Do you have the nicest condo for rent in D.C.? While D.C. certainly has room for luxury rentals, it's still possible to 'overdo' updates and upgrades to your property to the point that you may not be able to recover their cost through the rent.
- There's a distinct financial difference between revenue-generating property upgrades versus rental rehab that never pays off.
- Over-rehabbing a property might make it the most beautiful house on the street, but it will sit empty if nobody can afford the rent.
- D.C. renters want nice, safe rental homes. Choosing smart upgrades that attract the best residents without pricing your properties too far above the competition helps you make more money.
With expert property management in D.C., investors can apply the right amount of rehab that pays off.
How Much Rehab Is Too Much?
If luxury doesn't translate into more rental income, then you've gone too far with your updates. Every condo for rent in D.C. needs updates from time to time—but overdoing it can be an expensive mistake that takes time to recover from.
- When making updates to a rental property, investors have to put personal preferences aside.
- Your private residence might need top-of-the-line everything to make your home a 'dream' house.
- However, that level of investment into your rental properties can quickly become a financial loss for rentals.
If a property renovation includes granite countertops, a new sauna, upgrading to a chef's kitchen, or high-end hardwood floors, you'll struggle to recover enough return on those costs to justify the expensive upgrades if the market doesn't demand it.
Adding features can be appealing to you personally—but most renters won't pay a high monthly rent to live in a property with features they don't need or want.
Focus on What Renters Want
- Most D.C. renters want affordable quality in a rental home.
- They also want to pay a competitive price for living in a safe, comfortable home.
- Renters will avoid overpaying for the basic amenities that rental properties should offer to local renters.
You don't need to use cheap materials or poor-quality workmanship to make money on a rental property. Renters can spot bad upgrades and inexpensive materials, and they won't want to pay the rent to live in a home that shows evidence of low-quality renovation work.
Choose smart updates that bring quality to your properties without requiring a rent increase that outprices your home. Rehab with:
- Quality countertop and flooring materials that look nice and provide excellent durability
- Stainless steel appliances that can stand up to frequent resident use
- Vetted, quality contractors that provide excellent installation and work throughout every rehab project
- Excellent-quality paint and neutral colors
- Durable fixtures that aren't too trendy for a condo for rent in D.C.
Skilled property management in D.C. can help you evaluate upgrades and make smart choices about the best rehab for your rental properties. At EJF Real Estate Services, we know what renters look for in a property—and how the right updates can help you make more money from your rentals.
Don't Overhaul It
When considering renovations, sometimes small changes can make a big difference. Updates don't always require a full property renovation. As your cash flow allows and the market demands changes, choose specific areas of a property, and make thoughtful updates—one room at a time.
- When buying a new rental property, consult a property manager before overhauling the entire home with a complete renovation.
- A good property doesn't always require a full rehab to become rental-ready. Research the property and the market before starting a rehab project.
- When you understand rental rates in the area and the potential ROI for a property, you can make better-informed decisions about the right updates to maximize your investments.
Consider Tax Implications
- Many upgrades can be a tax deduction, but not every aspect of property rehab can help you at tax time.
- Making repairs to the property won't always qualify as a deduction. However, capital improvements to a rental add long-term value.
- Improvements replacing plumbing or outdated electrical wiring, adding central air, a new roof, or installing new appliances can qualify as 'improvements' that benefit you at tax time.
Market Your Rehabbed Property
When you make smart upgrades, it's time to market your rehabbed property! Highlight improvements in your rental property's listing, and adjust the rental rate (within reason) to attract the best renters and the most income from your updated rental homes.
A Property Manager Helps Investors Make Smart Rehab Decisions
It can be challenging to separate your personal preferences when choosing the right rehab options for your condo for rent in D.C. Let the numbers—and an expert property manager—be your guide!
- The EJF Real Estate Services team understands the D.C. rental market.
- We help investors evaluate the financial impact of potential property upgrades.
- When an improvement in your estimated income outweighs the costs of a rehab project—while keeping your property competitive—investors make more money with desirable rental properties.
Helping investors analyze and assign updates to rental homes in the D.C. area is just one way our property management services help you grow your portfolio.
You can learn more about the benefits of growth with full-service property management when you download your free copy of our guide to real estate investing!