Owning a rental property means taking responsibilities and some risk. But, as they say… no risk, no reward. Let’s help you get that reward, even when remodeling your rental property.
As a landlord, you are well aware that your rental place can become outdated or can even be cared for in less than optimal ways. Sometimes tenants complain and sometimes the place can be vacant for a long while. Remodeling that rental property may just be the solution.
Of course, sometimes you’ll wonder if remodeling is worth it. You may get nervous about the risk of spending the money and then not reaping the rewards. But in the end, keeping your rental property up to date and looking great is a sound investment with only a few caveats.
The Almighty Tax Write-Off
This may be the single greatest reason you have for remodeling your rental place. As a landlord, you can deduct many costs like general maintenance, repairs, as well as improvements and renovations. The IRS does treat remodeling your rental property differently than simply doing repairs. Talk to your accountant or the IRS to know the specifics. Generally speaking, you can deduct the repairs in full. Remodeling requires you to depreciate the changes over several years. The only thing to keep in mind when claiming it on tax is that you need to keep it as a rental for that entire time.
Do Not Over-Renovate
Remodeling means nurturing your investment. In most cases, cosmetic and aesthetic improvements are better than massive changes and upheaval. After all, you’ll be out of pocket for the renovations, all the while remembering that owning the place is about making money. Make it warm, inviting, and livable. This is the easiest way to get a solid return on your investment. Look at your property as a house instead of a home. Remodeling with that in mind will make a big difference between blowing out a wall and replacing the flooring.
Rent vs Location
The decision to remodel your rental property hinges on several factors. Affordability is, of course, one of them. To recoup costs, will you need to up the rent? Can the tenants or the area afford that? Will the improvements be good for the area or could they be risk?
Even if it’s a lower income neighborhood, you can still renovate. Talk to renovation and construction experts to discuss options that don’t cost too much but wear well over time. Also discuss repairing and upgrading some things, instead of replacing.
Focus on the Important Stuff
What sells a home to a buyer also convinces a renter. Upgrade the bathrooms and the kitchen. They are among the biggest factors when buying and they are among the biggest factors for renting. As said before, make the place comfortable, livable, practical and simple. Keep the roof and windows in good shape. Ensure paint and tiles are always looking nice. Keep doors and windows secure. Make the yard and landscaping low maintenance.
Tenants are more likely to care for a place that is looking good than they are for a place that is looking “tired”.
When in doubt, ask. Ask your home construction partners. Ask your rental agents. Ask your tenants. Being communicative and involved can sure help make things easier. You’ll find out what’s important for remodeling the rental place, and what isn’t high value. You’ll learn what people are thinking and the impression your place makes. Working together can sure make the process easier, while also enhancing the desirability of your rental property. Because people want to rent from landlords who communicate and are involved.
Greg Nelson is the owner of Nelson Construction & Renovations Inc. He is a Florida State Certified Building Contractor, creating artistry in all areas of design and construction projects. He is a musician, and artist. A husband and father, Greg appreciates all the wonderful elements of family life.
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