As an investor, every dollar spent needs to justify itself.
You have to weigh which real estate amenities are worth your extra money based on which can garner higher rental rates, better tenants, and stronger loyalty.
Some apartment amenities are consistently in demand, like central heating and air conditioning. But others, like pet-friendly features, balconies and luxury housing features, depend on your target tenant’s lifestyle and demographics. Which means you need to know your market and target demographic before investing in housing upgrades.
As you weigh potential home amenities to add to your rental properties, keep these fundamentals in mind to ensure they’ll actually earn you a return.
4 Essential Apartment Amenities Tenants Want Most
Some apartment amenities tenants simply don’t want to live without. Whether you’re buying an existing property, upgrading, building or tacking an income suite onto your home, highlight these must-have amenities in your listings.
Peer-to-peer home improvement network Porch surveyed more than 1,000 people to learn what they value in apartments and homes. They found these top four home amenities ranked the most essential in an apartment.
1. Central AC & Heat
Well above any other amenity, 79% of respondents consider centralized heating or cooling an essential apartment amenity.
Central air conditioning and heat mean a more comfortable home and, usually, lower utility bills compared to space heaters or window units. Electric heating and air conditioning units can be pricy and inefficient, so tenants overwhelmingly expect apartments to include central heading and air conditioning.
What it’s worth: On average, respondents said they’re willing to pay $89 more per month for central AC or heat. Millennials value it well above other generations at $101.
2. In-Unit Laundry
A majority, 62% of respondents, consider an in-unit washer or dryer an apartment essential — yet it remains less common in apartments. That could be because, even though they rank it high in desirability, renters aren’t as willing to pay as much extra for it as for other amenities.
The prevalence of this feature could also be due to a generational divide.
Baby boomers place a significantly lower value on in-unit laundry than do millennials. Perhaps building design simply has to catch up with the needs of the younger generation, something to consider if you’re involved in new construction or remodeling.
What it’s worth: Respondents are willing to pay an average $73 more per month for in-unit laundry, with millennials willing to pay the most, $84.
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3. Pets Welcome
Just under half (45%) of respondents consider a welcoming pet policy essential to apartment living. Whether tenants require this likely depends on whether they have pets, and the likelihood that they do is rising.
More than two-thirds — 68% — of American households include pets, most of those with at least one dog, according to a 2019 report by the American Pet Products Association. That portion was just 56% in 1988.
Plus, pet owners tend to stay longer at one property: an average of 23 months versus 15 months for non-pet owners.
This large swatch of potential tenants could be one you want to tap into. You can likely imagine the costs of allowing pets on your property, but you have plenty of ways to mitigate the risks of allowing pets, too.
What it’s worth: On average, people say they’re willing to pay $87 per month more if pets are allowed, with millennials valuing this amenity the most at $97. According to a separate Petfinder survey, allowing pets means an annual net benefit of $2,731 per unit.
4. Outdoor Living Space (Patio, Deck or Balcony)
Just 18.5% of respondents consider a balcony an essential amenity, but it’s worth noting because it fits a common theme.
When considering homebuying, 58.5% of respondents consider a private patio or backyard essential. In a separate survey by Homes.com, Gen Z respondents consider a backyard patio or deck their top desired home feature for buying, tool.
So, people want outdoor entertaining space, however they can get it. It’s no surprise apartment renters place less value on this amenity than homebuyers, given that renters tend to require less space overall. But a balcony or patio could be a valuable selling point if your units can accommodate it.
What it’s worth: People are willing to pay $65 more for this feature, with baby boomers valuing it more than other generations at $79.
4 Luxury Housing Features
Some renters are willing to pay more for amenities that make a property more luxurious and attractive, even if they don’t consider them essentials.
In every instance found in the Porch survey, baby boomers are far more willing than younger generations to pay extra for home amenities that add comfort but aren’t deemed essential.
1. Good View
Urban renters tend to talk more about the value of a good view — they’ll typically pay more for a higher floor overlooking a city’s skyline. But this apartment feature ranks almost equally among rural, urban and suburban dwellers.
The majority of respondents don’t consider a good view essential; just 12% say they require it. But people are willing to pay more for properties that have it.
What it’s worth: Baby boomers would be willing to pay $97 per month more for a good view, followed by millennials at $86 and Gen X at just $61.
2. Stone Countertops
Stone countertops feel like an unattainable luxury for many renters, which hardly makes it essential. When your monthly budget is tight, it makes more sense to opt for efficient heating over a shiny kitchen. Yet that’s precisely why it adds cachet as an apartment amenity.
Granite and marble are also more expensive to install than alternative materials, so you have to weigh the return on investment before sinking money into them. But in today’s world, property owners can buy excellent artificial stone that looks and feels like the real thing — without the hefty price tag or environmental damage. And if you want to get really creative, try these low-cost kitchen renovation hacks for outsized returns on your investment.
Only 6% consider granite or marble countertops an essential amenity. But those who can afford it are willing to pay for the luxury, so know your target demographic well before investing in upscale countertops.
What it’s worth: Baby boomers would pay $88 more per month for stone countertops, while millennials and Gen X would pay just $59 and $47, respectively.
3. Stainless Steel Appliances
Like they do countertops, younger respondents tend to place a lower value on stainless steel appliances compared to baby boomers. Overall, only 6% of respondents consider them essential.
Stainless steel keeps an apartment looking clean and fresh, because the material won’t show wear or rust as easily as other common materials. And apparently, no one in the industry has yet come up with a “next hot look” to convince trend-conscious buyers to go out and replace all their appliances.
What it’s worth: Baby boomers would pay a higher premium, $117, for stainless steel appliances than any other housing upgrades, while millennials would pay $61. Gen X would pay only $35 more per month, making this their least-valued amenity.
4. Swimming Pool & Fitness Center
These two apartment amenities rank similarly: 13% of respondents consider a swimming pool essential, and 12% require a fitness center.
Whether a pool is practical for your multifamily property or desirable for your tenants depends heavily on location. I didn’t care about a pool when I lived in Madison, Wisconsin, where weather only permits outdoor swimming about 25% of the year.
But I was willing to pay more to live in a complex with a pool in Florida, where it’s hot and sunny almost year-round.
A fitness center is a convenience and could be a money-saver for gym-going tenants willing to switch. Still, younger generations appear to consider both features non-essential luxuries more than baby boomers do.
What they’re worth: Baby boomers are wiling to pay $72 more for a swimming pool, while millennials and Gen X are only willing to pay $59 and $58, respectively. Fitness centers are worth an extra $76 per month to baby boomers, but only $53 to millennials and $38 to Gen X.
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4 Factors to Consider When Weighing Apartment Amenities
Watching trends in housing development might make you believe you have to install granite countertops, hardwood floors and Energy Star appliances to stay competitive. But the value of any amenities depends on several factors.
Before you start talking to lenders about financing rental property renovations, consider these four factors specific to your property.
Is your property urban, suburban or rural? Renters in each area tend to live different lifestyles, work different jobs and, altogether be different people. Which of course affects their housing demands.
For example, in the Porch survey, rural and suburban dwellers are 40% less likely than their urban counterparts to consider a swimming pool essential. They’re 20% more likely to call a private patio or backyard essential.
An example of the ideological divide, 17% of urban dwellers want solar panels, while only 8% of rural respondents consider them essential.
2. Generation & Age Group
What is the average age in your area? Does the renter pool generally comprise retirees, college students, young professionals, or middle-age parents and families?
Baby boomers tend to be more willing than their younger counterparts to pay a premium for non-essential housing upgrades. This could be a matter of different values among generations, or changing needs and income levels with age, so keep an eye on trends as younger generations grow older.
We know millennials buy homes, get married and have kids at a lower rate or later than previous generations, all trends that affect the rental market.
The Homes.com survey found that Gen Z claims to value a diverse community, a trait that older generations don’t typically consider when choosing housing.
3. Lifestyle & Life Stage
Does your property’s neighborhood attract families, college students, young professionals or retirees?
Renters at each life stage value different housing amenities. Young professionals might love the co-working space in your building, while families with young children prefer a pool. Retirees could pay more for a modern kitchen, while college students might not even require a stove.
Consider who your property is likely to attract to determine which housing upgrades are worth your investment.
4. Renters Aren’t Like Buyers
As a real estate investor, you’re probably also a homeowner. You think and act like a homeowner. But renters think differently, and their priorities don’t necessarily reflect your own.
Features suburban homebuyers consider essential that don’t even register for many urban renters include a backyard, guest bedroom, walk-in closets and hardwood floors.
The kinds of upgrades you’d make to a property to get more money in a sale aren’t necessarily worth more money to renters. And the home improvements that add the most value to the property don’t necessarily impact rents the same way.
Walk through as many rental units as you can in your market, and get a sense for how home amenities relate to rent pricing. The better you understand what local renters are willing pay more for, the better you can market to them.
Investing in the Right Apartment Amenities
Which housing features will prove most lucrative for your property depend on many factors. Try to throw out all of your own assumptions about what renters want, and look at property amenities through the eyes of your neighborhood’s prospective tenants.
Do your own market research for your neighborhoods. In doing so, you can invest your money for the best returns on investment by understanding renters’ needs and values, and focusing on the amenities they’re willing to pay more for.
What home amenities have you found to add the most to asking rents in your properties? What property features do you plan to add next?♦
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