When it comes to smart investments, single-family rentals (SFR) are hard to beat. Compared with the volatility of stocks and bonds, rental properties consistently generate impressive returns for investors through appreciation and rental income.
During the last 15 years, and even through the recession, single-family rentals delivered consistent returns. Rent prices regularly increased 3 percent monthly for years until January 2019 when they increased 3.2 percent, the fastest increase since 2017.
More People Looking to Rent
Declining home ownership, rising home prices, higher lending rates, and a preference for flexibility are responsible for the rapid growth. Since 2009, the number of people seeking to buy homes declined by 3.6 million, and the number of renters increased by 1.9 million.
A new generation of home dwellers was also more inclined to rent than buy. According to Pew Research, the millennial generation — which accounts for roughly half of U.S. households with children — is more likely to rent than own a home than previous generations.
What They’re Looking For
Whether you purchased the property or are a realtor representing the investor, there’s a good chance of great returns on an SFR investment. But how can you maximize this wise investment even further? By getting the property ready to rent, which means determining what renters are looking for, and hiring a property management company to put the finishing touches on the property.
That niche market of millennials is most likely looking for upscale amenities, like hardwood floors throughout the unit, stainless steel appliances, quartz countertops, and in-unit washers and dryers.
Renovations are Key
Certain tried-and-true renovations consistently attract renters and support charging higher rent.
Focus your attention on areas that renters care most about. High on everyone’s list is the kitchen and bathroom, but don’t neglect communal spaces like the deck or a finished basement. Even if you can’t afford a major renovation or extension, you can improve your property’s value by focusing on spaces within the house’s existing footprint.
Adding molding to kitchen cabinets, replacing small pieces of hardware, changing out worn switch plates, and adding a fresh coat of paint are simple and affordable ways to increase value. Finally, consider making your unit energy efficient and learn what government-funded initiatives are available for investors looking to increase home values on a budget.
More Ways to Increase Your Property’s Value
Become familiar with remodeling strategies that have previously worked well. These five remodeling projects delivered the highest rates of costs recouped, according to data from Remodeling Magazine’s 2020 Cost vs. Value report:
- Manufactured stone veneer (95.6%),
- Garage door replacement (94.5%),
- Minor kitchen remodel (77.6%),
- Siding replacement – fiber cement (77.6%) and
- Siding replacement – vinyl (74.7%.)
Hire a Property Management Team with a Renovations Department
Pan American Properties has a full-service in-house general contracting business with licensed plumbers, electricians, and HVAC professionals on staff. We help with all your renovation needs, from major kitchen remodels to appliance installation. Call Pan American Properties today at (888) 754-9700 or email us at [email protected] to learn more.