Whether you’re a seasoned landlord or just beginning to build an investment portfolio, learning when to make upgrades to your rental properties is key to maximizing your profits and return on investment (ROI). The most impactful property updates improve the aesthetic and functionality of the home while providing a significant benefit to tenants. These upgrades will also allow you to increase your rent price and build equity. I’ve gathered 13 of the best upgrades for a rental property to help you make wise decisions with your investment.
1. Paint the Interior
Approximate cost: Varies, can range from $2-$5 per square foot
Paint is hands down one of the most powerful and affordable ways to upgrade any space. A fresh coat of the right color can transform a room, making it feel brighter, cleaner, more modern, and more appealing. Before deciding whether or not to tackle this project on your own, consider your experience level, the supplies you already have, your schedule, and your specific rental property. A small bedroom may only take a few hours to paint, while a large living room with high ceilings and textured walls may need more time and energy.
To paint any space on your own, you’ll need some basic but important supplies from any local hardware store, like high-quality paint brushes, paint rollers, paint trays, drop cloths, and painter’s tape. Make sure you also get the right type, color, and quality of paint—if you aren’t familiar with paint finishes or choosing the right color, talk to the store’s paint professional. Plus, check the websites of popular paint brands to learn about popular paint colors and see examples of paint swatches. Keep in mind that neutral colors like white, gray, and beige are generally best for rentals.
2. Paint the Exterior
Approximate cost: Ranges from $1,500-$6,000
Anyone who is interested in investing in real estate should know the importance of a home’s curb appeal. The exterior of your property establishes the first impression for potential tenants, so it should be well-maintained and appealing. Painting a home’s exterior is generally a more labor-intensive job, but the results can massively increase the number of tenants who express interest.
Start by inspecting the house’s exterior to determine if painting is necessary, and make any necessary repairs before starting the project. You’ll need a power washer, paint scraper, caulk, and exterior-grade paint for your property. Plan for a more extended time frame to paint a home’s exterior, like several weekends, to accommodate the required drying time between coats and potential weather issues. Hiring a professional painter is a viable option if you don’t have experience painting properties and don’t own many of the necessary supplies.
3. Replace Light Fixtures
Approximate cost: $150-$1,000
Lighting is one of the best upgrades for a rental property because it is simple, affordable, and incredibly impactful. Most do-it-yourself people can learn how to change a light fixture easily. The right light fixtures can make a space feel modern while improving its functionality. Plus, energy-efficient lights can save on electricity costs and minimize the need to frequently replace bulbs, which benefits tenants and landlords.
You’ll need a ladder, screwdriver, voltage tester, wire nuts, and electrical tape to change any light fixture. Before starting, remember to turn off the power to the specific circuit at the breaker box to ensure safety during the installation. Although this is a simple project to learn, it’s important to be extra cautious when dealing with electricity. If you have any safety concerns, especially with older electrical systems, consider hiring an electrician to switch the fixture.
4. Install New Plumbing Fixtures
Approximate cost: $150-$400
Plumbing fixtures like faucets, sinks, and showerheads are cheap upgrades for a rental property that many landlords don’t consider. Kitchens and bathrooms are two of the most important spaces for buyers and renters, and updated plumbing fixtures make the spaces feel well-maintained and improve functionality.
Start by choosing plumbing fixtures that are more modern, highly functional, and fit with the overall style of the property. Common supplies needed for this project, other than the new fixtures, include a pipe wrench, plumber’s tape, and an adjustable wrench. Turn off the water supply, disconnect the old fixtures, and connect the new fixtures to the existing plumbing lines. Similar to light fixtures, this is a relatively easy project to learn. However, if you’re uncomfortable with plumbing or have any concerns, hiring a plumber will ensure a seamless installation.
5. Update Flooring
Approximate cost: $600-$8,300
Many landlords disregard the flooring in their property because they assume their renters will only damage it. However, upgrading flooring is one of the best rental property upgrades you can do to increase the appeal of your property and minimize long-term wear and tear. According to Apartment Advisor, rental properties with carpets are a “dealbreaker” for many renters.
Plus, there are many other types of flooring that are more durable than carpet, like laminate, tile, and luxury vinyl tile (LVT). Installing new flooring can become expensive, depending on the size of your property, the type of flooring you choose, and the labor cost. However, this may be a valuable investment in the success of your rental. If you can’t decide whether replacing your flooring is a smart decision, start by doing a rental market analysis to evaluate what your competition is offering.
6. Install Energy Star-certified Appliances
Approximate cost: $120-$300 for installation, $2,500-$6,800 for new kitchen appliance package
Many investors who buy their first rental property don’t consider the home’s appliances. However, purchasing new appliances or updating existing ones for modern energy-efficient appliances is a valuable property upgrade. Although this is not one of the cheapest upgrades for a rental property, it will go a long way to appeal to environmentally conscious and budget-conscious tenants. High-quality appliances are important for high-quality tenants, especially because they can minimize utility costs. In addition, new appliances will decrease the number of maintenance calls you receive.
If you aren’t sure if replacing all the appliances in your property is in your budget, start by considering the most high-use appliances like refrigerators, ovens, and washing machines. Visit local appliance stores, home improvement centers, or online retailers and research energy-efficient and cost-efficient options. Most appliance retailers include installation in their delivery packages.
7. Maximize Storage Spaces
Approximate cost: $15-$30 per linear foot
When tenants look for a rental property, they consider the amount of storage offered. Both indoor and outdoor storage is necessary not only to provide comfortable living spaces but also to offer practical solutions for organization. Upgrading your closets or adding strategically placed shelves are inexpensive rental property upgrades that will address a fundamental need for tenants and maximize the value of your rental property.
Depending on the existing design of your home, expanding the storage options could be a very simple, affordable rental property upgrade. Adding shelves to an existing closet only requires a few small pieces of lumber and basic building tools like a saw, stud finder, drill and/or impact driver, and supplies for painting or staining. If you don’t already own those supplies, this is a great project for a handyman to accomplish.
8. Update Kitchen Cabinets
Approximate cost: $400-$1,400 to paint cabinets, $110-$1,230 per foot for new cabinet installation
Kitchen cabinets make up the majority of a kitchen’s aesthetic and provide important functionality. If your rental property’s cabinets are damaged or low quality, replacing them will ultimately be the best decision for your tenants. According to Remodeling Magazine, the average return on investment for a minor kitchen remodel is 71.2%.
On the other hand, many rental properties have good quality cabinets, but the color can be dark or dated. In these cases, painting or refinishing them is a more cost-effective choice that can make just as much of an impact. According to Houzz, white is the top color choice for kitchen cabinets, with gray a close second.
9. Modernize Countertops
Approximate cost: $1-$140 per square foot
Like kitchen cabinets, countertops have a big visual and functional impact on a kitchen. Old laminate countertops feel cheap and are more likely to repel potential tenants. The cost of replacing and installing new countertops can vary drastically based on the size of your kitchen, the type of countertop material you use, and whether you get them professionally installed.
If you have extremely dated countertops, there are cost-effective alternatives to replacing them. Refinishing them with epoxy or a countertop painting kit are two options that generally have high durability. Refinishing counters can take about a weekend to complete and is just a fraction of the cost of ordering new countertops.
10. Update Kitchen Backsplash
Approximate cost: $10-$50 per square foot
While a kitchen backsplash may seem to be an aesthetic preference, it also prevents damage to the walls from heat, grease, or kitchen accidents. It can be the difference between a kitchen appearing dated or fresh and new. Removing and replacing a tile backsplash can become expensive, depending on the type of tile and materials you choose and if you hire a professional. However, this can also be a cheap upgrade for rental property if you can do it yourself or use an affordable option like peel-and-stick tile.
To remove and replace a tile backsplash, you’ll need a large number of specialty tools, like protective gear, putty knife, pry bar, plastic sheeting, spackle for drywall repair or new drywall, tile adhesive, tile spaces, tile saw, grout saw, and a grout sponge. This is a reasonable project to complete if you are a real estate investor who frequently works with tile in your properties. On the other hand, the costs and time involved may not be feasible for new investors or those who aren’t DIY enthusiasts. Hiring a professional tiler may be a more efficient method.
11. Refresh Landscaping
Approximate cost: $1,200-$6,000
If your rental property is a single-family home or multifamily investment property, its exterior appearance will make a big difference in your ability to attract quality tenants. With simple landscaping, like adding mulch, edging, and a few plants, you can show that the home is well-maintained and maximize its curb appeal. On the other hand, if the home has additional outdoor spaces like a patio or backyard, highlight these on your rental listings.
12. Replace Windows or Window Treatments
Approximate cost: $180-$400 for each new window, $155-$1,655 for new window treatments
Many renters and investors don’t realize how important windows are for every property type. Although replacing multiple windows is not a cheap upgrade for a rental property, the money spent will have long-standing positive effects and increase return on investment (ROI). Windows determine how much natural light will fill the home and have a massive impact on its functionality. New windows also improve energy efficiency and reduce utility costs for tenants. These factors will encourage long-term tenants and create a strong tenant-landlord relationship.
In addition, make sure you consider the window treatments in the property. It’s standard to have blinds installed over the windows. However, if existing blinds are cheap, dirty, or damaged, upgrading to cordless blinds, Roman shades, or wooden blinds will create another attractive feature for potential tenants.
13. Install a Smart Security System
Approximate cost: $200-$2,000
A security system is one of the best upgrades for a rental property because it benefits the owner and the tenant. This will give tenants peace of mind and build trust that you care for their well-being while they live on your property. The cost of a security system can vary drastically depending on the devices you use, the number of devices, and whether you pay for the security system or simply give tenants the option to pay for it.
Why Landlords Should Make Rental Property Upgrades
There is an upfront cost to making upgrades on a rental property, which makes some landlords and investors uneasy. However, investing in the right upgrades on a property is a strategic choice with multiple benefits that ultimately increase the overall profitability and success of a rental.
A few of the benefits of making rental property upgrades include:
- Quality tenants: The best tenants are drawn to well-maintained, modern, and comfortable living spaces. By making the right rental property upgrades, you’ll show that you are committed to providing a high-quality experience and will avoid experiencing tenant horror stories.
- Higher rental income potential: When your property has desirable features and amenities, it stands out in the market and justifies a higher rental rate. Upgrades like energy-efficient appliances, smart security features, and updated fixtures contribute to the property’s perceived value.
- A decrease in vacancy rate: When your rental property appeals to tenants, you can more easily find good quality tenants with quick turnovers. Shorter periods of vacancy help landlords establish a consistent, reliable income stream.
- An increase in property value: Strategic upgrades increase the overall value of the property. This is not only beneficial for potential resale but can also contribute to a landlord’s overall financial portfolio and net worth.
- Long-term tenant satisfaction: Upgrades that enhance a property’s functionality and aesthetics create satisfied tenants who are more likely to renew their leases.
- Tax benefits: Depending on local laws, many rental property upgrades are tax deductible. Document the items you upgrade or intend on upgrading and speak to an accountant to see if they qualify for a tax deduction. This is an additional financial benefit of keeping your rental properties updated and well-maintained, which helps offset the upfront costs of the improvements.
How to Pay for Updates to Rental Property
The goal for most real estate investors is to have a large amount of money in savings and in their investments so they are able to pay for things easily. However, when buying your first rental property, you may not have all the funds available to make the best rental property upgrades. Here are a few potential strategies to pay for necessary updates:
- Establish a dedicated fund: Set aside a percentage of your rental income specifically for property improvements. By consistently adding to this fund, you can budget carefully for the right upgrades.
- Explore financing options: Consider leveraging various financing methods, like existing equity, personal savings, lines of credit, or loans with favorable terms.
- Use tax benefits strategically: Talk to a tax professional about your desired property improvements. In some cases, you may be eligible for deductions on expenses related to rental upgrades.
If you aren’t able to pay for all of your ideal property upgrades immediately, start by prioritizing them based on the impact they’ll have on tenants. Make a long-term plan for the improvements you want to make, their potential cost, and how you can save to finance them. A strategic and well-thought-out financial plan will help you maximize your ROI on the property.
Frequently Asked Questions (FAQs)
The features that make a rental property more valuable are similar to the features that homebuyers want most. This includes modern kitchens and bathrooms, energy-efficient appliances, a space that feels clean and fresh, and strong curb appeal. There are many ways to add value to a rental property, like those listed above, but focusing on kitchens, bathrooms, and exteriors will generally provide the highest returns.
Although there are many different types of rental properties, like single-family homes, multifamily homes, apartment complexes, and vacation rentals, there isn’t one type that consistently generates more profit. Profitable rentals depend on a variety of factors like location, rental demand, and efficient property management. However, the best ways to maximize your return on a rental property is to make strategic upgrades, set the right price, and market the property thoroughly.
Neutral colors and styles are typically best for rental properties in order to make the space appealing to the largest number of people. However, you can spice up your rental property with strategic upgrades, like adding an accent wall, choosing unique lighting fixtures, and adding creative storage solutions. When you market the rental property, you can also stage it with bright colors or unique decor.
Choosing the best upgrades for your rental property depends on your budget, the condition of your property, and the rental market in your area. From energy-efficient appliances and flooring to enhanced security features, making the right property upgrades will enhance the physical aspects of your property and create a foundation for a thriving and sustainable investment.