Dear David,
We own a rental home. Our tenants moved out a few weeks ago and left things in quite a mess. We’re thinking about doing some renovations before we rent it out again, but are not sure if it’s worth spending money on improvements. Should we bother to update, or just get it back on the market? How can we find more responsible tenants this time around? – FEELING CAUTIOUS
DEAR CAUTIOUS: The rental market is a challenging place whether you’re a tenant or a landlord. Waterloo Region is, without question, one of the top places in North America to live. Our diverse and stable local economy boasts lower-than-average unemployment, and when we hit an economic wrinkle, we tend to rebound faster than other places.
In the past 10 years or so, this stellar reputation has driven up rental prices. Higher rents, coupled with historically low interest rates, enticed many investors to make rental properties part of their financial portfolio or retirement plan.
Supply seemed to match demand for quite some time, but the rental market has cooled in the last year or so. Like buyers, many of today’s tenants are sheltering in place as they wait out the economic storm of job losses and high inflation. Renters in a good position are moving less often, which makes this a perfect time to give your place a facelift.
Putting your unit back in the rental stream would be simple enough, but I suggest you do a bit of research and size up the competition in your neighbourhood. If your unit looks pretty average, you can reasonably expect to earn average rent, as long as the market is balanced. If your unit is exceptional, you can likely expect to earn higher-than-average rent, as people do like nice things and are often willing to pay for them. This is also the road to landing more affluent tenants.
Hypothetically, if you were to spend an extra $10 thousand on a renovation that takes your rental unit to the next level, your investment could potentially increase your rent by $250 to $300 each month. Your return on that $10 thousand investment is around 30 percent, and makes your unit more valuable when it comes time to sell. It’s hard to match this formula anywhere else.
A Realtor can help you find good tenants by listing your property professionally on Realtor.ca and helping to manage the application process.
PRO TIP: Whether searching for a tenant yourself or with the help of a Realtor, good practice dictates that candidates should first submit their rental application with references, a job letter, pay stubs, credit score and credit history for your consideration. With this information at your fingertips, you are more likely to have success choosing a tenant. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.
