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A significant part of maintaining a rental house is investing in its renovations and reparations over time. Investing in rental property improvements helps increase property value financially and in terms of renter preference. However, it can often be easy to overspend on unnecessary "upgrades" for the sake of a makeover.
In 2022, US homeowners' home improvement projects cost an average of $8,484. Despite rising interest rates, 50% of respondents expect to spend relatively the same amount in 2023. While experts predict a significant reduction in home sales and demand for new housing, there is an expectation for continued demand in home renovations, as homeowners with fixed low-interest rate mortgages look to improve their properties instead of trading up amidst high rates. Below, we'll look at some upgrades that can
Install central air conditioning
Central air conditioning uses larger units than your standard air conditioners and makes up a system in which air is cooled at a centralized spot in a property and distributed to and from rooms by ducts. Although it may seem more expensive than a normal set of air conditioners, central air conditioning is a good upgrade for your budget. These have an average energy-efficiency rating (EER) of 11.5 compared to the 8.5 of single-window models. As a rule of thumb: the higher the EER, the less expensive to run. Offering renters a lower possible cost of utilities can be a great selling point.
It’s important to note that cleaning and maintaining an aircon unit — especially a centralized system — will require additional effort. Air conditioners contain filters that eliminate dust and debris, protecting us from harmful dust and other bacteria while keeping the internal machinery safe. As such, spending a bit more on keeping your centralized units in tip-top shape can prevent larger repair bills later and make sure long-term renters are satisfied.
Invest in cool roofing
Another cost-effective home cooling approach to consider is investing in cool roofs — roofing made of materials that reflect sunlight and heat away from a property, reducing its overall temperature. Using cool roofs results in net energy savings, especially if your property is located in areas where electricity prices are high, as the cooler temperatures will save renters from having to rely on additional cooling equipment.
A study found that cool roofs can get you almost 50 cents per square foot in average yearly net savings. Specifically, for renters, this includes the bump during wintertime with increased heating costs and is counterbalanced by summertime energy savings. Cool roofs also have a longer lifespan than conventional roofs, saving you the hassle of weather damage in the long term and receiving calls from renters about leaks in the middle of the night.
Refurbish or DIY your fixtures
Finally, if you think it's time to remodel the kitchen or renew the look of the living room, pay extra attention to fixtures such as cabinets rather than other furnishings. After all, finding damages, scratches, and regular wear and tear in properties that are rented out for long periods of time is normal. We've mentioned this in another post about cost-effective renovations, but doing complete makeovers of sections in your property can be pretty heavy on your bank account and wallet.
Instead, being smarter about where and how you use your money can help you save money and improve the look of your property in the process. Rather than replacing whole cabinets, see if sanding or repainting can give them a brand-new appeal; regular cleaning and maintenance will also ensure functionality for all your fixtures. The money you save on cabinets can go to something else that helps you change your property's aesthetics and feel. Moreover, improving the fixture quality of your house can increase its overall value and may be more appealing to renters with a specific aesthetic in mind.
At the end of the day, it's important to look past merely upping the value of your property through generic upgrades and renovations. Instead, focus on alternatives that would offer you higher cost-efficiency and energy efficiency in the long term while benefiting your renters at the same time. In this uncertain period of raised prices, knowing the upgrades that can save you from unnecessary spending can go a long way in your real estate journey.
For more ways to maximize your investment in a rental property, consider a long-term rental loan to grow your portfolio. Contact us at Temple View Capital Funding today to learn more.
Article written by Roan James