As a property owner, you’ve probably considered upgrades in an effort to secure higher rent and perhaps better tenants. Maybe adding landscaping, installing new windows, adding lighting, or updating fixtures. Hopefully you’ve done research to figure out if you can actually list that property for a higher amount after doing that improvement, or if your property would simply be more desirable to rent in the first place. If your calculations come out right, you of course go ahead with the improvement. Simple, right?
Through the years, I’ve learned something that I don’t think has ever been mentioned in books/websites about these calculations: you often incur future costs maintaining these upgrades. This, in turn, throws those calculations off. What looks like a nice upgrade that’ll pay for itself after a given time could turn into something that keeps putting you in the red. And since you’re trying to produce cash flow from your rental business, this is bad business.
Let me give you some examples:
I like to make my properties stand out. One way is to add landscaping. My thought process was that flowers add punch, mulch looks nice, and landscape lighting would be one of those special extras that would set my rental houses apart from others. So I would add lights along paths and even develop new planting areas in both front and back yards. Good plan, right?
Maybe not. Plants die. Especially the flowers. Mulch needs to be replenished as often as several times a year. Renters don’t like dirt (and weed!) patches, so plants need to be replaced. Bushes and trees need to be trimmed, and when trees get too large, professionals need to be hired. Lights not only go out, but they also easily break when outside. Critters chew on wires. And yes, the renters want these items fixed too.
Although I can’t get rid of planting areas (not easily, at least), I have learned which plants survive in my area. I’ve learned that even if a plant is sold locally, that doesn’t mean that it’ll survive here. And I have ended up getting rid of the all the extra outdoor lighting. In-between renters you can see me pulling out what feels like miles of wires and interconnected lights.
Inside the houses, I’ve regretted adding cabinet knobs and pulls in the kitchens and baths. Such an item not only has to look nice today, but also in the future, when styles will be totally different. Replacing 20-40 cabinet knobs and pulls per kitchen can really add up. Not replacing them instantly dates the kitchen (and yes, you’ll hear about how dated it looks). Not to mention, it’s just another item that a prospective renter may or may not like. There’s no point risking it; this truly is high expense/low reward. Same with painting an accent wall in a popular color. Why go through the extra work and expense, just to re-do that wall again next time?
So here’s the bottom line (for your bottom line): before you go that extra mile with your property, ask yourself some questions. Not only will it pay off with an improved property, but will it really attract more renters? Or will it just be something unnecessary that renters will take issue with in the future, causing more work, headaches, and expenses?