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DIY

Low Cost / High Return Remodeling Tips

A row of houses.

If you’re not getting the quality of renters you want, it may be time to do some remodeling.

There are plenty of low budget upgrades you can do to add value to your property while adding eye appeal. The perceived value will allow you to get the rental rates you deserve and attract the tenants you’re looking for.

No matter what market you’re in, chances are if you’ve decided it’s time to remodel, you’ve probably got your sights set on the kitchen and bathrooms. Those are the best areas to start but don’t overlook other tasks that will impress and delight a prospective tenant.

In the Kitchen

  • Remodeling a kitchen brings you one of the highest ROI.
  • Upgrade the appliances to energy-efficient, they will last longer, save you money, and tenants are starting to expect them.
  • Cabinets, like appliances, are the face of the space.If they’re worn and dated, you can save a lot of money by refurbishing/refacing them instead of replacing them. 

Bathrooms

  • Again, like kitchens, bathroom remodeling produces a high ROI.
  • You don’t have to go all out here, but sometimes it’s makes more sense to replace instead of refurbishing. The vanity, for example, is easy to replace and will bring a fresh look for not much money. Big-box retailers will have plenty of low cost, quality options. 
  • New faucets and energy-efficient low flow showerheads will give the space a modern, updated feel. 

Painting

  • A fresh coat of paint is arguably the best and easiest way to freshen up your rental. Don’t get too racy here, keep the transformation subtle by sticking to neutral tones. 
  • An inexpensive way to get a good return on your investment by appeasing more potential tenants.

Outdoor Improvements

  • To ensure that they make it past the driveway to see what you’ve done inside, don’t overlook curb appeal.
  • No need to go crazy here either, keep it clean, neat, and low maintenance. 
  • Keep a well-trimmed lawn, replace the mailbox if looks worn or install sensor lighting for safety.
  • Give your front and garage doors or shed a facelift with a clean coat of paint. 

Things To Be Aware Of

  • It can’t be overstated enough, do not over remodel for your market, you’re renting a house, not creating your dream space.  
  • Plan to exceed your budget and time frame. Keep vacancy in the front of your mind. If your projects will make your property unrentable for too long, break it up into smaller jobs that can be done between tenants.
  • You may like being a DIY landlord, but don’t exceed your abilities. There are laws and ordinances that you need to abide by. It’s best to contract work you are unqualified for or feel uncomfortable doing. 
  • Make safety a priority. Before you start doing cosmetic upgrades, make sure the structure, electricals, and plumbing are in good working order and up to code.

Higher Rental Markets

If your property is located in an area that demands higher rental rates, you might be able to get away with a bit more luxury. Understand your particular market and see what comps in the area are offering. Accents like crown molding or upgraded countertops will add perceived value to the space. As always, don’t over-renovate, do as much as you are sure you can recoup in rent. 

As a landlord, you want to keep your expenses manageable while offering a clean and pleasant home to your tenants. As a DYI landlord, you understand your property better than anyone, repair what you can, replace what’s needed, and upgrade when it makes financial sense. 

Categories
DIY

And You Thought Being a Landlord Would Be Fun and Easy

That dream of living off “passive” income, however, takes a lot more work than you think.

Can landlords be available 24/7?

You’re tired of your 9 to 5 grind and figure buying real estate and renting it out will be a low-stress way of making a living, so you can eventually quit your day job. Rest assured, there’s more to that story. Yes, real estate can indeed be very lucrative — the world’s supply is limited, after all.

Rent Collection

Monthly rent checks are probably one reason you decided to get into the rental business. Collecting the rent is not as easy as walking to your mailbox on the first of the month. Though most renters are good at paying on time, it’s the inconsistent tenants that will cause you to gray prematurely. When the time comes, be ready to change your hat from the nice welcoming landlord to the merciless rent police. If you stay in business long enough, you’ll hear enough creative excuses to write a book.

How Hard Could It Be?

Any job is easy and enjoyable when things are running smoothly. But when the A/C goes out in August, a pipe burst in January or a tenant trashed the place before moving out, that’s when you will find out if you truly love your new job. All these things, and much more, will eventually happen. You need to be mentally and financially prepared to deal with them. 

For example, replacing the section of a frozen pipe is no big deal and relatively inexpensive, any plumber can do that. With the service call, drive time, and the hourly rate, you should be able to get it for around $250. Remember though, a frozen pipe doesn’t leak. What if it thaws at noon when the tenant is at work? They come home to water spraying out from under the sink or in the basement laundry area.

The area is flooded, the carpeting is soaked, and it’s Friday evening. Now you’ve got a mess, water damage, you may have to replace the carpeting, or least hire a professional cleaner. Wait, there’s more. The plumber is charging double or triple time because it’s after hours and a weekend. Don’t be surprised if you’re flirting with $1500 when all is said and done.

Managing Problem Tenants

No matter how vigilant you are with tenant screening, sooner or later, someone will sneak through that can summon your Satan. You may have heard all the horror stories, but you say to yourself, “I wouldn’t let that happen to me.” Oh, don’t worry, it will.

It’s Time For You To Go!

Evictions get ugly, are time-consuming, and the bills add up quickly. First, you’re not collecting current rent due. Then there are court filing and attorney fees. Chances are the property is going to be a mess or worse yet, damaged. If the tenant left a bunch of stuff behind, you may have to pay to store it. Then, of course, you’re not able to rent to other tenants until you bring it up to standards. And finally, you have to find a new tenant. If you’re lucky, you’ll only lose two or three months’ rent. Including court costs, your final bill could easily hit $4000 to $6000.

What’s A Balance Sheet?

If you’re the kind of DIYer that doesn’t mind getting their hands dirty but hates numbers, sorry but you’re going to have to learn. Oh sure, you can “just pay someone else to do it,” but an accountant or CPA doesn’t come cheap. Even if you can afford to hire it out, you should at least become familiar with bookkeeping and the finances of your new venture. You expect complications with your tenants, you don’t want to get ripped off by some bookkeeper.

You Need To Be A Good Banker

Hopefully, your properties are fully occupied, and you’ve got plenty of cash flow to meet expenses, and you’re stashing some away. For most landlords, the reality isn’t so dreamy. That’s why you need to stay on top of finances and bank some cash. 

Tenants come and go, but your fixed costs don’t go with them. You’ll have times when money is rolling in, and then you’ll face spurts of vacancy. It’s vital to put some money aside to keep as a reserve to get you through the dry times.

Property rentals can be very profitable, but as with any business, it’s not all peaches-n-cream. Real estate is not for everyone. There will times when you’re ready to sell the farm, followed by times that make your investment and hard work all worth it.