When it comes to your rental property, it can be hard to decide which projects to tackle first, especially if multiple areas need attention. If the roof caved in or the wiring went wonky, you can’t wait—no matter what else is on your list.
“Landlords should prioritize by making sure premises are habitable and safe,” says Toby Mathis, an attorney at Anderson Law Group, who owns multiple rental properties in Las Vegas, Nevada. “Second, choose by whatever generates the highest rate of return.”
It’s a best practice to first tend to your tenants’ health and safety, and not only because you care about their well-being. State and local codes usually set an “implied warranty of habitability” for rentals, which means that by law, your property must be fit for people to live in.
Deciding when to make major upgrades that don’t threaten habitability can be harder. Consider these three factors:
General property maintenance—cleaning, organizing, and servicing appliances—follows a loose seasonal schedule. It makes sense to winterize your sprinkler system in the fall, before cold weather hits, and to do exterior projects like paving and painting when temperatures are mild.
Consider other things about the season, too. For example, lower humidity levels in winter are ideal for interior painting, and you’re more likely to find deals on materials in upgrade “off seasons” (aka, not summer). Winter is good for other reasons: Contractors aren’t as busy, and if tenants leave town for major holidays, the work is less likely to disrupt their routines.
“For landlords with some flexibility, this means it’s easier to get multiple bids, flexibility on prices, and more responsiveness from contractors,” says Jonathan Heuer, a partner at HomeSquare, a home maintenance company that operates in New York and Connecticut.
“Sometimes work can be scheduled when a tenant is on holiday or vacation, which is a win for everyone,” he adds.
Working with the seasons can save you money and headaches. That said, major repairs left undone can lead to more—and more expensive—repairs. So if your property requires an upgrade that could cause future problems if left unaddressed, go ahead regardless of the season.
Another factor to consider is how much your upgrades are going to cost, and how you’re going to pay for them. According to HomeAdvisor, repairing a roof costs $787 on average, while installing a new roof comes in around $7,000. Of course, costs can vary depending on where you live, the scope of the repair or upgrade, materials required, and contractor seasonality.
In some cases, you can wait and save up the funds for those bigger expenses. But if it’s pressing and you don’t have cash on hand, you may have financing options like a small business loan or a cash-out refinance on your primary residence. In general, it pays to look for low-interest financing—a credit card probably isn’t the best option.
A leaky roof or a broken HVAC unit are repairs you’ll have to make regardless of the value they add to your property. For other projects, Mathias says landlords should consider three things before investing:
- How much income the upgrade will generate.
- The true cost of the upgrade, including any interest from financing.
- Whether the upgrade will increase the value of your investment property.
If converting a den into a bedroom means you can charge significantly more in rent, that upgrade will probably pay off. On the other hand, even though painting the exterior of your property might attract renters, it may not mean you can charge more for rent.
Mathias also notes that unless you’re planning to sell soon, sinking a lot of money into upgrades does little to increase the value of your property.