When selling a house, real estate agents and their clients will often discuss the option of staging the property to help position the home in the best possible light. And depending on the price point and state of the market at that time, staging may generate a positive return on investment (ROI). But what about rental properties? Does it ever make sense to stage a rental property before putting a listing on the open market?
When to Stage a Rental Property
The entire goal of staging a property is to enhance the perceived value and shorten the duration it spends vacant. If you can rent the property at a higher rate and keep vacancy to a minimum, staging can make sense.
Generally speaking, you only want to stage higher-end rental properties where prospective tenants have high expectations. In other words, you’re much more likely to stage a 2,500-square-foot penthouse in New York City that rents for $5,000 per month than a 1,000-square-foot bungalow in Louisville, Kentucky that’s on the market for $800 per month.
The decision of whether to stage a property ultimately comes down to ROI. If it makes sense on a financial level, then it’s worth considering.
According to 2ndKitchen, “The national average for staging a one bedroom rental property is $800 to $1200. The initial design service and consultation averages between $300 to $600, while the average per room staged in a rental unit is $500 to $600.”
Using these numbers, let’s say it costs you $1,200 to stage a small rental property. Prior to staging, you’re able to find a tenant who will rent the property for $1,500 per month. After staging, you believe you’ll be able to charge $1,800 per month. Over the course of a 12-month lease, that’s an additional $3,600 in revenue. If you do the math, that’s a 300 percent ROI.
If you’re confident that you can get at least a 2X return on staging, it’s probably worth it. Anything less than a 200 percent expected ROI probably isn’t worth the hassle. When in doubt, talk to your property manager – or contact a local property management company that’s popular in the area – and pick their brains. They usually have a pretty good idea of what is and isn’t working in their market. They’ll let you know if staging is actually worth it.
5 Rental Property Staging Tips
If you do decide to stage your rental property before listing, here are several helpful tips:
1. Establish a Budget
Always start with a budget – and be reasonable. (If you don’t, you could easily lose money on staging.)
It doesn’t make sense to spend $5,000 on staging a rental that’s only going to rent for an additional $300 to $400 per month. At best, you’ll come close to breaking even. At worst, you’ll lose a couple of thousand dollars. Run your numbers and figure out how much you can spend in order to generate a worthwhile ROI. This is your budget.
2. Keep it Minimalist
Don’t fall for the trap that you have to design every square inch of the property. In reality, less is more. A minimalist approach will yield better results. People feel overwhelmed when there’s too much going on. A prospective renter wants to feel the room breathe.
3. Focus on the ‘Money Rooms’
You don’t have to stage every room. Instead, put most of your budget into the “money rooms” – meaning the rooms that renters are most interested in. This includes the kitchen, master bedroom, and master bathroom.
4. Stay Neutral
You’re not trying to win any design shows or get your property featured on HGTV. There’s no need to start a new design trend or shock people. Stay neutral. You’re shooting for a clean, sophisticated look. Nothing more and (certainly) nothing less.
5. Leverage Light
Light is one of the most important factors in making a home feel warm and welcoming. It creates warmth and makes rooms feel bigger. Try brightening up rooms by replacing bulky window treatments with sleek blinds. You can also hang mirrors on walls opposite windows to help multiply and refract the light that enters the room.
Adding it All Up
No two properties should ever be staged identically. It’s all about feeling the property and integrating elements that accentuate its best features. And if you use the tips discussed in this article, you’ll find it fairly easy to enhance the perceived value of your property and charge a higher rent.