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3 Great Property Improvements with the Best Return on Investment

It’s called an investment property for a reason. Your rental should do more than generate monthly revenue: it should also grow in value through the years, allowing you to eventually see equity growth, just as you’d experience with your own home. However, rental owners can, and should, take steps to maintain and grow their property’s value. This includes making key investments back into the property through strategic, high-value remodeling projects.

Replace the air conditioner or heater

What is the state of your property’s HVAC systems? If its air conditioner is on death’s door, you’ll want to replace it in the near future. An aging air conditioner can be a major problem for a rental property. It can break down during the lease, causing headaches for you and your renter. It can also make the investment property more difficult to sell when you list. Would you buy a property with an air conditioner that needed to be replaced without asking the current owner to either pay for it or take care of it prior to closing?

In general, if your rental property has unmet maintenance or replacement needs, you’ll want to tackle them first, before you invest in remodeling and upgrades. It’s the real estate equivalent of eating your vegetables before dessert. This includes both large projects like replacing the roof or installing new windows and relatively small ones, like installing new doors. For these essential projects, completing the work isn’t just about investing back into your property. It also allows you to successfully rent it without ongoing issues.

Remodel your rental’s kitchen

When it comes to high-ROI projects, kitchen remodels are king. Renovating the kitchen is a great way to add long-lasting, highly effective value to your property. Both renters and prospective buyers love upgraded kitchens, so you’ll see a strong return on your investment whether you hold onto the property or decide to sell it. If you’re looking for ways to reinvest back into your rental, it’s hard to go wrong with a kitchen remodel.

To maximize your overall ROI, however, you’ll want to be strategic. If this were your own home, you might make some decisions based on taste or luxury instead of value. However, in a rental or investment property, everything needs to be examined through the lens of prospective return. This means sticking to popular styles, avoiding luxury or high-cost materials, and making smart trade-offs. For example, you may personally prefer the look and feel of tile flooring, but today’s vinyl looks great, is nearly just as durable, and often costs far less to install.

Change up the bathroom

If your property’s bathroom looks like it belongs in a different decade, it’s probably time for a change. Next to kitchens, bathroom remodels have one of the most profound impacts on your property’s value. A renovated bathroom can be a major selling point for renters and buyers alike, which means you have more options.

Here, too, it’s important to focus on value over luxury. Unless you’re working with a luxury condo, skip the marble countertops and jacuzzi tub. Instead, remodel the shower with new tile, glass, faucets, and fixtures. Replace the existing vanity with something much nicer, and add new tile (or vinyl) flooring throughout. In the bathroom—and, really, every room of the property—small and inexpensive additions can be the perfect finishing touches. Don’t forget to replace the old light fixtures or repaint the walls before calling your project complete.

Get the most out of your remodeling dollar

To a certain degree, a homeowner can afford to spend on luxuries and upgrades. In contrast, the owner of an investment property needs to know where every dollar is going and ensure they’re maximizing their reinvestment back into the rental. It’s prudent to stick to high-ROI upgrades. For a full list of the property upgrades that will net you the best return, be sure to check out this infographic:

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