Is there such a thing as too much rehab? Plain and simple, YES!
As a landlord and an investor, hiring a Salt Lake property management company to help you manage your real estate dealings, especially rehabilitation, while also trying to provide the best living conditions to your prospective tenants and, more importantly, a healthy ROI, might sound a little complicated. Still, the truth is, embarking on projects like this takes more than mere gut instinct. How much should you do? When is the time to pull the plug on a rehab? These are some of the questions you should ask yourself before making a big decision.
In this blog, we will highlight some essential things to know on what to do with your rehab works to provide the best possible living conditions for your tenants while still getting every cent on the dollar.
Taking Your Property Into Consideration
It's important to keep in mind that a fancier house does not necessarily mean more rent. Many more factors go into the value of rent you can get, including things like:
- The architectural design of the house
- Size of the rooms and the house in general
- The compound or the surrounding
- The neighborhood
Your prospective tenants are humans. Every individual has different needs and desires, and to attract the right tenants. Regardless, you need to put the house or keep the house in good condition to attract renters.
Another thing to keep in mind is that humans are insatiable; going way beyond the line to please some will either hurt you in the long run or be detrimental to the needs and taste of others. At the end of the day, renters generally want affordable quality above anything else.
Embarking on a Rehabilitation Project
The first--and most important thing--to know and do when undertaking rehab on your property is to take the most direct route. This is especially true when your property is inhabited or a renter has already signed a new lease and is waiting to move in. Avoid doing extra unless a tenant asks for specific features that you feel you can deliver, in which case you should have an agreement in place about the financing.
You should also know what is covered in your home owner's insurance before ever initiating a renovation. Will it leave you under-insured?
Performing Routine Maintenance to Avoid Additional Rehab Projects
Besides upgrades or emergency repairs, your property should also undergo routine maintenance, which reduces the amount of rehab you would need to do later on. Keeping up with regular maintenance may be daunting. But doing so will save time, money, and stress later on. The cost, type, and maintenance needs differ by location.
If you're lost on where to get started or don't have the time to handle regular maintenance or your next big rehab project, Salt Lake property management can help.
Five Warning Signs to Look for in a Rehab Project
To keep your costs in check and your timeline on track, it's a good idea to learn a few warning signs that may indicate that your rehab project is getting bigger than it needs to be. Some signs to watch for include:
- When several small projects could add the same or more value to your project as a major one
- It goes way out of your insurance coverage.
- At the point where it suits specific demography more than the others (this will discourage a lot of prospective tenants, now and in the future. In a case where a tenant asked for such renovations and is willing to pay, you must calculate the risk of how much it will cost to put the house back in the original shape that will appeal to new prospects if the tenant eventually moves out.)
- The economic implication of such rehab; here are some precautions about the economic implications of over-improving your house.
- In your neighborhood, you need to critically look at the rental rates in the area and the ROI on rental properties. When renovations result in an increased rate in accommodation, although it might appeal to new buyers/tenant, increased rates compared to other good choices in the neighborhood scares them off, which is bad for business.
Generally, ROI is key to any renovation.
What is next in the process of home renovation?
Which part of your home renovation needs to be done first? What should be the focus of your attention and what can be delayed?
Property management differs by location, and when it comes to Salt Lake property management, we provide expert advice that will guide you through the processes involved before you take any wrong steps. At Reeder Asset Management, a family-owned company operating for over 20 years, we are poised to offer the best consultancy and management services to ensure seamless and proper management of your property. As a company of owners for owners, we perfectly understand the challenges property owners face; as such, we are in the best position to solve them.