6 Tips To Consider When Renovating a Rental Property

Making the Right Moves When Renovating Rental Property – Real Estate Investments

There’s no getting around it. As a real estate investor, embarking on a rental property renovation is inevitable. Whether it’s out of necessity due to damage or simply to enhance the property value, following certain steps can make renovating your investment property both painless and profitable.

These practical tips might seem like common sense to most, but it’s astonishing how many property owners skip this advice to save time and a few dollars. Ultimately, this approach often leads to higher costs than anticipated. So, let’s dive in…

1 – Plan: Renovate Your Rental Property Between Tenants

Here’s a crucial piece of advice: never, ever renovate your rental property with tenants still in the unit. Renovating becomes significantly smoother and quicker without tenants in the space. Avoiding the risk of damaging a tenant’s belongings, not to mention dodging their opinions on every step of the renovation, is paramount.

2 – Upgrades: Get Good Quality Flooring

Given that floors in rental properties bear the brunt of wear and tear from tenants moving in and out, it’s wise to say no to carpeting. Instead, consider more durable options like hardwood floors during your renovation efforts.

If it’s time to replace your flooring, opt for something easy to clean, durable, and modern, such as commercial-grade tile or hardwood, to elevate your renovating project.

For basements, luxury vinyl (plank) flooring stands out as an excellent alternative to laminate. It’s not only more durable and waterproof but also mimics the aesthetic of laminate flooring, making it a smart choice for areas prone to water damage.

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3 – Bathroom renovations: Get Good Quality Bathroom Fittings

When renovating, choosing higher-quality bathroom fittings or faucets pays off in the long run. Lower-quality options are more susceptible to corrosion and leaks, which can increase maintenance costs over time in your rental property.

Repair or replace leaky taps before you must replace the entire countertop.

4 – Go Green or Energy-efficient

A key renovating tip is to always opt for energy-efficient appliances. They’re not just environmentally friendly; they also save you money by reducing energy consumption.

Most new ovens, dishwashers, and laundry machines come with energy-efficient features, so make sure you’re selecting recent models when upgrading your appliances during renovation.

In your renovation efforts, prioritize energy-efficient lighting like LED, and invest in durable, thermal windows and doors to minimize energy-stealing drafts.

5 – Do Not Ignore Outdoor Maintenance

Maintaining the exterior of your rental property, including the backyard, front yard, and surrounding areas, is crucial. Whether you’re doing it yourself or hiring someone for repairs and maintenance, keeping the premises in top shape is essential.

Ensuring your tenant’s safety to and from the building is as crucial as their enjoyment of the property. Neglecting outdoor maintenance can lead to injury lawsuits, so it’s important to keep all areas well-maintained.

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6 – Remodel Areas With the Highest Return on Investment (ROI)

• Bathroom and kitchen:

Kitchen and bathroom improvements lend up to 85% ROI.

Simple updates, such as new hardware or lighting fixtures, can significantly transform the appearance of livable spaces with little initial investment, making them a smart choice for investment property renovations.

• Repairs and property condition:

Painting rental properties offers an ROI of almost 100%. Adopting a habit of applying a fresh coat of paint every five years is a wise renovating strategy that pays off.

As mentioned earlier, flooring is one of the most impactful improvements you can make to a property, with the ROI averaging between 70-90%. This makes it a key focus area for renovation projects.

Extra: Tax Credits

Before you dive into the financial aspects of renovating, it’s crucial to understand that certain rental property expenses, including renovations, can be tax-deductible in Canada. This depends on various factors, such as whether the expenses are considered rental expenses or capital expenses for your rental property. It’s essential to check if you’re eligible for rental property tax deductions, including the rental property renovation tax deduction, to optimize your rental income tax deductions effectively.

You can find online some Active Canadian Tax Credits, but be sure to get the assistance of a professional. A good property manager will be able to provide you with some guidance.

Conclusion

Renovating an investment property is a key strategy in property investment, demanding meticulous planning and execution.

Incorporating strategic tips into your property renovations empowers you, the landlord, to steer through the renovation process more efficiently. This careful approach is instrumental in securing financial success and maintaining tenant satisfaction over time, ultimately boosting the return on your property investments.