Property Management: Rehab for a Big ROI
In property management, renovation is a given. Property managers must make the decision on when to renovate and the number of renovations to be done, which comes down to cost, but they must take into consideration the return on investment (ROI). They can achieve a large ROI when they renovate the right areas. In the first phase of any property renovation, property managers must inspect the property’s exterior and interior spaces to see what needs immediate repairing.
The Property — When inspecting the property, you should check for:
- cracks and other damage to the sidewalks and asphalt
- overgrown trees and bushes — these present safety and security issues
- faded paint on surfaces (e.g. handicap parking spots) and the building(s)
- broken railings and steps
- Non-operational light fixtures and/or lampposts
- damaged siding or brick
- damaged areas on the roof
- poor drainage after storms
- damage to the swimming pool and/or pool deck
There are many ways to cosmetically improve the grounds, such as planting more flowers, adding mulch around trees, trimming trees and bushes, repainting parking lines, and adding more lighting and handicap ramps.
If there is a courtyard, does it need a major renovation? Many renters look for some type of outdoor space, such as a balcony or courtyard. Those looking for an apartment building with a pool expect the pool area to be well-maintained and have a secure gate.
The improvements that warrant a big ROI externally are a new roof, new asphalt or a rehabbed pool area.
Interior — For apartments, do the units need a facelift? This entails checking the flooring, kitchen cabinets, electrical, plumbing, windows, appliances, doors, tub and tub surround, and lighting fixtures. Do the units need to be repainted? Does the carpeting need to be replaced?
The improvement that warrants the biggest ROI is the kitchen. Cabinets and the countertop are easy to change out. When it comes to appliances, if they are ten years or older, they should be replaced with energy-efficient ones. Upgrading kitchens will also warrant a bump in rent. Other valuable upgrades include windows and patio doors. Replacing them with energy-efficient ones will cut down on heating and cooling costs.
Overall, safety should also be a concern when renovating. It is important that smoke and carbon monoxide detectors be replaced annually as well as making sure electrical and plumbing are up to code. If renters do not feel safe or that the property management does not care about the property, they will move out.
Originally published at danbellows.net on July 3, 2019.