Important Things to Remember with Rental Property Additions

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Every real estate investor wants to increase the value of their rental property.

Unlike improvements in a primary residence, rental property improvements need to achieve a balance between investing enough to boost the value and attract top tenants and spending too much money without seeing a return on your investment.

Kitchen and bath renovations are usually the focus of attention when a property owner plans upgrades to their property. However, they are not the only renovations to improve your income property’s ROI.

If you can, adding square footage can be a great way to increase the value of your rental property.

bedroom

Consider adding a bedroom

Additions such as bathrooms are a little more demanding, as they need plumbing and electrical work, but bedrooms can be a reasonably easy addition.

If your property has more than four bedrooms, you probably won’t get a great return on investment (ROI) for adding more, but if your home only has two bedrooms, you can add a lot of value with another bedroom.

Even if they only have one child, most families want at least three bedrooms. The third bedroom is often used as an office, especially in today’s work-from-home world.

Turning a one-bedroom into a two-bedroom or two into three can get your rental price to the next level and attract high-quality tenants who will stay.

A bedroom’s main features include a door, window, and a closet, which generally do not bring significant complications. You can expect the overall project to take less time compared to other ones.

If you ever decide to sell the property, having that extra bedroom will increase the sale value.

design-and-planning

Design and planning

With any successful undertaking, it all starts with a good plan.

Whether you choose to make a list or get full-blown architectural plans, you need to know what jobs you will be taking and where you need professionals.

Here are some of the things you should plan and budget for:

  • Permits
  • Demolition
  • Foundation
  • Roof
  • Siding & Gutters
  • Windows
  • Structural Carpentry
  • HVAC Ductwork
  • Electrical
  • Plumbing
  • Insulation
  • Drywall
  • Flooring and Interior Finishes

Breaking the project down as much as possible will make it easier to get a realistic view of the costs regarding finances and your time.

permits

Obtain all permits

Building permits are issued approval by your local government agency that certifies the work was performed to a standard.

Not all renovation projects require a building permit, but any project that changes the structural or mechanical systems usually requires an appropriate license from the local building department.

The decision to require a permit is generally based on assessing the relative risk that the work poses to current and future residents.

You may be tempted to start remodeling without obtaining the proper permits. This can be a catastrophic choice down the road.

Before you embark on any renovations, you should research and apply for the proper permits.

Nothing worse than finishing a pricey renovation to find out there was an overlooked issue, and you need to tear out the drywall.

Your local building department likely has a website with a FAQ section for permit requirements.

Contact your local building office. If your project requires a permit, they will provide you with an application that outlines the requirements for applying.

Your building department may stipulate that some types of work, like gas lines or electricity, can only be done by licensed professionals.

Construction projects might require plans or drawings to be submitted with the application. Some jobs may require more than one permit.

The licensing office will issue you an official permit to post on the house while the work is being completed. Building permits are valid for a determined amount of time. You will not have an unlimited amount of time to complete your project. Building permits are usually issued for a period of between six to eighteen months.

The permit will need to remain posted until the work completed under the scope of that permit has been approved in a final inspection.

general-contractor

Consider hiring a general contractor

If you manage and maintain your property, you might feel confident in doing a bump-out or basic room addition on your own. Your do-it-yourself approach may have served you well in caring for your rental property.

Thanks to internet videos and new do-it-yourself-friendly building materials, homeowners are successfully taking on complex projects formerly reserved for contractors and specialists.

If you possess the skills and knowledge to complete the project, serving as your own general contractor can potentially save you several thousands of dollars. However, you shouldn’t take on the role unless you are confident in your abilities and have considered what a general contractor provides.

Network of connections

Experience brings professional connections. Experienced contractors operate in a social and professional network. An experienced, well-regarded general contractor can often hasten processes that can hamper your project.

A well-established contractor will know the ins and outs of applying for permits and may have contacts with the building officials. A general contractor who has established relationships may enjoy some considerations that a regular property owner may not.

A pro will have an extensive contact list of:

  • Masonry Professionals
  • Carpenters
  • Electricians
  • Plumbers
  • HVAC Contractors
  • Landscapers
  • House Painters

If a contractor regularly works with subcontractors, they may have an agreement for a lower bid or get a faster turnaround time.

Time Management

Any project, large or small, can become stressful when you are under time constraints. If you have a full-time job or other demands on your time, coordinating with several subcontractors can be overwhelming.

As a property owner, you know all too well that a vacant rental is a drain, so it’s imperative that you schedule your remodel as tightly as possible.

A general contractor is motivated to get the job done quickly.

investment-property

Get the most out of your investment property

Just like a good general contractor can ensure a smooth renovation process, a rental property manager can manage all aspects of maintaining and managing your investment property.

Author Bio

Nichole Shahverdi is the Director of Marketing for Bay Property Management Group. Prior to marketing, Nichole worked as the Director of Leasing where she worked directly with property owners and investors, advising on maximizing ROI and increasing tenant retention.

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