Are you considering renovating a rental property? Keeping your rental property well-maintained, functional, and appealing to tenants will keep it marketable. If you have tenants currently renting your property, you may be wondering how to conduct rental renovations while the space is occupied. In this article, we’ll discuss that and everything you need to know about renovating rental properties. 

Benefits of Renovating a Rental Property

Renting out a property carries a certain level of risk because not all tenants will take care of your property well. Every landlord wants the ideal tenant – one who pays rent on time and respects the rental property. One way to improve your chances of attracting quality tenants is by a rental redo. Upgrading a property to improve its function and appeal to attract quality tenants who are more likely to respect your property and pay rent on time. This is because tenants who are willing to pay more for their rental have an appreciation for quality living and care about where and how they live.

Rental renovations increase the value of your rental property and allow you to set a higher price for your rentals, thereby increasing your income coming from your rental. The great thing about renovations is that you can decide whether to go with a large renovation project or make some smaller changes that have a huge impact. Either way, having a renovation plan and knowing which areas of your home to upgrade to add the most value is worthwhile. Some landlords are deterred by the cost of renovations, which can be hefty and stressful; however, in the long run, it pays off.

Another reason to renovate your rental property is to help manage your operating costs. If you have old appliances in your property that keep requiring repairs, these costs add up and can become quite substantial. Instead of constantly having to conduct repairs, renovate your property and upgrade old appliances. Doing this can save you money in the long run by reducing your operating costs. In addition to saving you money, it will give you peace of mind because you won’t have to worry about your tenants calling you often for repairs.

Do you want to stay competitive in the rental market? Renovate your property and make it more attractive to tenants. Keep yourself informed on what other rental properties in your area are offering tenants and find out what tenants want in a rental space. Then upgrade to include some of those features and benefits. By doing this, you’ll keep your rental property competitive and be able to capitalize on your property.

Tip: Have a clear goal for your renovation project. While there are many benefits to a rental redo, decide early on what your priorities and budget are. This will help you keep renovation expenses for a rental property manageable.

Best Improvements That Increase Property Value

You want to benefit from your rental renovation and not just renovate for the sake of renovating. The best way to renovate a property effectively and get the most from your investment is to focus on key areas that have a high ROI. Some renovations are more profitable than others. The best way to approach this is to think of your tenants and what areas of the home matter most to them.

If your rental is vacant, consider the type of renters you want and where their priorities lie in terms of a home setup. For example, young professionals may place a higher value on entertainment and hosting, so the space must be upgraded to be compatible with that lifestyle. If your tenants are families with small children, they may be more impressed with a modern kitchen and an accessible bathroom with tons of storage space.

Cosmetic Upgrades:Functional Upgrades
Changes that enhance style and appeal:

– painting walls replacing cabinet doors or hardware
– installing backsplashes and new flooring
– replacing countertops    		Upgrades that improve function:

– electrical rewiring
– plumbing updates
– energy-efficient appliances and systems
– extra storage
– structural remodeling room additions
– foundation repair

Some of the renovations with the best ROIs are:

Everyone loves a great kitchen. Upgrading your kitchen with modern appliances, fixtures, cabinetry, and countertops does wonders in improving the aesthetic and functional aspects of your kitchen. Modern kitchens are convenient spaces, central to the household, and contribute to the look and feel of the entire home. Also, kitchens are multi-purpose spaces that are used for much more than just prepping for meals. They’re also used for hosting, eating, doing homework, or just hanging out.

The bathroom is a critical space that really sets the tone for the day. It’s where people spend significant time doing morning and evening routines. A bathroom with a spa-esque quality completely transforms the space and enhances the bathroom experience. A good bathroom renovation is not just about cosmetic upgrades. Finding ways to make the bathroom more accessible, improving function, and increasing storage space are all great goals for a bathroom remodel.

Applying a fresh coat of paint is one way to revitalize a room. Carefully consider the colour you want to go with and make sure it’s one that will complement the space well. It should be inviting and set the mood for the space. Flooring has an equal effect on a room, so consider the different options available on the market and see which one works best for your rental property. In addition to being appealing, make sure that the flooring is durable and easy to maintain and clean.

Eco-friendly is the way to go, not just because it’s great for the environment but also because it can reduce utility costs for you and your tenants. To maximize energy savings, think about installing energy-efficient windows, appliances, and insulation. An additional incentive to make your rental property more energy efficient is that you may be able to claim text deductions for some upgrades.

The first impression that tenants have of a property matters. Tenants want to take pride in where they live, and it all begins with curb appeal. Tenants also want an outdoor experience that adds value to their lifestyle. So this is another good area to focus on. Rethink the landscape design and find ways to improve it. Fix unflattering areas on exterior walls to improve curb appeal and make the property stand out.

Convenience is a high priority in modern living. Tenants want to live in a home that allows them to perform certain functions remotely. Consider installing smart locks, lighting systems, and thermostats so your tenants can control elements of their home from their phone.

No one wants to live in a cluttered space. One of the top concerns for many tenants, especially families with young children, is not having enough storage space. This can make a home look and feel disorderly. Renovating a rental property to increase storage makes a major difference by allowing tenants to keep their space organized and clutter-free. Some neat and creative ways to increase storage are built-in closets, shelves, and cabinets. Consider extra storage in bedrooms, kitchens, and bathrooms.

Tip: Remember that you are renovating your property for tenants and not for the home you live in. So don’t spend excessively on luxury materials and high-end appliances and features. Go for rental-friendly upgrades that are affordable and durable.

What To Consider When Renovating A Rental Property

The first thing you need to determine is how extensive your renovations will be. Municipalities provide guidelines on what upgrades constitute major and minor reno work. The scope of the project will determine your budget.

Minor renovations usually include repairs like replacing floors, installing new cabinetry or counters, plumbing repairs, appliance replacement, and window replacement. If your rental renovations are minor, they can be done while the tenant is in the property as long as notice is provided.

Major renovation work that compromises safety or impacts access to essential services like water or electricity can only be done when the unit is vacant.

Safety is one of the top concerns when embarking on renovations of any kind. This is heightened when a rental property is occupied. Before you can make any renovations to your property, you need to make sure that you know what the landlord renovation laws in Ontario are. Each province has different rules and regulations regarding rental renovation and what kind of upgrades can be done while a rental property is occupied. Know what these rules are and abide by them. Also, learn about tenant rights during construction in Ontario.

These rules will inform you about how much notice you need to give your tenants before you can begin renovation work and what type of renovations can be done while your tenant is living in the building.

In general, tenants need to be given 24 hours’ written notice for minor renovations and repairs. If the renovation requires the unit to be vacant, you’ll need to apply to the Landlord and Tenant Board for permission to evict a tenant to conduct demolition and repairs. At the end of the day, your goal should be to conduct renovations as smoothly and seamlessly as possible. This will require a lot of planning.

In general, building permits are needed if you’re adding to a property, changing the use of a building, conducting an excavation or constructing a foundation, or changing electrical or plumbing systems. To obtain a permit, you will need to apply through your local municipality.

Tip: An experienced home renovator will know what permits and regulations you should be aware of. Even if you choose DIY, consult with a reputable renovator to avoid costly mistakes and headaches down the road.

The Downside of Renovating a Rental Property

Renovations can be expensive. Even when you budget well, you may still find yourself incurring additional expenses and going over budget. This is because there may be some unforeseen expenses that come up. We recommend leaving room in your budget for these surprises so they do not cripple the whole project.

Rental renovation is time-consuming. Finding the time to find the right contractors, attend to the project, and make all the arrangements can be taxing.

One thing to keep in mind when renovating a rental property is that you have little control over damages to the property. You may find yourself having to conduct sudden repairs or incurring unexpected expenses due to carelessness. These unexpected expenses can result in headaches for you as a landlord.

Tip: Establish an agreement in your lease that states what repairs will be covered by the landlord and what will be covered by the tenants.

Rental Property Renovation Tax Deduction Canada

The Ontario government offers tax incentives to landlords renovating property. These include the Ontario Seniors’ Home Safety Tax Credit and the Ontario New Housing Rebate for Substantial Renovations.

Be sure to learn what the specific requirements are to qualify for renovation tax credits in Ontario.

Considerations When Deciding to Renovate an Old Property vs. Buy vs. Build New Property

Cost

Renovation is not always the best solution. Sometimes an old property can be renovated to improve its value, but there are times when it is not worth the cost. If the property is rundown, causing more headaches than gains, and will be more expensive to remodel than to acquire a new property, it may be time to let it go.

A better option is to buy or build a new home for your family to move into, and then rent out the home you currently live in.

Time & Timeline

How much time you have will determine whether buying a home or building one is the better choice. The advantage of buying a property is that you can move in relatively soon. Building a property means that you will need to live in your current home until the new home is built and ready for you to move in. Building a new property also requires a lot more involvement in designing a custom home.  So if it will be difficult to find the time to attend to the project, or of you’d rather not be involved with all the details, buying a home may be best.

An advantage of building a new property is that you get to pick your neighborhood and build your custom dream home.

Final Thoughts

When renovating a rental property, focus on solving problems and making life easier for your tenants. For example, if there isn’t enough counter space or additional lighting in the bathroom is needed, make these upgrades. It’s all about creating a functional space that also looks attractive, knowing what renovations to consider, and what rules and regulations to be mindful of.

Reach out to our team to learn more about renovating your rental.

Related Article: Top Home Improvements That Add Value

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