Are you planning to remodel your rental property?

During your time as a real estate investor, you will eventually need to do renovations to your property. Whether out of necessity due to damage or to simply upgrade the value of your property, these tips will help make your DIY remodeling process as painless as possible — and save you money while doing it.

1. Renovate between tenants

Try to remodel your property when you don’t have tenants living in the space.

Why?

  • Well first you need the space if you are painting, putting in new flooring, or doing more extensive projects, such as adding a window or tearing down walls. An open area will allow you to work without risking damage to a tenant’s personal property.
  • Second, remodeling between tenants gives you the freedom to work. You won’t interfere with their “peaceful enjoyment of the rental unit” by hammering nails when they try to prepare dinner. It is mutually beneficial — you don’t have to work around their schedule and they don’t have to tolerate someone in their space.

Now you might be thinking, what if I have to remodel while a tenant occupies the space?

In this case, it’s best to work out a plan with your tenant directly. Agree on a preferred time to renovate and be clear about when you are coming and when you are leaving. Also provide an estimate of approximately how long the project or repair will take. If you are hiring a contractor, such as an electrician or plumber, alert the tenant of the time they will be arriving and suggest they clear the work area for their own protection.

Depending on the length and scope of the remodel project, you may need to adjust your rent price accordingly. A day of repairs shouldn’t require rent adjustment, but a month-long project may call for a decrease in rent price.

Notices

In order to allow time for the tenant to vacate, the landlord must serve a notice of termination at least 120 days before renovations begin. At this point, tenants have up until 10 days before termination date to leave the premises.

Before vacating, a tenant can exercise a right of first refusal to reoccupy the space once remodeling is complete. They must do so in writing before leaving the unit. If the tenant exercises this right, the landlord must pay them three months rent or the amount the tenant would have paid to stay during renovations — whichever is lower.

Notice period may vary by state or province, so be sure to check with your region’s Tenancy Act before serving a notice to terminate. Note that termination date must be outside a fixed lease term, meaning the landlord must give notice to the tenant before the end of the lease term but cannot request they leave until their lease term is complete.

2. Get quality flooring and bathroom fittings

Out of all rental improvements, the floor is the most important when it comes to quality. This is because the floor endures the most wear and tear from tenants moving in and out of the space.

Most rental properties still have carpet. If your flooring needs to be replaced, consider changing it to something easy-to-clean, durable and modern, such as commercial grade tile, linoleum or hardwood. While this flooring may cost a little more initially, it will provide a high return on investment and last up to 20-30 years.

Choose high quality bathroom fittings or faucets. Lower quality fittings are more prone to corrosion and can buckle with use.

3. Address tenant improvements in your lease agreement

Most leases state that tenants can make improvements to the property if they receive written permission from their landlord first. Improvements may include painting, inserting nails in wall, or making any other changes to the appearance of the rental space.

State clearly in the lease agreement whether you allow improvements or require permission beforehand. As well, specify if the unit needs to be returned to its original condition. If not, the security deposit may be used to cover the costs of refurbishing the suite to its prior state.

4. Be proactive, rather than reactive

You’ve heard this before, but have you put it into practice? Being proactive about renovations will save you money. Instead of reacting to damage, you can prevent it.

How do you be proactive?

Establish a schedule. Plan to make one improvement per year on one of your properties or units. Whether it’s replacing the carpet or installing built-in cabinets, arrange your improvement in advance. By scheduling a project, you’re more likely to follow through and budget appropriately.

In addition to your one improvement, schedule regular service checkups and inspections. Ensure all electrical and plumbing is up to date and your property is ready for winter. Every 3-6 months, conduct inspections and check for moisture in walls and closets. Keep smoke detectors and carbon monoxide detectors in working order. Inspections help prevent damage and allow you to survey the suite for any problems. These checks will also give you good ideas for your next yearly improvement.

5. Remodel one unit or room at a time

Renovate one unit or room at a time rather than overhauling an entire property. You want to increase the value of your real estate, not go into debt from renovation costs. Remodel in small stages so you can continue to rent the remainder of your property.

6. Go green or energy efficient

The benefits of efficient appliances are three-fold — they last longer, they are environmentally friendly and most of all, they save you money.

In the bathroom, invest in a low-flush toilet to conserve water and save on monthly water bills. The same goes for showers. Bath tubs use up to three times more water than an average shower. If you are renovating a bathroom, replace the tub with a low flow shower.

Before replacing your tub, be sure it’s removal doesn’t affect your property’s resale value. If your home only has one bathroom, you should consider keeping it a shower/bath combo. A property with several units or a basement suite will see the most benefit from installing a single shower to save on overall property costs.

Next, opt for energy efficient appliances. Most new ovens, dishwashers and laundry machines are energy efficient, so ensure you are buying a recent model when upgrading. Again, this will save on energy costs, last longer and increase rental appeal.

7. Remodel areas with the highest ROI

As a property owner and investor, your return on investment is always a primary consideration. For this reason, you will want to focus on the areas that provide the most bang for your buck.

According to Realtor.com, kitchen and bathroom improvements lend up to 85% ROI. Updates, such as new hardware or lighting fixtures, can dramatically change the look of a space for little initial investment.

Painting has a ROI of almost 100%. Make it a habit to give walls a fresh coat of paint every five years.

Flooring, like previously mentioned, is one of the most important improvements you can make to a property and the ROI isn’t too bad either — between 70-90% on average.

8. Be mindful of outdoor maintenance

Depending on the location and size of your property, you may have to tend to a backyard, front yard and surrounding area of your rental property. This means maintaining the premises yourself or hiring someone to cut your grass, shovel sidewalks, repair hinges on doorways, clean rain gutters or tend to broken walkways.

Your tenant’s safety to and from the building is just as important as their enjoyment inside. Too often outdoor negligence can turn into an injury lawsuit. Be prepared to maintain a safe and clean property and plan for seasons accordingly.

Plus, regular outdoor maintenance can improve the look of your property, which may attract more tenants and increase overall property value.

9. Be practical, savvy, and smart

You cannot be a property owner without having at least one of these qualities.

Practical

Being practical means making improvements that are appropriate for your property. Compliment your rental’s existing characteristics. For instance, a modern kitchen with stainless steel appliances could use complimentary stainless steel hardware rather than light traditional wood hardware, which might look out of place.

Moreover, think before making extravagant improvements, such as adding a pool or hot tub to the property. Is this amenity going to increase or decrease the value of your home?

Savvy

Being savvy means making the best use of the space you have, such as adding storage under stairs, using built-in cabinets rather than stand alone units and decorating the rental to suit the taste of tenants, not your own.

If decorating isn’t your thing, keep it simple. Walls and window coverings should be neutral and inviting. Stay away from harsh tones, such as blue, pink or orange, which will make a room appear smaller than it is.

Remember, you are providing a space for the tenant to fill in and call their home. Appeal to a wide selection of tastes, and you’re more likely to accommodate just about anyone.

Smart

And lastly, being smart means knowing when something needs to be cleaned, repaired or renovated. Try steam cleaning a carpet before ripping it out or washing walls before painting them. Small facelifts, or a good scrubbing, can often save you from sinking time and money into needless large-scale renovations.

 

Please Visit us

www.KINGSTONHomes4U.ca

Dan DaCosta

Dan DaCosta

REALTORĀ®
CENTURY 21 Champ Realty Ltd., Brokerage*
Contact Me

Tags