Renovating Rentals For Profit
Over the last few years, we have become experts at renovating properties in lower income areas. The hardest part has been finding a good contractor and other professionals, but there are a lot of other things that we've learned that were not intuitive in the beginning. These tips can go a long way towards simplifying a renovation, keeping costs down, making sure the renovation lasts, and more.
General
- Tenants are looking for clean, bright, and new looking apartments. Give them what they want.
- Remember… you don’t have live there, your tenants do. Don’t over-renovate an apartment.
- Until a contractor proves themselves to you, manage the project very closely
Walls
- Select two-tone paint colours for all walls except kitchen and bath.
- Baseboards should be semi-gloss white and walls should be eggshell off-white beige to give a classy look.
- Ceilings should be flat white.
- Kitchens & bathrooms should be semi-gloss moisture resistant off-white paint for all painted surfaces
Floors
- Hardwood is preferred in all areas except kitchen and bath, but if not already present, it can be very expensive to install
- If hardwood is present, refinishing them can make a dramatic difference in the quality of the property. Even if the floors are in terrible shape, they can usually be salvaged
- Laminate flooring is the next best thing for all areas except kitchen and bath. Higher quality (thicker) laminate is more expensive, but is not necessary unless you plan on keeping the property for a long period of time. Lower quality laminate will usually work quite well.
- Ceramic tile flooring is preferred for kitchen and bath areas, sometimes even for entrance ways. Inexpensive tiles are usually acceptable, but may break more easily than more expensive ones. Either kind will give a rich look to the unit.
- Commercial tile is now available in more styles and colours, and can be a good alternative to ceramic tile. It doesn’t look as nice, but is very durable.
- Vinyl flooring is the least preferred. It’s inexpensive to buy and install, but can be easily damaged.
- Carpet is also the least preferred. In lower income areas, tenants usually do not have vacuums, let alone steam cleaners to keep the carpets in good shape. If you want to use it anyways, select a low-pile, commercial or semi-commercial quality carpet in medium to dark grey.
Kitchens
- Older cabinets can be made to look new with a fresh coat of semi-gloss or melamine paint. White painted cabinets (inside and out) are preferred unless the unit is higher end.
- Install new brushed nickel cabinet knobs to give the cabinets a new look
- When installing new cabinets, use the services of a kitchen design centre at IKEA or Home Depot. Select cabinets that will be durable enough to withstand tenant abuse.
Bathrooms
- Ceramic tile looks much better than a plastic tub surround and costs only a little more
- Buy toilets with large drain spouts – it will save you plumber bills for clogged toilets
- Use pedestal sinks to make a bathroom look larger
- Don’t forget to include storage space and electrical outlets for a tenant
- Make the bathroom sparkle!
Finishings
- Replace all light switches, plugs, and cover plates – it will make an apartment look new
- Replace outdated light fixtures and use moderate to high wattage light bulbs (40W to 60W
- Replace outdated door knobs and door stoppers with brushed nickel ones
Exterior
- Install new mailboxes and house numbers (if necessary)
- Cleanup any garbage lying around
- Paint the building if it looks run down
- Safety is a concern in some areas, so address this with proper exterior lighting, secure doors, etc.
One of the best things about having a standard set of renovation criteria is that you don't have to waste time making decisions for each property, such as paint colour, regular vs. Decora light switches, etc. You can also buy materials in bulk because you know you will use the same stuff over and over again.
A friend of ours recently viewed some of our apartments in different buildings. One of his first comments was "They all look the same", and Joanne responded "That's right! We don't do interior decorating for each unit - we do the same thing for all of them."
Remember... you don't have to live there yourself, your tenants do.
This article is copyright © 2004-2010 Spirepoint Properties. All rights reserved.
Paul Blacquiere and Joanne Beehler are full time real estate investors and have been investing in Ottawa, Ontario, Canada since 2002. They are owners of Spirepoint Properties, a Canadian real estate investing company dedicated to making real estate investing easy.
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