As an investment property owner, it can be difficult to determine which upgrades are actually worth making to your property. Upgrades can be expensive, but an updated property is more attractive to prospects and will result in happier tenants that stay longer. Certain upgrades can also increase property value and reduce future maintenance or utility costs.
The goal, of course, is to invest the right amount of money on the right upgrades to increase property value, attract better tenants, and keep tenants for longer periods of time. But as any property owner will tell you, this is a difficult equation to figure out and it can be hard to know for sure if your upgrades will provide an actual return on investment.
As a full service property management company, we advise and guide our clients through the process of upgrading and maintaining their homes, always with an eye toward maximizing their return on investment and keeping their tenants happy. Over the past couple of years, this has become increasingly important in the Greater Boston Area, as there’s been an explosion in the supply of new apartments. This means property owners will need to focus on upgrades if they want to stay competitive within their market.
The Value of Market Research
One of the most important things to understand when upgrading any investment property is that your goal should always be to stay competitive within your local market. If you feel that your property could use some upgrades but it’s still more competitive than any properties nearby, it may not make sense to spend money on additional upgrades.
Alternatively, if your property is outdated compared to other units in the area, it’s almost always going to be worth it to spend some time and money on upgrades. An outdated house will be harder to rent, fetch lower rent prices, and cause tenants to feel neglected. That means more turnover, more headaches, and less return on your investment. In some cases, the upgrades you make can be paid back with just a few months of increased rent prices.
This is why we always do thorough market research before making upgrades to our clients’ properties. This will help us determine which upgrades are (or are not) required. With that in mind, let’s look at some of our favorite upgrades that are quick, cost-effective, and most importantly, will make your tenants feel at home in your property.
1. Curb Appeal
When most property owners think about upgrades, their mind naturally gravitates toward the interior of their home. But external upgrades are just as important and can be cost-effective in terms of keeping current tenants happy and attracting new tenants. Planting flowers, grooming trees, putting on a new coat of exterior paint or power washing walkways can all be done while tenants are living in the unit and for little upfront cost. These small upgrades can greatly improve your property’s curb appeal, attracting better tenants and making your current tenants feel better about the place they live.
More significant upgrades like refinishing balconies, repaving driveways, and installing exterior lighting can be costly but are sometimes worth it in the long run. Again, some simple market research will determine which of these upgrades are most important for your specific property—but no matter what you do, don’t forget about the exterior of your building!
Appliances are one of our favorite upgrades to make in any property because they are quick, easy, and instantly improve the look, feel and function of any home. Nowadays, tenants expect stainless steel appliances and it tends to be one of the first things they look for when viewing a property. Upgrading old stoves, dishwashers, and refrigerators will make your unit significantly more appealing to prospective tenants.
While it may seem like a major upfront investment, it has been proven time and time again that new appliances will quickly pay for themselves. Not only will they attract better tenants, but you can charge more in rent and you’ll likely see reduced utility and maintenance costs moving forward.
Just like stainless steel appliances, most tenants want or expect hardwood flooring. Carpet gives an outdated look and may need to be changed between renters to account for spills and stains—meanwhile, hardwood flooring increases property value, looks great, and requires little maintenance if handled properly.
Laminate and faux wood are great flooring options that look exactly like hardwood without any of the headaches or maintenance, and at a fraction of the cost. This is a common upgrade we recommend for our clients as it is one of the most cost-effective flooring options that will instantly elevate the look of any unit.
4. Countertops & Backsplashes
A decent countertop and backsplash can go a long way in any kitchen. These upgrades are quick and easy to make—you could even do them yourself if you’d like—and cost less than you might think. There are a number of different low-cost countertop options that look and function significantly better than the laminate countertops of decades past without breaking the bank.
Even more expensive countertops like granite can be well worth it as they will last for years to come with little to no maintenance required. Your tenants will spend a lot of time here, so the function and feel of your kitchen should always be a priority when considering which upgrades to make.
5. Paint & Fixtures
Last but not least, we have the easiest upgrades of them all. Putting a fresh coat of paint on the interior of your units can do wonders, and it only takes a few days of work with minimal costs. This is something we try to do between every tenant turnover.
And if you’re going to paint your unit, you may want to also consider upgrading light fixtures, faucets and showerheads at the same time. This is another quick and easy upgrade that can instantly change a room with little upfront investment. Outdated fixtures are a big red flag for prospective tenants, and updating them can have a massive effect on the way a room feels and functions.
We audit every property we take on, providing specific recommendations for our owners around which upgrades they should consider making. Want to see if your property is competitive with your market? Contact us for a free consultation.