Skip to Content

Stop Over-Improving Your Leander Rental Property

Overdone Luxury Apartment Rental in LeanderOne of the major faults that new Leander rental property investors make is to over-improve their rental house. Normally, you like your rental to be in good condition and appeal to quality tenants. But improving the property too much can minimize or even lose any profits you look forward to earning while you recoup your remodeling costs. One of the practical ways to avoid that risk factors is to think strategically and address obstacles to profitability upfront – before you even purchase the property, if possible. When you start with your final objective with a good understanding, you will never catch yourself in a financially shaky situation from over-improving.

Few professionals recommend starting by planning the end of your investment’s life – your exit strategy. When buying an investment property, you need to feel confident that you will have an opportunity to refinance or sell the property at any given time and produce a tidy profit. If not, what is the point of getting the property? So, since you’re crunching the initial numbers, think about what you will need to get out of your property over a few years down the road – and all improvements you want to make. Talk to one or two lenders to learn about mortgage products, costs, and if your goals align with your financials. A positive lender can illustrate what barriers you may face and whether your strategy is solid or not.

Another important piece of information you need to avoid over-improving your Leander rental property is your After Repaired Value (ARV). To make sure that your investment is profitable, you must be aware of the property’s value as soon as you finish improvements. Using this figure, you can be assured that you won’t be overspending for your remodeling plans. Using good comparable properties, calculate your ARV. After that, talk to real estate agents, other investors, and your contractor. The more information you pick up, the more confident you’ll feel that your improvements are enough – but not too much.

Finding that balance can be a real challenge, particularly if you are a first-time investor. Erring in either direction can cost you big time. However, one method to find the right improvements for your rental house is to turn to your comparables once more. If you identify what the other rental homes in the neighborhood look like – and what they rent for – you can improve your property up to the point that it will allow you to charge market rents and no more.

Making your property nicer than others in the neighborhood is one of the bad choices you can make. If most neighborhood houses have tile floors and composite countertops, don’t install hardwood and granite. Although anything you upgrade must be of good quality, typically, luxury materials and high-end products are a complete waste of money. There are exceptions to this rule, especially if your rental is in a high-end neighborhood or certain upgrades would give you a significant boost in a property. But even in such cases, you need to aim for mid-grade materials and nice but not very good improvements.

At last, avoid over-improving your rental house by remembering not to get too attached to the house. Try to view it as an investment, not a home. If you become emotionally involved in your rental properties, you will begin making modifications that you like but will do nothing to improve profitability. It is normal to want to take pride in your rental properties, but that pride must come from being the owner of a profitable and well-run investment and not how much you spent on improving the property.

Would you like some expert advice on how to improve your rental property to maximize profits? We can help! At Real Property Management All Connect, our team of Leander property managers can help you find comparables, calculate your market rents, and much more! To learn more about what we offer investors like you, contact us today online or call us at 512-806-0606.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details