. If you plan on doing a few property upgrades in between tenancies, simply put that in your rental ad and let prospective residents know your plans.

Just remember, treat your residents well and you just might be surprised at how well they'll treat your property, and how long they'll want to stay!