Other Valuable Improvements
Improving your property will add to its value, not only in the amount of rent you get for the unit, but also in your equity when you decide to sell. Some renovations, such as upgrading a kitchen or bath by replacing, for instance, worn porcelain sinks or countertops, are worth making because they don't have to cost a lot and will look good to tenants. With a nicer looking kitchen and bath, you'll be able to collect a little more for rent, and later they will contribute to the increased resale value of your property.
Kitchens
Kitchen projects have the largest return on investment and do the most to impress prospective tenants. You can put in new or refaced cabinets. Even just painting the old ones, replacing the countertop, and adding new hardware will give some cabinets new life. Purchase new or name-brand used coordinated appliances — stick to white. Install a new light fixture in the ceiling. Add a dishwasher or a garbage disposal and lay a new floor.
In most cities you can find a reliable used appliance dealer who repairs and cleans old appliances, then delivers the almost-new appliance and removes the one that no longer works. When you are shopping, however, stick to name brands because it will be easier to have them repaired later and also find replacement parts.
Don't tear out walls and change floor plans. Prospective tenants won't notice the change and it won't add to the value of your property. Don't purchase top-of-the-line appliances; they're too expensive. Moderately priced kitchen cabinets will be sufficient. Don't spend too much.
Bathrooms
You can improve any bathroom by putting in new, brighter lights, a larger mirror, and more towel rods and clothes hooks and fresh hardware. Updating the sink and installing a low-flush toilet — stick to white fixtures to keep it simple — will pay off as well. Can you install a showerhead over the tub? If you do, also put in a new shower curtain rod. (Bathtubs with shower doors are not recommended. They often turn into potential maintenance nightmares because of leaks and mildew.)
Look at the bathroom floor. Is new flooring needed? Some tiles and floor coverings are relatively inexpensive and easy to lay, and will improve appearances greatly.
Carpeting the bathroom is never a good idea. Bathroom carpets are usually cumbersome to clean. And since wet carpeting takes a long time to dry, you're setting yourself up for potential mold and mildew problems.
Separate Utilities
The cost of heating with natural gas, oil, and propane is probably about twice as much as you paid a couple years ago and now electric rates are climbing as well. So it makes sense to have separate gas, electricity, and water heaters and meters installed in your rental unit. You won't have to worry about your tenant's usage because she will be responsible for those bills.
If utilities can't be separated, however, or you decide it's not worth the hassle or the expense, you have to determine how to distribute an equitable cost to your tenant. Estimate what you think the utility bills will be, and establish a rental rate that will cover the expense. In addition, if the media reports that rates will be higher in the coming year, you might want to add in a cushion. The energy companies usually forecast a percentage increase for the coming season, so you might want to take that into account when you prorate costs on a yearly lease.
Another way to share the cost of natural gas heating is to go on the budget plan offered by your utility company. You'll pay the same amount each month for gas or electric. Charge your tenant for half the monthly cost. If the gas budget is $50 a month, you'd add $25 to your tenant's rent each month for heat and gas appliances. When gas prices go up drastically, the utility company will let you know the budget amount will be higher and then you can adjust the rental rate for the next year. And when you notify your tenant about the increase in rent, you'll be able to say in all honesty that utility prices have gone up and that's why you need to charge more.
