If your rental property is in desperate need of an upgrade, but funds are low, you can’t just scrap the project. After all, the look and functionality of the property is what keeps it rented. If the home or apartment is run-down, you’ll have a hard time attracting and keeping tenants.
In this case, there are still many options available to you, from an LOC to using your knowledge to create a new income stream. Use these tips to fund your rental improvements and keep your property in great shape.
Get a Line Of Credit
Quick turnaround
When it comes to loaning money for your upgrades, don’t rely on your experience from buying your personal home. “Alternative funding options for rental home upgrades often vary from those financial products available to owner-occupied homes,” explains Allison Bethell is a staff writer at Fit Small Business, specializing in Real Estate Investment.
In the case of rental home improvements, Bethell says there are a few ways to take out a line of credit:
Investment property LOC: There are two kinds, “one for investors with one or a few properties and the other for portfolio owners. This works similarly to a home equity line of credit (HELOC) in that it's a revolving line of credit and you only pay interest on the money you use,” says Bethell.
The investment LOC then functions the same a regular LOC: you’re approved for a certain amount and use that that money with a debit card or checkbook. This way, you take only what you need and nothing more.
HELOC: This alternative allows you to borrow against the equity of your personal home. You then use that money to do the upgrades on your rental or investment property.
Get a Business Credit Card
Quick turnaround
There are two great reasons to fund your rental upgrades with a credit card: you have many options to choose from and a decent credit score will allot you a significant amount of funds. Not to mention, as Bethell points out, “You can spend what you need and may even earn cash back rewards or mileage points in the meantime.”
The ease of this alternative funding option is also the danger: it’s quick and easy, and if you don’t pay the money off before interest kicks in, or in a timely manner, you’ll be dealing with costly interest.
A similar option is to take out a cash advance on your current credit card, suggests Richard Haynes, Broker and Owner of Manhattan Pacific Realty. One thing to keep in mind: “These rates are steep, but if it increases rent or value then these small loans can make life easy,” he suggests.
Grants
Long-term plan
You may envision the college application process when you think of grants, but these financial gifts are available for many people, including rental property owners, suggests Denise Supplee, Realtor®, Investor, and co-founder of SparkRental.com.
She recommends doing research for local revitalization grants with sites like Grants.gov. You can also check for grants at HUD.gov, the U.S. Department of Housing and Urban Development.
Sell Your Knowledge
Long-term plan
As a property manager or landlord, you have a vast wealth of knowledge on a wide range of topics, including: tenant management, property management, landscaping and home maintenance, and perhaps even property investing or flipping houses.
Use that knowledge to fund the home improvements for your rentals by putting it into an ebook that you can sell and make money from. Here’s what you need to know:
- An eBook doesn’t need to be long—it can be as short as 10 pages, as long as it offers valuable information for the person who’s paying for it. Use this guide to determine the best price.
- The key is getting the title right, which is what will hook potential buyers as they’re browsing. Check out these 21 Helpful eBook Ideas, where you’ll find clever titles that are enticing and persuasive.
- You can sell the book on Amazon, Smashbooks, or through another online publisher. You can also sell it yourself by installing an ecommerce platform in your current website. Check out these reviews from MerchantMaverick to determine which ecommerce platform and tools will be best for you.
Fund Your Upgrades
There are many alternative funding options for your rental upgrades. Use these ideas to improve your property and attract new tenants, whether you work with the city on a revitalization program or simply create a few ebooks on your areas of expertise.
Author Bio: Jessica Thiefels has been writing and editing for more than 10 years and is now a professional freelancer and consultant. She's worked with a variety of real estate clients and home professionals, and has written for Forbes, Inman, House Hunt Network, Homes.com and more. Follow her on Twitter @Jlsander07 and connect on LinkedIn.
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