When considering whether or not to upgrade your rental property in Salt Lake City, there’s one question you should always ask yourself first: If I complete this upgrade, will it increase my rental income?
In a typical single-family home, you can choose smart, proven renovations that will potentially increase exit value when you sell the property to a buyer who will live in the house. However true investment properties, staged to rent, are valued based on net income, which is a little different.
At Rize we handle property management in Salt Lake City, and we have seen great examples of how maximizing net income works when renting rather than selling a property.
Upgrades aren’t worth leasing.
Sure, that marble tile on the bathroom looks and feels great, but tenants are not buying your house or apartment, so generally they are not willing to pay more for extravagant upgrades. Simple, not sexy, aesthetic upgrades typically get landlords the most bang for their buck.
What’s high end enough?
Installing beautiful, functional granite countertops rather than cheap, temporary laminate may buy you a well-deserved rent bump, but don’t bother with those super-high-end cabinets or extravagant appliances. Tenants looking at a property to rent will see things on the surface. So, yes, a modern stainless-steel microwave versus a dirty, dated white one might sell them on first glance, but their short-term viewpoint doesn’t go much past that.
Functional often falls flat.
Any homebuyer would love to know their home has brand-new, energy-saving windows. A tenant? Not so much. As long as windows open and close, a renter is usually good to go. Meaning, people simply will not pay more in rent for better-insulated windows. They may complain if they are drafty, but this does not mean they would welcome higher rent in exchange for new windows.
These are just a few basics to keep in mind when considering the impact of upgrades on the rental fees you can charge for an investment property. Have more quandaries about what and when to upgrade? Run your questions by the Salt Lake City property management experts at Rize HomeSource.