Did you overdo it on your last rental property rehab project? If you spent more on renovations for your home rentals in Seattle than you're able to recover with a reasonable monthly rent price, you did too much.
- Making smart upgrades is a good idea for rental property investments.
- When your properties have the amenities Seattle renters want and stay up-to-date with similar houses, you make more money.
- However, the wrong upgrades (or too many updates) can be expensive mistakes. Recovering from overspending on renovations can be a long road—or never happen at all.
How can real estate investors know if they're doing more rehab than a property needs? Our expert Seattle property managers can help you get it right.
Can You Do Too Much?
- We know you want your rental properties to be the best homes in Seattle.
- When you offer the best properties (and management) in the market, you find better renters and generate more income.
- However, the best investment properties don't need to be the fanciest or most expensive houses or apartments in the area.
- In most cases, luxury won't translate into a rental price that most renters can afford or are willing to pay to live in your Seattle rental homes.
Local renters want quality rental homes that they can afford. They won't overpay for features they don't want or need. If a renovation raises the rent too high, they'll move on to another Seattle rental home that meets their needs at a better monthly rent price.
What IS Too Much?
- Can you stop before you do too much?
- How can investors know the number of updates they need to stay competitive?
You might have expensive tastes for your private residence, and that's okay! However, your personal preferences might not work well for high-quality home rentals in Seattle. Investors must separate what they want in a home from what renters want. You're not going to live in your rental property. When working through appropriate upgrades, it's critical to prioritize money-making rehab options over styles or high-end features that you would want in a home.
- The best Seattle property managers can help you determine how much is too much and choose the ideal upgrades for your rentals.
- Competitive rental homes don't need expensive wood flooring, granite countertops, lavish fixtures, trendy paint colors, or add-ons like spas, jacuzzis, or an elaborate backyard oasis.
- Make sure your property has enough features for residents to enjoy outdoor spaces and indoor amenities, but avoid investing in features that don't improve property values or justify a significant rent rate increase.
Evaluate the ROI
- Start with the numbers: Weigh the cost and demand for rehab projects and compare them to the market-driven rental price you can charge after completing the updates.
- If the ROI makes sense based on projected income, consider those updates and smart investments in your future income.
Take It One Update at a Time
Overhauling your entire Seattle rental property can be a significant out-of-pocket expense that never pays off. Renters can't live in your property during an all-encompassing rehab project. If a complete renovation takes your home off of the market for more than a month or two, you're losing money while adding more expenses to your plate.
- One of the most effective ways to avoid doing too much rehab is to take updates one or two at a time.
- Target one room or type of update (like new flooring) between lease terms and complete those updates.
- Then, find your next renters with a higher rental rate to cover the costs of recently completed projects.
- When it's time for another lease renewal, evaluate your property and compare it to similar Seattle rentals.
- If it's time for more updates, take on the next bite-size updates to manage cash flow and stay competitive.
Don't Mistake Repairs for Improvements
New plumbing or electrical wiring isn't a property improvement; it's a repair. While these fixes might be a necessary update that keeps your property safe and serving renters well, they might not justify an increase in the rental rate or qualify as a deduction on your taxes.
- When it's time to review your monthly rental price or consider tax deductions, make sure you understand the property renovations that the IRS considers repairs or maintenance.
- You'll need to compare these to what you can consider as an improvement that adds value to the property and works as a valid deduction.
- A property manager in Seattle can help you navigate these details to get the most out of your property rehab projects!
Choose the Right Amount of Property Rehab
The best Seattle property managers help real estate investors choose the right amount (and type) of rehab to maximize rental property income! Real Property Associates understands the market and what renters look for when choosing a new rental home. We also know what kinds of upgrades keep your properties competitive to build your long-term income.
Recommending the right updates to home rentals in Seattle is just one of the many ways we serve you while growing your portfolio. To learn more, download your free copy of our free guide to real estate investing!