5 Tips on Renovating an Investment Property for Renters
Not maintaining a property makes you a slum lord – and that’s not cool. But going all out on renovations when it comes to investment properties isn’t a good idea either. Revenue properties are for one thing only – making money – so here are some tips to help you balance taking care of your investment while avoiding costly renovations that will add little value to your revenue property.
Never Finish A Basement
Unless you’re putting a basement suite in a home, it isn’t usually worth it to finish a basement. The square footage of a house is calculated based on the above grade size of the home. That is, the basement isn’t counted. Although basements are common in a lot of houses and townhomes in Edmonton, they are not seen as valuable spaces compared to the rest of the home.
The basement is still space, and it can be used for storage or laundry or something other than living space, so it might be desirable to have a basement, but most renters will not be willing to pay more to have a finised basement.
So save yourself some money and if the basement isn’t already finished, just leave it the way it is.
Avoid Energy Efficient Items That Cost More
[pullquote_right]If you have some old windows that work fine, but may not be energy efficient, just leave them how they are[/pullquote_right]
Ok, so if your revenue property’s windows are falling out, you’re going to have to replace them. But if you have some old windows that work fine, but may not be energy efficient, just leave them how they are.
The bottom line here is that if you replace something that works ok with something that costs more because it’s energy efficient, you’re not going to make money on it.
When you replace your furnace with a more efficient model, you’ll be saving money every month on your own heating bill. But if your tenant is paying the heating bill, why are you worried about saving them money? Remember, you’re running a business here, not an eco-community. Try charging more for every little item you spent more on, and your potential tenant is likely to just rent somewhere else.
Your renters may appreciate lower energy costs, but will they pay more for them? Not likely. How long will it take to recoup your loss on something like a high efficiency furnace or energy star fridge? Just keep it simple and replace what’s broken and you’ll be doing the best for your balance sheet.
Use Kitchen and Bath Paint Everywhere
Repainting a home is something every landlord should want to avoid, and that can often be avoided by choosing the right paint in the first place. A little money spent here can save a lot in the long run.
Durable, cleanable paint is where it’s at when it comes to rental units. Flat paints do not clean easily, but glossy ones do. So if you want to be able to clean your walls and trim, be sure to use the most durable and cleanable paint you can find. Kitchen and bathroom paint was designed to hold up to hard scrubbing and damp environments unlike other paints often found in bedrooms and living areas. It won’t cost much more for the paint and the labour is the same, but it will make cleaning your rental property a snap when your current tenants move out.
Do Not Install Laminate Flooring
[pullquote_left]You might be able to take care of your floor at home, but your tenants probably won’t[/pullquote_left]
Laminate flooring is often inexpensive, but it might not be the best for a rental property. A lot of laminate flooring doesn’t wear well and sometimes can only last a few years. Laminate is susceptible to buckling, scuffing and water damage. You might be able to take care of your floor at home, but your tenants probably won’t.
Laminate may not be too costly per square foot to buy, but any downtime used for renovations will cost you money, and it isn’t as if installation is free. If you’re not installing the laminate yourself, the cost of labour will be a significant part of the total cost of redoing the flooring.
Remember that tenants are not often interested in keeping your property ship-shape because they don’t own it. Before you select any material, think about how it’ll hold up to wear and tear from someone who didn’t pay for it, and has nothing to lose but a damage deposit.
Get Your Renovations Done Fast
[pullquote_right]Try to schedule renovations during expected vacancies – perhaps even get permission to renovate small things while a tenant still lives in the unit[/pullquote_right]
You don’t have time to lollygag when it comes to renovating a revenue property. You want renters in there all the time, for every month you own your property, so the longer you take to renovate, the more rent you’re passing up.
Try to schedule renovations during expected vacancies – perhaps even get permission to renovate small things while a tenant still lives in the unit. Whatever makes things run smoothly and saves you money is what you should be aiming for.
For example, a roof can be re-shingled almost anytime that weather permits, and a stove could be replaced anytime. Painting and flooring are renovations that would likely have to wait until a property is vacant, but other items might not be so invasive. Try to think of what can be done when, and schedule appropriate maintenance and renovations at the most cost-effective times.
What You Are Really Looking For
Whatever you do to your revenue property, try to think about what will make you money, save you money and what won’t. It’s a balancing act trying to avoid costly repairs later on and needless spending right now – but it can be done. Choose your materials carefully to make sure they’re cleanable, durable and reasonable in cost while taking into account the added value of any renovations and the most cost-effective times to do them. If you can manage that, you’ll be making as much as you can as a landlord while saving at the same time.