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What makes a tenant willing to pay $1,500/month for one property, and only $1,150 for another across the street? Some differences are easy enough to explain: more square footage, more bedrooms and bathrooms, sparkling kitchens, etc, but these are often prohibitively expensive changes to make to a rental property. Like all investors looking to maximize their return on investment, landlords are always looking for ways to boost their rents with minimal up-front cost. So what are some affordable property improvements that will catch the eyes of renters, both as they skim rental ads and as they walk through a rental property for the first time, and persuade them to pay more?
Keyless Locks
First impressions can be extremely effective. Keyless locks may be punchbutton combination-based, or even better, controlled by a mobile phone app (Lockitron costs $179, and others are even more sophisticated and start at $199), to give temporary, remote access to cleaners, contractors, etc. Like hot tubs and fireplaces, it adds to the chic factor, setting prospective tenants thinking about just how upscale they will appear to their friends when they move into their exciting new home.
Outdoor Landscaping
Once again, first impressions matter, from both the images in the rental listing to the curb appeal when prospective tenants first approach the property. Landscaping does not have to be the traditional manicured lawn and perfect garden; if the property is a rowhome, large potted plants along the front of the house make an excellent first impression, and plants in the rear courtyard or deck are a nice touch as well. Consider groundcover plants, such as ivy and pachysandra, as inexpensive and easy alternatives to well-groomed lawns or gardens, but which add an air of aged elegance.
Bamboo Flooring
Considering upgrading to hardwood floors, but worried about the cost? Hard bamboo flooring can be installed at a fraction of the price, and looks and feels great. It is also available in light or dark colors, for a variety of looks (or designs, for that matter).
Hot Tubs
Before writing off this idea as impractical, consider that $5,000 hot tubs routinely sell for $1,500 on Craigslist, used. If the idea of a used hot tub is bothersome, consider that it will not bother the tenant – any hot tub installed in a rental property will have been used previously, as far as the tenant is concerned. Hot tubs will pull the emotional heart strings of prospective tenants, and create a glamour factor that many tenants would be willing to pay an extra $50-200/month for, depending on the quality of the hot tub and the property/neighborhood. This upgrade will pay for itself in 1-2 years, creating additional cash flow and boosting the eventual property sale price (modern hot tubs last indefinitely, with minor maintenance). The real ongoing cost is in the electricity bill, which the tenant generally pays.
Fireplaces
Gas fireplaces can cost as little as $400, and installation may be only another few hundred dollars, depending on the ease of running a gas line and exhaust line to it. This is a luxury amenity that can be emphasized in the rental listing, and will add to the glamour of the property, but it will only offer a decent ROI on higher-end rental properties. Like hot tubs, the only major ongoing cost is in the utility bill, which means installation a one-and-done expense.
It is worth mentioning that all of the property upgrades above will require some care and maintenance by tenants, which means that it will be necessary to include clauses in the rental agreement outlining the tenant’s responsibility, and it is especially critical to find responsible tenants. For example, overuse of chemicals in the hot tub can ruin the hot tub cover, and covers start at $350. Likewise, hardwood or bamboo flooring can be easily scratched, so leases should include a requirement that all furniture have felt pads installed on the bottoms of legs.
There is an old adage in sales: consumers make decisions with their emotions, and then justify them with logic. Appeal to their secret wish for luxury and to be the envy of their friends, and they will flock to view the rental property – and gladly pay a higher price for it.
Related Reading:
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Renovation Investing Tips, Tricks & Cautionary Tales
5 Home Upgrades that Won’t Add Any Value to Your Property
