No one wants to undertake a home renovation, especially when you aren’t the one directly benefiting from it. But renovating your investment property can pay off for you in big ways down the road. When you purchase a property, you will likely need to upgrade several features in order to be able to sell it for a higher price. An updated property will have a higher value, so you can sell it at a profit. The key is to know which renovations to take on now and which ones to wait on. Some renovations are more likely to increase your property’s value immediately, while others will only help it retain its value long term.
The following home renovations are the most likely for you to get the biggest return on your investment, boosting your investment property’s value right away, while also making it easier to sell. Keep in mind that while ROI is a big part of any remodel, that the actual percentage can add up to more than a 100% return at time of sale, because the projects below are designed to lead to fast sales and higher selling prices for the property, rather than about your personal comfort. You can price the property higher after many of these renovations, getting the biggest possible return on your investment.
Minor or Cosmetic Kitchen Remodel
Kitchen remodels are almost seen as a standard renovation these days. Nearly everyone that purchases a property expects to have to update the kitchen. But there are many types of kitchen remodels that range from full tear-outs to just updating surfaces. The renovation that’s going to get you the biggest return is the minor or cosmetic remodel, which according to Remodeling Magazine’s Cost vs Value report, will get you around an 80% ROI. This is because a kitchen that looks nice will capture people’s attention when they just walk through; they would have to spend some time there cooking to determine if the layout and space will really work for them, so investing in a full tear out just won’t get you as high a return, and it will also take longer to complete.
And while 80% ROI still means putting additional money into the property, a home with an updated kitchen is going to show better. It’s also going to be easier to sell, and is going to attract more attention and potential buyers. You can price the property higher, and therefore recoup even more than the initial investment. To make sure you’re getting the most out of it, pay attention to the colors and features people want the most. White kitchens, with stainless steel, and granite countertops will attract the most attention.
Replace Your Siding
You’re probably aware of how important curb appeal is to a home’s value. If a home doesn’t make a great first impression when a potential buyer pulls up, it’s a lot harder to make that sale. Replacing the siding on a home with something fresh and up to date can get you a 75% ROI. Take a look at what nearby homes are sided with to find the type that’s comparable and therefore the most attractive to potential investors. Make sure that it’s also a color that works with the region you’re in to avoid turning off potential buyers.
Like with kitchens, a home with updated siding will be easier to sell, so you can recoup your costs faster. Materials that can be considered eco-friendly, including steel siding and fiber cement siding are also in high demand right now, as is material that’s low maintenance. You may be able to price a property higher if you can bill it as having an eco-friendly, low maintenance exterior.
Anything that you do to a home to increase its energy efficiency is going to give you a good return on investment. The latest survey about home trends have shown that 73% of new home buyers prefer an energy efficient home to any other type, and people are more willing to pay for these features over a similar home without them. Energy efficiency can take many forms, from insulation, which according to several years of reports from Remodeling Magazine gets more than a 100% ROI, to energy efficient appliances, with the dryer coming in as the most effective appliance to choose. If you’re not sure where to start, get an energy audit done and follow the detailed plan you receive to make the most effective changes.
Add a Wood Deck
Outdoor living areas rank high on homebuyers’ lists right now. These can take the form of patios, porches, or decks, and while patios slightly outweigh the others in terms of popularity, it’s the wood deck that gets you the biggest ROI. A patio’s return is only 55%, but a wood deck gets a return of more than 75%. Wood decks are also more versatile and you can add them to homes that have questionable yards or landscaping. Just make sure that the deck matches the style of the house and that you stay away from composite, which doesn’t recoup the same rate as real wood.
Outdoor living areas have been popular for several years running now, and the trend is only expected to grow. If your property doesn’t have an outdoor space, you’ll have a harder time selling, or you may need to price lower. By adding a deck, you make the home more attractive, and you can price it higher by pushing the fact that you have outdoor living space, while getting a higher rate of return than other areas.
Update the Garage
When you’re considering the curb appeal of the property, don’t overlook the garage. Homes that have garages are going to be more popular than homes without them, and people will be looking to see what your investment property has. So, while they’re looking, make sure that the garage door is reflecting the curb appeal you want for the whole property. A new garage door gets a 97% ROI, particularly if you opt for an upscale garage door, which has things like security features or a designer look. With the role that curb appeal plays in your overall value, you can’t afford to overlook this important area.
At the same time, the interior of the garage is just as important. Garage storage tops the list of features that people want in a home. So, a new door will grab their attention, while an interior remodeled to accommodate storage will hold it and help raise the value and attractiveness of the property.
Invest in Your Investment
If you really want to help your investment property pay off, it needs to meet the demands of the buyers. In a housing market that’s on an upswing, you can make your investment property stand out from the crowd and command the highest rates by making sure that you renovate the most important areas. Pay attention to these five projects to get the biggest ROI on your investment, and achieve success sooner.