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11 Best Upgrades To Make to Your Rental Property | Cottage

Not sure how to upgrade your rental property and get the best bang for your buck? Check out the 11 smartest upgrades for a rental property here.

January 1, 2018

Even if your rental property might bring in some money already, there’s always more you could earn. Some smart upgrades may boost your rental property’s value, whether you’re looking to market it for the first time or it already has an occupant.

Generally, it's a good idea to choose grades based on the property size, inclusions, and types of renters you're targeting. For example, if you're targeting college students for your rental property, amenities like an in-unit washer and dryer could be wise.

If you’re unsure where to spend your upgrade funds, read on to discover the 11 best upgrades for your rental property.

Determine the Market Capitalization Rate for Your Rental

Your first step, regardless of upcoming upgrades or renovations, should be to determine your rental property's market capitalization rate or market cap rate. In a nutshell, the capitalization rate is the expected rate of return generated by your rental property. It’s based on the net income your property should generate, assuming full tenancy for a year.

The capitalization rate determines how much money you can expect to earn on your rental property in the foreseeable future. If the number is too low for your liking, you can decide on potential upgrades based on how much you want to earn.

To calculate the capitalization rate, follow the below formula:

  • Capitalization rate = net operating income / current market value

In the above formula, the net operating income is the expected annual income generated by a property. In other words, it’s the expected rent payments you’ll receive throughout the year. (Don’t forget to deduct any expenses you must pay to maintain the property over time, such as taxes, repair fees, etc.)

The current market value is the present-day value of the property. You'll need to know the going market rate through research or by contacting a real estate agent for more information.

Generally, a “good” capitalization rate is between 5% and 10%. The higher the capitalization rate, the higher the risk you incur by purchasing or investing in the property. That said, there’s no perfect capitalization rate for every rental property; it all depends on local real estate factors, your budget, and other factors.

Now let’s review 11 upgrades you can pursue to make your rental property much more attractive to tenants and earn more rental income.

1. Add an ADU

Accessory dwelling units, or ADUs, can be profitable rental property upgrades. While you can rent out a room in a single-family home, this often comes at the expense of a decrease in personal privacy and potential rental income.

Instead of moving a tenant into your main home, build an ADU on the property, then charge the tenants for the space. In the era of work-from-home, options like a bedroom and a separate office (and the privacy and extra storage afforded by both) are welcome additions.

Conversion ADUs can be constructed out of garages and existing spaces, or you can add on a room or two with attached ADUs. Detached ADUs are fully separate units. Whichever you pick, with the ADU experts at Cottage, you can have a fully customized, high-quality space in a fraction of the time.

Whatever the case may be for your rental property, Cottage can help design and build the perfect ADU for your portfolio goals.

2. Replace Carpet With Hardwood Flooring or High-Quality Laminate

Depending on the types of tenants you are trying to attract and the costs of materials in your area, you may want to replace carpets with hardwood or laminate floors. Hardwood and laminate floors are frequently perceived as more aesthetically pleasing and are oftentimes easier to clean.

Furthermore, hardwood and laminate floors are better for tenants who have pets. Messes are easier to clean up for you or the maintenance staff, and hardwood and laminate floors are less likely to be ruined by pet play.

3. Install Energy-Efficient Appliances

Energy-efficient appliances, such as dishwashers, clothes washers and dryers, and more, can add even more market value to your rental property. These upgrades may help bump up the asking rental rate. Plus, they can be highlighted by your realtor or rental agent when showing the unit to potential tenants.

Some energy-efficient appliances may allow you to take certain tax credits depending on how many you install and how many properties you own. While this upgrade will cost a bit upfront, you could earn much more than the cost of installing those new appliances over time.

4. Redo Kitchen Fixtures (if Needed)

Your rental property’s kitchen is one of the most important rooms in the space, whether it’s a home, an apartment, or an ADU. Kitchen fixtures ranging from ovens to vents to faucets must look flawless if you want to attract high-value tenants.

If necessary, swap older kitchen features with brand-new ones. Current trends include brass and stainless steel fixtures as well as polished chrome. More economical options, like zinc alloy, are sturdy and attractive and will leave room in your budget for other upgrades.

A pristine-looking kitchen will do a lot to convince potential tenants to live at your property and keep them there for a long time.

5. Add a Security System

It could be prudent and profitable to add a security system to your rental property. Security systems, such as automated alarms and control panels, give potential renters more control over their security and can alert you if there's a break-in or a squatter.

Security systems may even decrease homeowners' insurance payments by roughly two to three percent.

Additionally, if you ever decide to sell your property instead of leasing, security systems are attractive to potential buyers. A 2018 survey relieved that over 60% of home shoppers wanted pre-installed smart door locks and security cameras.

Thesecurity system can be a selling point when trying to attract new tenants or buyers. Bottom line: add a security system to your rental properties to see more benefits than one.

6. Level Up Your Lighting

Lighting throughout a rental space, including light bulbs and light fixtures, can impact how large it looks, how inviting it is, and how warm it feels, particularly at night. Tenants love a well-lit space for its functionality and the aesthetic value it provides. If you haven’t already, swap fluorescent or old light bulbs for LED and energy-efficient alternatives.

Energy-efficient light bulbs save you money on your electrical bill, and they look better to prospective tenants.

7. Do Some Landscaping

Is the outside of your rental property subpar or less than inviting? That’s an opportunity for a prudent property owner like you to hire a landscaping company.

They can fix up the outside of the property by:

  • Planting higher-quality grass or climate-appropriate plants, such as succulents or certain species of trees
  • Adding a path from the driveway to the front door
  • Doing a touch-up on any rough edges of the property or adding a fresh coat of paint to the exterior
  • And more

This upgrade can attract new tenants, as the front yard is often the first impression. Make sure your property management company keeps the new landscaping features looking their best to maximize curb appeal.

8. Install a Kitchen Island

To really make your rental property's kitchen look and feel spectacular, consider installing a kitchen island alongside your existing countertops and kitchen cabinets. A kitchen island expands cooking, and food prep space, plus gives you the option to stage the kitchen space as a breakfast bar if you so choose. Kitchen islands are relatively inexpensive, especially if you opt for portable ones.

In addition to an island, plenty of other kitchen upgrades can make a rental home look infinitely better. Installing a new backsplash is one; repainting the cabinets is another, and choosing a high-end kitchen flooring option like ceramic tile is yet another.

9. Replace Your Switch Plates

The switch plates throughout your rental property are the covers that conceal and protect electrical switches. If these are damaged, dinged, or cracked, replace them to make your property look cleaner and more put together.

Damaged switch plates can lead to fines or injuries in the future, so it's wise to swap them out anyway. If you go for highly-decorative switch plates, buy a few extra to keep the look consistent if they need to be replaced in the future and your original design choice is no longer in stock.

10. Upgrade Your Shower Heads

Poorly designed or old showerheads only produce a trickle of warm water, leaving tenants feeling underwhelmed and less than refreshed after a hot shower.

New showerheads, like rainfall showerheads, feel luxurious and make your whole space feel like a high-end hotel. To keep your tenants happy, make a point to clean or replace the showerhead often.

11. Integrate With IoT (Internet of Things)

The IoT, or the Internet of Things, is becoming more and more popular thanks to smartphone devices like Amazon Alexa, Apple Home Pod, and more. You could integrate your rental property with the Internet of Things by installing a smart router that comes with the property, then including IoT devices and appliances as part of a package deal.

For instance, maybe you’ll replace your rental property’s old refrigerator with a smart home fridge instead, which can be controlled via a smartphone app.

Many people love conveniences, and Internet of Things connectivity adds more convenience to a property. This is doubly true if you integrate your IoT network with some of the other upgrades above, like smart LED lights, a home security system, etc.

A Final Word on Rental Upgrades

Ultimately, the top rental upgrades are those that work with your budget and that attract new renters to your property. Think about what your tenants want and make your upgrades accordingly.

To upgrade your home’s rental value by adding an ADU, contact Cottage for assistance.

Cottage designs unique and customized ADUs perfectly tailored to your property and surrounding lot. With a bit of help, you’ll upgrade your rental property and see an increase in your rental income in no time.

Contact Cottage today to learn more!


Capitalization Rate: Cap Rate Defined With Formula and Examples | Investopedia

Federal Income Tax Credits and Other Incentives for Energy Efficiency |

What is IoT (Internet of Things) and How Does it Work? | Definition from

How to Assess the Market Value of Property | Chron

Accessory Dwelling Units | California Department of Housing and Community Development

Why Get a Home Security System | U.S. News & World Report

5 Home Improvements That Can Save You Money on Homeowners Insurance | Consumer Reports

Step 1: Choose which type of bulb | Equipment Energy Efficiency (E3) Program

How to Change a Shower Head and How Often Should You | Architecture Lab