Are you thinking of remodeling an investment property and renting it out?
When it comes to rental apartments, presenting a fresh, updated space can both increase its attractiveness to prospective tenants, and also command a higher rent price.
When considering all the possible remodeling projects and their costs, its important to pick ones that will give you the highest return on investment (ROI), without breaking your bank.
Lets take a look at 5 rental apartment remodels that really pay off!
Avoid the Number # 1 Remodeling Mistake Rental Property Owners Make!
Before we dive into the specific renovations you should consider, you should know that there is one common error that many property owners make:
Invest a lot of money into a high-end remodel, WITHOUT taking into account the local neighborhood trends and rental prices.
The price you can get for your property is primarily driven by local rental pricing trends. This is because people looking to rent, first pick a particular neighborhood with all the amenities it has to offer, and then search for the right apartment in that area. This means that if your apartment is located in a low-median income neighborhood, you will not be able to charge significantly higher rent, just because your apartment has a luxury-style remodel.
So before you drop cash on expensive materials, finishes and fixtures, do some research about rental prices in your area. It is also a smart idea to go check out what other apartments, similar to yours look like. Look at both old and renovated properties, and compare how much they go for.
Remodel Cost vs Value
Property owners across the US, report rent increases of 10-30% from renovation expenditures of $2,500-8,000. Of course, the ROI will vary based on your location, the age and curb appeal of the building your apartment is located in, and the surrounding competition.
When planning how to allocate your renovation dollars think of what updates will make the best first impression and offer the greatest overall value to the tenant. Perhaps new granite countertops are an unnecessary luxury, where as overhead lighting in the bathroom is an impressive and useful feature.
The bottom line is that unless there are major existing structural problems in your apartment that need to be fixed, your remodel can yield a great ROI by simply making interior cosmetic improvements that have a visual punch. Spending as little as $2,000-3,000 dollars on your unit can give you a nice rent appreciation bump of $75-110/month.
5 Top Remodels for a Rental Apartment
Here are the best remodels for a rental property, that have consistently proven to bring in the greatest ROI. Depending on the current condition of your apartment, you can combine these to give your tenants the most value and get a nice increase in rent.
1. Replace Old Carpeting
One of the biggest turn-offs to prospective tenants is old carpeting. If it has visible stains and even a slight smell, it is best to replace it. New flooring does not have to break your bank, and there are a number of attractive and practical materials you can consider, such as laminate flooring, engineered hardwood and real wood. New carpet flooring is also a great option, especially in bedrooms, and many people love the look and feel of good quality carpet.
Real hardwood is by far the most expensive investment, but its also the most lasting and attractive. If your property is located in a high-end neighborhood and you are planning to charge fairly high rent (2,000+/month), installing new hardwoods, or refinishing the existing wood floor is a smart idea.
Costs: you can expect to spend the following of different flooring materials:
$2-3 installed for laminate flooring
$3-4.5 installed for engineered wood
$3-4 installed for carpet
$4.5-6.5 installed for hardwood flooring
2. Improve Interior Lighting
Very few people would be thrilled by the prospect of living in an apartment that looks and feels dark both day and night. While you cannot control the amount of windows and natural light your unit offers, you can maximize the amount of interior lighting it has. Adding extra lighting to such essential spaces as the living room, kitchen and bathroom can make a huge difference in the overall look and feel of the apartment.
If possible, consider installing overhead lighting, as people appreciate it much more than other types of light. Even replacing old, ugly lighting fixtures with more modern ones, can create the necessary visual punch.
Cost: adding a new, beautiful light fixture can cost $70-200. To put new wiring in place for an overhead light requires the services of a professional electrician. Expect to spend $400-550 per fixture. If you are looking to put in recessed lighting in a single room, the average cost will be $750-950
3. Add a Fresh Coat of Paint
Painting your unit is an easy and essential update that will make a huge visual impact. A freshly painted space always looks more modern and inviting, so its definitely worth the investment. Additionally, if you are into DIY, you can save a lot of money by painting the apartment yourself, as this project requires little special skills, equipment or experience.
When choosing your color pallet, its best to avoid trendy or overly bright/bold hues, as these will not be attractive to a wide range of people. Its best to keep the colors neutral and warm. For example, off-white, beige, and greige, will look beautiful without being too overbearing.
Cost: on average you can expect to spend about $3-5/sq.ft (includes walls, trim and ceiling) for a professional painting job. To paint an average size, 1500 sq.ft. apartment will cost about $2,700-3,200 (includes all labor, materials and 2 coats of professional grade paint, such as Behr).
4. Update the Bathroom
One of the most usable and highly scrutinized spaces in an apartment is the bathroom. This is precisely why doing a bathroom remodel has one of the highest ROI’s: 70-80%. However, it also has one of the highest initial investment costs, to fully remodel a small bathroom can start at least $10,000.
The good news is that unless the bathroom in the unit looks very old, dingy and is also not very functional, you can most likely get away with doing minor renovations and resurfacing, rather than full replacement.
Among small, but highly effective renovations are:
-adding more lighting
-replacing the vanity and faucet
-replacing the shower head
-resurfacing the bathtub
-cleaning tile grout
-replacing/adding shelving or cabinets
-replacing the toilet
-adding a new shower curtain
-adding a mirror
-adding a bathroom fan
Remember, your goal is to make the bathroom look updated, comfortable and functional.
Cost: depending on the current condition of your bathroom, it may cost you anywhere from $500-3,500 to do some or all of the updates listed above.
Add New Appliances
The kitchen is another essential space that renters require to be updated and functional. One of the most important features people care about are the appliances. No one wants to move into a place with an old, barely functional fridge or stove. Having a working dishwasher and microwave are also a must.
When replacing major appliances, especially if you need to do all of them can be a major expense, there are smart ways to save money. First, think functionality rather than looks. Unless you have a luxury unit, most people are not looking to have stainless steel appliances, and you don’t have to spend hundreds of dollars extra to install them in your unit. Second, consider getting open box appliances from stores such as Best Buy. They offer great deals on these units, and you can get savings of 30-50% off.
Lastly, if you have space in your property (like in a closet, bathroom or kitchen), consider installing a washer and dryer. You can find compact size combination units as well (washer/dryer in one). This will be a huge perk and a selling point to many prospective tenants, especially if there is no laundry in your building.
Cost: depending on what appliances need to be replaced and the brands you want, expect to spend $250-3,000