Landlords and real estate agents have a huge factor in common: their success comes from the perceived value of the property up for sale or rent. This means it doesn't matter what you think the home is worth as much as it matters what the potential buyer or renter thinks it's worth.
The good news is owners and agents can take action to increase the perceived value. The trick is to keep the ROI as high as possible. So, don't over-invest in things that won't deliver a suitable return.
Anyone who rents property should develop friendships with local real estate brokers because techniques that work well in one area, may not pan out well in another. Just as a fisherman needs to talk with others to discover the best fishing holes, landlords should talk with those who are actively engaged in the real estate market.
There are no one-size-fits-all silver bullets for justifying higher rental prices. However, some of the most-recommended ideas can be helpful. Consider these, for instance:
- Landscape improvements are almost always a good idea. Your property doesn't have to look like a mansion, but it definitely should look like someone cares. According to the HomeGain 2012 National Home Improvement Survey, landscaping investments return an average 215 percent ROI. Think about curb appeal. Little things like fresh mulch, a lack of weeds and a healthy lawn can go a long way towards justifying the rental price.
Make sure all lighting features work and deliver ample light. Let in natural light by being selective with window treatments and making sure window glass is clean. Attractive shades and drapery also look great from the outside and can provide a cozier and warmer feeling inside.
- Green upgrades in heating and cooling can be expensive, but may also be high ROI ventures. Not only is it easy to show prospective renters that they will have lower utility bills but there also are green incentive programs that offer rebates or tax credits for property improvements. This Old House cites a Seattle broker who told them buyers are very concerned about utility bills.
If you are looking for some of the quickest, easiest and most beneficial property improvements, here are the top three improvements according to HomeGain, listed by ROI percentage:
- Cleanliness and reduced clutter: 403 percent
- Lightened and brightened property: 299 percent
- Electrical and plumbing upgrades: 293 percent
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