Most landlords view accessibility upgrades as a necessary compliance expense, rather than a potential revenue booster. However, this mindset can be costly, as it overlooks the significant impact of tenant retention on rental returns. The length of time a tenant stays in a unit can greatly affect the property’s profitability, with longer tenancies resulting in lower vacancy rates and reduced turnover costs.
A standard unit turnover can result in significant expenses, including lost rent, make-ready costs, and leasing fees. For a $2,000-per-month unit, these costs can range from $3,000 to $6,000. By investing in accessibility upgrades, landlords can potentially avoid these costs and increase their revenue.
When calculating the cost of an improvement, it’s essential to consider the length of the tenancy. A $4,000 bathroom upgrade, for example, can be amortized over a two-year or six-year tenancy, resulting in significantly different monthly costs. The longer the tenancy, the lower the monthly cost of the upgrade.
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This is why the most profitable capital improvements are often those that encourage tenants to stay, rather than those that simply increase rent. Housing data has consistently shown that older renters and those with mobility limitations tend to move less often and are more reliable tenants.
Not all accessibility spending returns equally, however. Some upgrades, such as properly anchored grab bars and lever door handles, can provide a high return on investment at a relatively low cost. These upgrades are cosmetically neutral, appeal to a wide range of tenants, and can be installed for less than the cost of a single day’s vacancy.
Other upgrades, such as bathroom modifications and structural changes, can also provide significant returns, although they may require a larger upfront investment. For example, a comfort-height toilet or handheld shower wand can make a unit more attractive to older renters and those with mobility limitations.
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Under the Fair Housing Act, tenants with disabilities have the right to make reasonable modifications to their units at their own expense. However, this can often be seen as a warning sign by landlords, as it may indicate that the unit is not suitable for the tenant’s needs. By proactively making accessibility upgrades, landlords can attract tenants who are looking for units that meet their needs.
Accessible units are often under-advertised, with renters and adult children searching for specific features such as step-in showers and grab bars. By including these features in their listings, landlords can attract high-intent, long-tenancy renters and reduce their vacancy rates.
This strategy requires a shift in mindset, from viewing accessibility as a compliance expense to seeing it as a revenue booster. They can increase their revenue by attracting tenants who are looking for units that meet their needs, and by reducing their vacancy rates.
