9 Smart Rental Renovations To Boost Rental Income

Rental renovations can pay off big time. By making a few upgrades to your property you can give a financial boost and attract better-paying clients.

Whether you're renovating an older rental or fixing up a new purchase to rent out, this guide will share top 9 renovations you can make to uplift your property’s value–both financially and aesthetically.

Key takeaways

• Upgrades like hardwood flooring and insulation can dramatically enhance a rental's appeal and efficiency, offering returns of up to 147% and 100%, respectively.
• Small changes, such as updating kitchen countertops and appliances or bathroom fixtures, can make a big difference, with returns ranging from 67% to 71%.
• Energy-efficient windows and exterior improvements like new roofing or siding increase property value, contribute to long-term savings, and attract higher-quality tenants.
• Creating open living spaces and investing in outdoor enhancements improve the livability and curb appeal of your property, making it more desirable to potential renters.

Why should you renovate a rental property?

On average, property renovation can increase your return on investment (ROI) by 69%, but it varies by the project's nature, your property's location, and your budget.

Here are some benefits of rental property renovations:

• Increases rental value: Upgrades and modernizations allow you to charge higher rent. By improving the aesthetics and functionality of the property, you make it more attractive to prospective tenants who are willing to pay more for premium features.
• Reduces vacancy rates: A well-maintained and updated property attracts tenants faster, minimizing vacant periods. Consistent rental income means more money in your pocket.
• Lowers property maintenance costs: Renovating a rental unit often involves replacing old, worn-out elements with new, more durable materials. This can significantly reduce future repairs and maintenance frequency and cost.
• Enhances property appeal: Whether it’s a fresh coat of paint, updated fixtures, or a complete kitchen remodel, renovations can transform the look and feel of your property, making it stand out in a competitive market.
• Boosts long-term property value: Beyond the immediate increase in rental income, upgrades can also enhance the overall market value of your property, ensuring a higher return on investment if you decide to sell.

9 best renovations for rental property to boost ROI

We've compiled the top 9 rental property renovations that consistently deliver the best return on investment (ROI) for landlords looking to scale their portfolio. Focus on these improvements to increase your property’s value and desirability.

Upgrade to durable, easy-to-clean flooring

The flooring in your rental is an investment in durability that pays off year after year. Refinishing existing hardwood floors can yield an ROI as high as 147%, and installing new hardwood floors offers an estimated 118% return.

Hardwood floors are highly sought after by renters and are exceptionally durable, making them easy to clean and maintain. They instantly elevate the look of your property and justify a higher rental rate.

If hardwood is not an option, consider high-quality luxury vinyl plank (LVP) flooring. LVP is water-resistant, extremely tough, and less expensive to install than traditional tile or hardwood, reducing turnover costs.

Pro tip: When replacing, choose neutral colors that complement various decorating styles.

Implement insulation and ventilation upgrades

Upgrading your property’s insulation can recover up top 100% of return on the investment, as found out by 2022 Remodeling Impact Report. This upgrade is less about aesthetics and more about utility and comfort.

Better insulation improves energy efficiency, reducing heating and cooling costs—which can save your tenants up to 20% on their energy bills. An energy-efficient property is highly appealing to energy-conscious renters.

Additionally, proper ventilation (especially in attics and crawl spaces) protects the structural integrity of your property by mitigating moisture buildup, preventing costly mold or wood rot repairs down the line.

Conduct a strategic bathroom makeover

Bathroom are one of the heavily scrutinized spaces by prospective tenants, and a clean, modern bathroom signals a well-maintained property.

To renovate the bathroom, think in terms of its longevity and simplicity. Replace outdated fixtures, install new, neutral-colored tiles in the wet areas, and ensure all plumbing is modern and reliable. Small, impactful changes like a new mirror, vanity, and modern light fixtures can drastically change the room's feel without major construction.

Pro tip: Prioritize replacing the vanity and light fixture; these two elements have the largest visual impact.

Install energy-efficient windows

Replacing old, drafty windows with energy-efficient alternatives not only improves ROI (vinyl windows yield 67%; wood windows 63%) but also results in long-term savings on energy expenses.

Energy-efficient windows enhance your property’s curb appeal and improve the interior comfort, directly appealing to modern renters. This upgrade reduces tenant utility costs, making your property a more compelling financial choice for them.

Refresh the kitchen with key updates

Rather than a full kitchen remodel, which can eat into your profit margins, focus on a strategic kitchen refresh to maximize your return. According to the Journal of Light Construction (JLC), minor kitchen renovations can yield up to 113% ROI in recouped benefits.

Consider these minor but high-impact moves to get the highest ROI:

• Set up durable countertops: Replace old, chipped laminate with a mid-range, durable material like granite or quartz, or a quality solid surface that withstands heavy use.
• Install modern appliances: Swap out old appliances for modern, energy-efficient stainless steel models. This increases appeal and lowers the tenant's utility bills, a major plus.‍
• Do cabinet makeover: Apply a fresh coat of paint and replace outdated hardware to make old cabinets look new and custom.

Replace roofing and garage doors

New roofing and garage door replacements are often overlooked by investors because the upgrades are not that noticeable by tenants or the landlord. But, they can still deliver approximately a 100% ROI. These aren't flashy, but they are essential structural and safety components.

New roofing ensures the property is protected from the elements, eliminating a significant risk of expensive damage. Meanwhile, a modern garage door dramatically enhances curb appeal and tenant safety. Both improvements are non-negotiable for property safety, value, and tenant attraction, ultimately contributing to higher rental rates.

Update the exterior siding

Exterior siding updates, such as installing fibre cement siding or vinyl siding, are critical to maximizing the curb appeal of your rental.

Updated siding dramatically improves the exterior aesthetic and durability. This simple investment attracts more potential renters, often leading to faster lease-up times and higher perceived value. Furthermore, quality siding reduces your long-term exterior maintenance costs, saving you time and money.

Modernize by opening living spaces

While it’s hard to put a specific ROI number on this, creating a more open floor plan is universally popular with renters and a surefire way to increase your property’s perceived value and desirability.

By carefully removing a non-structural wall between the kitchen and living room, you create a seamless, flowing space that is highly desirable. This design trend makes a property feel larger, brighter, and more modern. A modern, open space often places your listing at the top of a potential tenant’s wish list, securing you a faster lease signing and higher monthly income.

Enhance outdoor living and curb appeal

Curb appeal is the first impression your property makes, and simple outdoor enhancements significantly boost rental attractiveness. While ROI varies, the benefits manifest in lower vacancy rates and the ability to charge higher rent.

Focus on functional, low-maintenance updates. This includes simple, clean landscaping, a fresh coat of exterior paint, and ensuring the entryway is inviting. If possible, adding a functional outdoor area, such as a small patio or a simple deck, can set your property apart.

Case in point: How I increased my property’s rental value by 10%

As an investor based in Atlanta, Georgia, I recently completed a kitchen renovation in one of my rental properties to boost its value and appeal.

I followed the following approach to increase both property value and rental income:

• Project overview: Upgraded the kitchen, focusing on cost-effective yet impactful changes.
• Before renovation value: $250,000
• After renovation value: $275,000
• Total investment: $15,000
• Increased rental income: From $1,200 to $1,450 per month

How I maximized ROI:

• Chose mid-range appliances: Spent $5,000, ensuring quality without overspending.
• Installed new countertops: Opted for quartz, spending $4,000, for durability and style.
• Updated the cabinetry: Instead of replacing it, I repainted and added new hardware, costing $2,000.
• Improved lighting and fixtures: Spent $1,500 on modern, energy-efficient options.
• DIY Backsplash: I did the backsplash myself, spending $1,500 on materials for a custom look.

‍Key takeaways: You can increase a property's value and rental potential with smart, data-driven choices that minimize the cost of materials. Besides making the property more appealing to renters, this kitchen renovation also increased its market value, proving that smart renovations are worth the investment.

Maximize your returns with expert-built financial tools

Rental home renovation is a major task and require diligent expense tracking, clear cash flow visibility, and the ability to manage funds for different projects. This is where we come in as your trusted financial partner.

We built Baselane specifically for U.S. real estate investors and landlords to help you take save time and gain clarity over your finances. This is some of the many ways we can simplify rental renovations for you.

• Keep renovation budgets separate: Open unlimited virtual accounts for free to dedicate funds for each specific renovation project, like "Kitchen Refresh Reserve" or "Roof Replacement"
• Simplify bookkeeping: Automatically auto-tag all project expenses to the correct property and Schedule E category, turning complex renovation tracking into effortless tax preparation.
• Boost investment returns: Earn a high APY on your cash reserve accounts—the money you set aside for future renovation projects—letting your money grow even before the hammer hits the nail.

Let Baselane optimize your rental management while saving you time and money. Book a demo today.