“Never give a tenant the opportunity to damage expensive things.” ~ Jorge Vazquez
If you’re a real estate investor, the first activity you probably initiate post-purchase is the property’s renovations or upgrades.
Quick and smart property renovations help to ensure that you’ll have a tenant moved in sooner rather than later, and can also significantly increase the property value in the event that you’d like to sell for a profit in the future.
In the short run, we all know that property upgrades will result in higher rental income opportunities. People are willing to pay more for a nicer place; plain and simple!
However, you must be careful not to “over-improve.” Certain upgrades, although desired, are not necessary for rental properties; they can in fact break the bank.
Even if you consider them affordable at this time, the math just may not add up if you’re trying to secure the best ROI. Certain renovations could take years if not longer to pay for themselves.
For example, let’s look at the kitchen…
Nobody likes an old and outdated kitchen. However, the cost of a brand new kitchens can add up quickly between electricity, plumbing, appliances, countertops, backsplash, cabinets and floors. You may want to consider some more affordable upgrades that will still improve the home and increase the rental income opportunity, but will cost significantly less and leave more room for net income each month.
Alternatives to a full-kitchen “top grade” renovation include:
- Painting to give a more up-to-date and modern appearance
- Resurfacing cabinets rather than replacing them
- Creating additional storage space through open shelving
- Choosing laminate surfacing versus granite countertops can provide a clean new appearance without the price tag of granite
- Resilient vinyl flooring is pretty convincing – to the common eye, it appears as beautiful tile. Again, without the high price tag!
Remember, at the end of the day this is a rental property; it’s not your dream home! Many tenants are beyond satisfied with an updated and modern environment and that can be accomplished without the best of the best!
Did you know that in addition to finding and securing great investment opportunities for our clients, Graystone Investment Group actually has an in-house construction crew that can rehab your home and have it ready for tenants within just a couple of months? We do this work at rates that are typically 30% lower than the average contractor would charge, and have years upon years of experience with renovations in relation to ROI. We always “do the math” before recommending certain renovations! To learn more, fill out an Investor Profile and someone will contact you shortly.
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