Maybe your heart is set on owning an apartment property that is unlike anything you’ve developed before. In the past, you focused on middle-income properties that targeted tenants who valued affordable yet quality housing.
Now, you’re taking things up a notch. Your goal? To develop a Class A asset and luxury rental property—one that will help you to boost your ROI on rental property.
Fortunately, I’ve compiled a guide on the top ways to develop Class A assets and thus watch your bottom line soar in the years ahead.
First, Why Luxury Property?
The prices of luxury properties continue to soar, as this type of real estate remains in high demand—especially along the United States’ coastlines.
In fact, research shows that between 2007 and 2017, the number of people who could afford homes but still preferred to rent properties increased by 175%. In addition, the yearly increase in the number of renting households earning $150,000-plus per year is now faster than that of home-owning households.
For this reason, now is the perfect time to get your feet wet in the growing area of luxury real estate investing. In this area, you’ll cater to high-income tenants looking for first-rate and flexible housing options, and as a result, you can easily boost your ROI on rental property.
What Exactly is a Luxury Rental Property?
Before you attempt to develop a luxury rental property, it’s critical that you understand what constitutes a luxury property in the first place.
The reality is, a hefty price tag is not enough to place a piece of real estate in the “luxury property” category. Instead, along with featuring a high price, the property must be exclusive and unique. In other words, it needs to be highly desirable. After all, wealthy individuals don’t mind paying premium prices for assets perceived as superior.
As a general rule of thumb, your high-end renters want the same types of features that other renters want, just on a bigger scale. They’re looking for beauty, opulent finishes, top-tier amenities, and lots of attention to detail.
Let’s take a peek at a few ways you can increase your ROI on rental property by creating luxury properties for renters.
Customer Services, Like Trash Pickup Services
One way you can make your rental property stand out from the rest is to offer your tenants custom services.
For instance, if you have a maintenance professional, have them pick up your tenants’ trash from their doorsteps two times a week and take them to your property’s dumpster for a monthly fee. This will keep your tenants from having to take the trash out on their own, which will save them time and energy. They’ll love the special treatment they receive through such a service.
Renovating your apartment property is one of the most effective ways of boosting your ROI on rental property. Renovations may include:
Rehabilitating the Entire Building
You could perform a moderate asset rehabilitation, where you rehabilitate your entire apartment building, for example. Any existing residents of the building would have to be displaced for a few months, but they’d return to new heating/cooling systems, flooring, bathrooms, countertops, cabinets, appliances, windows, and even paint.
This approach to renovating your property may cost you around $20,000-plus per unit. But it’ll lead to a beautiful finished product, and as a result, you could very well increase your rent prices anywhere from 50% to 100%. In the end, you can expect to develop a more desirable tenant base in the future.
Rehabilitating Individual Units
Rather than renovating your entire apartment building, you could complete renovations as each lease turns over. For instance, once a tenant vacates a unit, you can add quality finishes to it, such as fresh cabinet faces, faux hardwood flooring, fresh carpet, or new vanities.
These kinds of fixes may put you in a position to increase your rent between 20% and 30%. As a result, this approach is an excellent option if you’d like to increase your ROI on rental property by boosting the property’s value while still maintaining cash flow.
To further develop Class A assets, you can offer premium parking to your tenants. These parking spaces would be directly in front of their rental units, and they would pay you to reserve them. This will immediately drive your ROI on rental property up and benefit your bottom line. You could also provide a garage for your tenants to park in, which can increase your ROI as well.
In addition, consider adding light-emitting diode lights to your property’s common areas. These lights will save you money in that they use minimal energy and can easily last you 25 years, thus saving on maintenance costs.
Other Possible Changes
Be sure to install washers and dryers in your rental units. This is one of the best ways to generate revenue at rental properties. In addition, feel free to add a children’s playroom, exercise room, or rooftop deck to further boost your ROI on rental property.
Greenery can also make any living space feel new and fresh. So, try to add new landscaping in the exterior of the building. You can also add plants to apartment balconies or your lobby to add life to these areas.
Your Property Location
Location, location, location—this is another extremely important consideration when you’re trying to increase your ROI on rental property.
When you search for a rental property to turn into a Class A asset, look for a property in a “hot” neighborhood. The best neighborhoods are generally those near high-end shopping, the arts, and dining.
Also, try to locate your property near other luxury properties or near a body of water. For instance, many luxury renters value living at waterfront locations or at least in areas where they can enjoy stunning lake, ocean, or river views. A property with an excellent mountain or countryside view can also be good for your ROI.
Start Developing Class A Assets and Boost Your ROI on Rental Property Today!
If you’re serious about watching your bottom line grow, this summer is a good time to start exploring properties that you can turn into luxury rental properties. The good news is that you don’t have to take on this task all by yourself.
I can guide you through the multifaceted process of transforming properties into top-of-the-line assets. Get in touch with me to learn how you can develop Class A assets and start enjoying new levels of financial freedom.