We've all seen those property rehab shows where a complete flip ramps up the value of a property beyond the owner's wildest dreams. There is a similar misconception that an extreme overhaul of a rental property will make it more desirable to potential tenants. However, it is possible to go overboard with your choice of rehab—or to pick updates that do more harm than good!
Of course you want to focus on quality and craftsmanship. However, as one of the top rental agencies Orlando has to offer, we know that not every addition to your property will actually result in higher rent! You need to ensure that the updates you do choose have the right return on investment. Ultimately, you know your portfolio is a business that runs on creating an inviting rental that will fetch a competitive rent; it's not about improving the home for its own sake.
With that in mind, we came up with some thoughtful questions to ask yourself as you prepare to rehab a property. As an expert in Orlando property management, we designed these questions to help you make the kind of choices that will offer you a high return on investment through updates that appeal to your renters!
1. What Does Your Ideal Renter Want?
- Rather than thinking about what would make your Orlando rental property the most objectively luxurious spot to live, consider who is shopping for rentals in your area.
- While not every market is the same, most renters are looking for the same kind of thing: affordable, quality housing.
- There will be times when a well-built home will be more impressive than one with expensive appliances that are not known for their reliability.
- Focus on what your rental applicants tend to focus on themselves; that means that every visit to the home is an excellent opportunity to notice what gives them pause and consider rehabbing that area.
Fixing something that no renters have ever even mentioned might be a fix on something that isn't "broken!" This is partly why working with the best Orlando property management can equal big savings for you. Let management companies in Orlando guide you in what your renters want!
2. How Quickly Can You Recoup the Cost?
When it comes to high-dollar investments in rehab—such as adding pools or a complete remodeling—you want to consider how quickly you can recoup the cost in higher rent or lowered vacancy rates.
As many real estate experts will tell you, the value of your rental property is impacted by the market, so focus on how your rental income will change rather than assuming that your property's sale value will definitely jump because of these changes and additions.
Yes, you might see an excellent return if you ever go to sell this property, but let that be a grand surprise. Instead, make the kinds of rehab decisions that yield a consistent return on your investment (and quickly) based on the rental income they will generate.
3. Have You Already Done Big-Impact Touchups?
As we mentioned above, renters are looking for affordable, high-quality homes—but there might be small things that have a significant impact on your ROI. For instance, if energy-saving features like a smart thermostat are prevalent in your area, this is a relatively inexpensive upgrade. The modern look of the thermostat may subtly sway your renters to the quality of the home, and the lower energy bills because of smart temperature management won't upset them either.
Even simple fixes like a fresh coat of paint can go a long way towards improving the appeal of your home without requiring major renovations! The best rental agencies Orlando has to offer will point this out to you before extreme facelifts are carried out. Make sure you've taken note of smaller upgrades like this and put them into place before you turn to significant renovation projects!
4. Will the Rehab Have Fringe Benefits?
Sometimes, major rehab projects have side benefits. If you're trying to make a name for yourself as an investor in the Orlando luxury rental market, some pricey upgrades might make an impression!
- If your remodel adds square footage to the home, you may be seen as a better deal or an appropriate home for larger families, which could justify a rent increase.
- Just make sure that the benefits aren't entirely about perception—which doesn't necessarily equate to increased profit.
- If you're in doubt about which updates will work for your target market, you can always lean on your trusted partner in Orlando property management! An expert property manager will be able to guide you through ideal updates across your entire portfolio.
5. Are Rental Rates on the Rise?
- If your area has stable—or falling—rental rates, this may not be the time to go overboard on rehab.
- Instead, wait until the market is a little tighter, where people are paying higher rents anyway.
- This makes the splurge for a nicer, recently-remodeled place ideal in the face of limited options.
Make sure that you invest in rehab to take advantage of intense competition for the right home; when affordable options are abundant, rehabbed properties may not fetch the kind of rates you want—and will instead sit vacant at their higher rate for longer.
Ask Orlando Property Management for the Best Upgrades!
In the end, most property owners have only rehabbed at most a few properties—so your sample size may be smaller than what can give you useful information about your target market. This is partially what makes working with an expert in Orlando property management ideal for choosing the right upgrades. When you work with Verandah Properties, we can provide a detailed outline of the current trends in Orlando rental housing from both the perspective of an Orlando realty and property management company.
At Verandah Properties, setting rental rates and finding tenants for our investors is what we do—so we have a great idea of what fetches a premium and what tends not to move the needle on rent. We can help you strategically time the rehab you do to keep your property rented at the rates that you want to hit.
Before you start the rehab process on a costly project, have us weigh-in and, potentially, suggest a few lower-dollar projects that will have a great impact on your property's future and ROI. Of course, if you're planning on adding a future property to your portfolio, getting started with our FREE guide to real estate investing is the first resource you should turn to! Growing your portfolio with the right properties from the start can also make your upgrades more effective long term.