Did you know that around 80% of the homes in the US in need of updates are at least 20 years old? If that sounds like your rental property, it may be time to consider renovations and even house additions.
Choosing to add home additions to a home you live in is hard enough, but trying to figure out if you want to do it for a property you rent out is even more difficult! After all, you’re paying money for something that you don’t get to benefit from directly, so it can be an intimidating thing to do.
Are you thinking about increasing the square footage at your rental property but aren’t sure if it’s worth the trouble? If you’re already not that interested in being involved in the property as the owner, it can be hard to make that choice.
Keep reading as we discuss house additions for a rental property and what you should consider.
Pros and Cons of House Additions
As with any type of change you make to your rental property, there are pros and cons that you have to consider before you can make the right choice.
Some of the pros of a house addition include:
- Helping to design a more functional space
- Controlling the overall future plan for your home
- Spending money to start making more money later
Some of the cons that you would want to think about include:
- Changing rental property upkeep schedules (depending on room types added)
- Using up property space, including yard or patio features
- Waiting for renovations to be complete before renters can move in
Depending on what sort of house additions you have in mind, you can avoid some of those cons with the right plan.
For instance, if you want to finish a basement so that it can be used as an additional room, you won’t have to worry about eating into your house’s outside area. In addition to that, if you’re adding an extra bedroom instead of an extra bathroom, that won’t really impact how much upkeep the home needs overall from you as the property manager or landlord.
It’s all about creating a plan before you get started and carefully considering how the decision will impact your renters and the home’s future.
What Are the Main Benefits of Home Additions?
The biggest benefit of renovations for a home addition is that you get more space in the home. Adding on means you have more room for whatever types of needs your potential renters have.
For instance, you can add an extra room that would work as a bedroom, home office, or even a hobby room.
You’ll also be able to charge a little bit more in rent for a larger space, which increases your overall income. This unused space is now going to become an extra aspect of how you make money as the owner! High-quality tenants want to live in a high-quality home, so you’re going to attract better renters as a result of the change.
When you upgrade part of the home, you might be swapping out old fixtures or appliances, which can actually reduce your overall upkeep requirements. Newer upgrades are less likely to break down, so you won’t have to deal with maintenance requests or higher costs like you would with less efficient components.
Lastly, another huge benefit is that you’re going to be more competitive in the local market. If similar properties to yours have been updated and changed in recent years, but yours is the same as it’s been for 15 years, that’s not going to help you get more income or more renters.
How Does This Impact Home Value?
The answer is a resounding yes, home additions will increase your home value. The amount will vary based on different factors, including what sort of addition you added, what the new size of the home is, and what the market in the area looks like.
When you have more square footage, it almost always will be noticed by potential buyers once you decide to sell. You’ll be able to ask for a bit more on the asking price because of the extra room in the home.
It’s important to be careful when planning the type of room you want to add, however, as you want this to be as attractive as possible to potential renters and future buyers alike. If you still plan to rent the property out for a few years, you can’t forget that it has to be a change that your desired market is going to like in addition to potential homebuyers later on.
As with any big change that you might want to make, always look into your local zoning laws to ensure that any additions you are planning will work for rental properties. Knowing about anything that may impact your building plans will help things go smoothly during the renovation process and avoid property problems later on.
What Renovations Would Work Best?
Now that you can see why a rental house addition could be a great thing for your future as a property owner, it’s time to figure out what types of renovations make the most sense.
If you’re planning to mostly rent to families, for instance, you have to think about what other family homes in the area are offering that your home doesn’t. This is how you determine what appeals most to tenants.
In a similar manner, if you’re looking for tenants that are college students, think about what college students are looking for in their rental homes. You need to have the right amenities to make your rent prices worth it for them.
Some room addition ideas that you may want to think about include:
- Adding a garage
- Turning the basement or attic into a separate room
- Converting the main bedroom into a suite
- Adding more bedrooms for larger families
- Expanding your kitchen
You can also do something less extreme if you’re working within a limited budget. For instance, swapping out old appliances, busting down a non-load-bearing wall, and creating an open/updated kitchen and living room combo can go a long way.
Considering House Additions for Your Rental Property
Making the choice to add on house additions is a big move, but it’s likely going to help you in the long run. You’ll attract better tenants and get more money in rent, even if you have to pay a little bit now to make that happen.
And, if you feel like managing your properties after the house additions are completed just isn’t for you, Reedy and Company can help.
Are you interested in learning more about this process? If so, get in touch with our team today to learn about our services and how property management can help you.