Miami is an affluent area, and people pay $1,702 on average for monthly rent in this luxurious city. As a result, rental property owners can do quite well with their businesses when they own properties in this area.
If you are considering renovating a rental property, you might wonder if this is a smart move. As you evaluate this decision, you should know that keeping up with renovations is crucial for rental properties in this city.
You might also benefit by knowing that renovations can be costly. Therefore, you might want to consider the following nine cost-related items before you start making improvements.
1. Routine Maintenance and Updates
When deciding if you should complete rental property renovations, it can help to start by viewing the primary benefits of updating your properties.
You can reap a variety of benefits through this, including the following:
- Your property values will increase
- You can attract higher-quality tenants
- You can write off the renovations as tax deductions
- Updating your properties protects them
Keeping up with the routine maintenance of rental properties is also vital, but performing renovations is even better. Routine maintenance and updates aren’t free, but investing in your properties is a worthwhile endeavor.
In fact, you should have this category of expenses in your annual budget. If you don’t have this expense in your budget, you might be more likely to skip these important activities.
2. Fees Associated With the Updates
Because renovations cost a lot, it is vital to take some time to evaluate your rental properties before deciding what to do. Every update you make will cost money, but you can spread out the costs over time by completing the jobs one by one.
As you evaluate the properties, you might want to answer the following questions:
- How is the overall appearance of the unit?
- How long has it been since renovations occurred?
- What work does the unit need?
- What are the most important steps to take with this unit?
- Could the work hold off for a while?
By asking these questions, you can determine if you should perform the work now or wait. These questions can also help you decide which steps to perform first to help you stick with a budget you can afford.
3. Tenant Research Fees
Another excellent step to take is to learn the demographics of your tenants and their needs. What types of people rent your properties? Are you happy with these types of tenants?
As you evaluate your situation, you can focus your renovations on the things that your tenants want the most. If you’re not sure how to handle this step, contact a consulting firm.
Paying a consultant to help you determine your target market is worth the costs. The consultant will help you learn your market, which will help you make the right decisions.
4. Cost Differences in Hiring It Out or Doing It Yourself
Complete renovations of all the units might not be feasible for your budget, but you might be able to afford some steps. One way to save some money is by handling some of the work yourself.
Therefore, you might want to compare the differences between hiring a company to do the work and doing it yourself. If you decide to handle the work yourself, make sure you include all the expenses that you will have.
For example, will you need some rental equipment to complete the projects? If so, you can check out these rentals to learn more about the costs of equipment rental.
5. Materials and the Cost Differences
Another vital decision to make is choosing the right materials. If you plan on renovating all the kitchens, what materials should you use? Should you install cheap countertops or granite ones?
The renovation costs for a rental property depends on the materials you use. As you decide on the materials, think again about the types of tenants you want to attract. If you use high-quality materials, you will attract high-quality tenants.
The quality of your apartments also affects the prices you charge per month. If you offer luxurious units, you will receive higher monthly rental amounts for them.
6. Energy-Efficient Improvement Costs
As you consider what improvements to make, you might want to think about offering energy-efficient improvements. Today’s generation is highly concerned with environmental issues and energy-efficient matters.
It typically costs more to install energy-efficient systems and materials in apartments and homes, but paying extra money might be a good investment. When you offer high-efficient systems in the units, you might attract more tenants.
7. Expenses for Keeping up With Curb Appeal
While you evaluate your rental properties, you should never underestimate the value of curb appeal. When you pull up to your properties, do they look good, or are they an eyesore?
Remember, the curb appeal of your properties is the first thing potential tenants see when they arrive at your property. If the apartments look outdated from the outside, they might assume the units are not updated on the inside.
8. Permit Costs
As you plan your projects, make sure you add in the costs for permits. You cannot complete projects on your buildings without obtaining the necessary permits.
You can check with your local courthouse or building inspector to learn more about the types of permits you need and the costs. Once you know these costs, you can add them to your budget.
9. Loan Costs
Finally, you might need to factor in the costs of borrowing the money. If you don’t have the cash you need to pay for these things, you might have to turn to a loan.
How much will a loan cost? Loans often have closing fees that you must pay, and you’ll also have to pay interest.
Consider All These Things When Renovating a Rental Property
Renovating a rental property might be costly, but it can also pay off in the long run. When you make the right improvements, you might find better-quality tenants.
Are you interested in learning more about rental property improvements? If so, check our blog for more interesting and informative articles on this subject.
