Open floor plans, plenty of closet space, and a new roof are worthwhile investments that can help drive up rent prices and the total value of your single-family rental (SFR), not to mention making it easier to rent. But you do not want to rehab your investment property beyond the neighborhood’s value, especially in areas focused on affordable housing.
Instead, focus your upgrade and renovation efforts on functional improvements that can save you money and hassle down the line, such as a new roof or energy-efficient windows. Any such improvements that can reduce heating and cooling costs are specifically valuable if you include the cost of utilities in the rental price.
There are plenty of areas you can save money by using builder’s grade materials or foregoing upgrades altogether. Here are a few:
1. Skip the granite countertops and custom kitchen cabinets.
Custom, solid wood cabinets, and granite or other high-quality countertops could represent a significant portion of your rehab budget for an SFR. But prospective tenants aren’t likely to look into the quality of construction that closely. Opt for builder’s grade materials if the property needs a new kitchen to meet code.
If you can, skip the kitchen remodel altogether. A fresh coat of paint and perhaps new cabinet hardware can provide a clean look and save you thousands of dollars to spend where it really matters.
2. Eliminate costly ceramic tile, hardwood floors, or engineered hardwood from consideration.
Flooring materials in a rental should be affordable, durable, and easy to care for. Tenants may not be conscientious about caring for expensive hardwood floors or keeping carpets clean. Choose more affordable vinyl tile or even luxury vinyl tile to give your SFR property a fresh, new look without overspending in flooring upgrades.
3. Don’t splurge on high-end appliances for your SFR.
By law, landlords do not have to include kitchen appliances in a rental at all. However, if you fail to provide a stove and refrigerator you could severely limit the pool of tenants willing to rent your SFR. If the existing appliances are clean and functional, you may not need to upgrade. If you do purchase new appliances, forego the Internet-enabled smart refrigerator and high-end stove in favor of less expensive models that look nice and perform well enough.
Know What Your SFR Needs
You might be surprised to learn that your SFR property may need fewer improvements than you would put into a fix and flip investment. Ensure the SFR has functioning heat, electricity, functioning plumbing systems that include hot and cold water, and working door and window locks. The house must meet all building and safety codes for your area, and provide shelter, with functioning doors and windows and a roof that doesn’t leak.
Knowing where it pays to upgrade and where you can save can help reduce rehab costs to improve your profits.
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