best rental property advice | InvestingInProperties.com

The Most Cost Effective Improvements

When acquiring residential rental property, you should always be asking what improvements can you make that carry the greatest return on your investment. Obviously, the more attractive your property, the more attractive it will be to prospective tenants, and the more rent you can theoretically obtain. Your main concern should always be your competition, and what like rental units in your neighborhood look like, and can fetch in terms of rent.

Always ask if your property absolutely needs work. If so, what should be replaced and repaired? Upgrading a rental unit should only be done with an eye toward the incremental income to be derived from the upgrade. If yours needs work, then consider these repairs as allowing the greatest return on your property investment dollar.

Landscaping

Never underestimate what a little landscaping can return in terms of bringing in a better type of tenant to your building. A freshly spruced, attractive exterior will make a great first impression for any potential tenant. You want multiple applicants to be fawning over your unit. This will ensure you maximize the rent for that unit. If you can create a renter’s bidding war because of the desirability of your building, all the better.

Updating a kitchen

If your rental unit has a kitchen that’s over twenty years old, you’ll need to decide if you want a complete kitchen renovation, or something simpler. If you can get away with simpler, by all means do so. Re-sand and paint the kitchen cabinets. Change the lighting fixtures from fluorescent to track lighting. Simple laminate countertops can replace old and outdated ones. Also consider replacing the kitchen sink and faucet together for a more up-to-date look. A trip to your local home improvement store will help give you ideas for some low cost solutions.

The bathroom upgrade

A very inexpensive way to modernize the look of a bathroom is too replace only the simplest of items in it. Consider upgrading faucets, toilets, towel racks, bars and accessories first. If the bath is older than 20 years though, you’ll definitely have to consider changing out the vanity, bath tub and/or shower fixtures. In either case, make sure you coordinate any upgrade with other rental units, or, at the very least, do the kitchen and bath together in the same unit. Then, you’ll apply economies of scale when hiring a plumber to come in and do both projects concurrently.

Talking about plumbers…

As long as you’re hiring a plumber, you should also consider if your building needs any major overhauls. This might include having him check all your pipes for corrosion, as well as wear and tear on your hoses and connectors to all your appliances in the building. Having him repair and or/replace faucets and other items now, may help prevent problems down the road.

Should you replace the carpet?

If your floors are looking ragged due to worn carpeting, it most certainly is time to replace it. While carpeting represents the least expensive way of updating your flooring, it also is the quickest to wear out. Consider commercial grade carpet. Another way to go is engineered wood flooring. It will last 25 to 30 years, cleans up well and easily, and looks excellent. However, if you have old pine or oak floors under existing worn carpeting, you might also consider having them refinished. Gleaming hardwood floors are a great way to attract more upscale tenants, since they are so in demand right now. Consider replacing old, peeling kitchen tiles with newer, updated tile or linoleum, or as mentioned above, wood-engineered flooring.

Is it time for repainting?

If your interior walls are looking worse for wear, then repainting in a nice, light shade is always a good idea. Keep ceiling white, but consider off-whites and beige shades for the walls. Neutral colors always work best when renting your units. They’re also easiest to repaint when it comes time to find a new tenant and spruce up the unit. Make sure all rooms are painted the same. As for the exterior, keep the color in harmony with the neighborhood, with nothing outlandish. Remember, your building must appeal to the greatest number of potential tenants possible, in order to maximize your cash flow by keeping demand high for your units.

If you follow these most basic of investment property repairs, you will certainly keep your repair costs down, as you continue to appeal to the greatest number of tenants. And the best tenants at that. This will help keep your building in a positive cash flow for years to come.

photos courtesy of blakehomeimprovements.com, telegraph.co.uk, diynetwork.com, aglasgowskeptic.blogspot.com, apachemoving.net, bandspainting.com, roofingcontractordouglasvillega.info

Creating The Buffer Zone

All start-up businesses are plagued by the same problem: a lack of sufficient capital

to get through the initial rough period where cash flow is crucial, and tends to be almost non-existent until the business hits a critical mass of revenue. The same applies for any beginning foray into the property investing field. The best advice I can impart is that you set aside an adequate amount for reserves to get you through your first couple of years of operation. This means, you’ll need self-restraint in order to not want to tie up all your available capital in the most expensive, or the biggest projected money-making endeavor. If you leave 15%, 20% or a bit more in adequate cash reserves, you will be able to deal much better with the obstacles that are sure to befall you as any beginning property investor would encounter.

Holding back

Sure, you’ll want to use up your full capital reserves to maximize your return. But don’t. Hold back. Keep that extra amount in the bank for the proverbial rainy day.

It may appear so attractive to utilize the maximum amount of your investments to gain an even better deal, an even better (or greater) mortgage amount – but don’t do it. Restraint, restraint, restraint. This will ensure you create a safety net for yourself. Until you know how the business will go, and you’ve acquired sufficient knowledge to be able to predict better how each succeeding property acquisition will perform, lay back, and keep that certain rainy day amount in reserves.

Sleeping better

When interest rates go up, or the market tanks, or your tenants don’t pay on time,

or your taxes skyrocket suddenly, you’ll be able to sleep better knowing you’ve planned for emergencies. The last thing you’ll want to do is go back into the borrowing pool to finance an already-extended property. That’s where things get disastrous fast. Especially when you can’t make your mortgage payment (see financial crisis of 2008 – 2011), and are forced to either go through a short sale , or worse, a foreclosure on your property. Or possibly worse – being forced to place your investment property on the market at a fire sale price in order to unload it quickly. Very, very hazardous, and not for the faint of heart.

Socking cash reserves away

So play it safe. Put those cash reserves away, and know it’s OK to make mistakes.

Mistakes that I can guarantee, you will definitely make as a beginner property investor. You’ll certainly be best prepared for entering the property investing arena in this fashion. Finally, always take your time crunching your numbers on each potential property acquisition. The more conservative the numbers for rent and expense items you plug in, the better equipped you’ll be to handle any market downturns and surprises that will hit you financially.

photos courtesy of quickenblog.com, appraiserjobs.com, lincolntrustco.com, worldpropertychannel.com, usnews.com

Best Investment Property Repairs