Increasing Cash Flow on Your Investment Property
If you are looking to increase the value of your investment property you should also be looking for ways to increase the rent. As a property management company in Toronto, we regularly recommend owners look at cash flow of their property, and by that I mean rent when at all feasible. Typically, when an existing tenant gives notice that they are moving out, it is the best time to take a hard look at the property to see what improvements can be done to command a higher rent. Here are a few examples of “hot spots” within your investment property that you should take a look at. Remove carpet – If you have carpet in the rental property and it would be financially reasonable to remove it, you should give this some consideration. Not only does hardwood or laminate look better, but it wears better too. A carpet can be ruined by one tenant and you run the risk of constantly having to replace it (or attract tenants that don’t care how messy it looks). Improve the kitchen – Ok, so we don’t suggest replacing a full kitchen with high end materials like granite countertops (unless that is the type of investment property it is) but take a good look at the kitchen and see what upgrades might be needed to attract a tenant at a higher rent. A kitchen is a major focal point in any home and if you want to substantiate higher rent, the kitchen needs to play its part. Upgrade the bathroom – Similar to the kitchen, a bathroom is an important room in your investment property. What is important about a bathroom is not its size or colour but how clean the bathroom is. If the bathtub looks like someone took an SOS pad to it, one quick solution is to get it reglazed/refinished. For around $320 you can make an old tub look brand new again and not have the $5-$10k price tag of a full bathroom renovation. Even just recaulking fixtures, changing the mirror or adding some extra light can make a big difference. Include ensuite laundry – One of the best selling features of an investment property is it’s laundry facilities. There is not much worse of an experience than having to carry your laundry to your car and drive to a Laundromat (or your parents house) because you don’t have it available at your home. Ensuite laundry alone doesn’t sell, but it is likely a deal breaker to at least 50% of prospective tenants. Painting – New paint will bring life back into any place. Choose light colours for the kitchen and bathroom (to give it a bigger feel) and pick neutral colours for the other rooms. Sometimes you can negotiate with tenants to have them paint the place if you supply the material (and they provide you the receipts). This strategy is cost effective however if the walls are terrible, it might be better to pre-empt the situation. Enhance the Curb Appeal – Get the proper lighting in front of the complex, get the grass landscaped properly or even just plow the drive way. Little enhancements like this go a long way with first impressions for tenants. Whether you choose to do one or all of these suggestions, your property will command a higher rent. When trying to decide, do an ROI calculation for each repair and determine which enhancement you should prioritized. Not only will your property yield a higher rent, but it will be worth more too. Mekler Property Management offers property management services in the Greater Toronto Area. For more information please visit us at www.Mekler.ca – We help you be a landlord without being the landlord!
Good stuff Leo. Thanks for sharing. Its amazing what $2,000 can do to your ROI