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Owning a property can be a smart investment. But with quick changing pace of the real estate market, its value may go up and down regularly. To make sure that you make the most out of residential property, you should aim to utilize its potential by making a minimal investment while aiming maximize the return on your investment.
If you're looking to add permanent value to your investment, you can consider improving its aesthetics and overall functionality. Improvements can take the form of cosmetic improvements (refurbishment) or substantial rehabilitation (renovation). Refurbishments can be as simple as repainting or installing new wallpapers, adding new decorations, new carpeting or reflooring. On the other hand, renovations can cover improvements and repairs to the structure of the property such as upgrading the kitchen or installing newer fixtures in the bathroom. Renovations are more likely to increase the value of your property and give a greater ROI. Over the previous years, there has been at least 50-60% value recouped from renovations.
Regardless of the upgrade you choose to implement, these improvements increase the value of the property for not only your tenants but for your own portfolio as a credible and accountable landlord as well.
However, not all property improvements guarantee ROI. Worse, some can even have the opposite effect and hurt a property's market value if it's not well-researched or properly executed. With renovations and refurbishments, the relationship between cost and value are always changing. You must weigh the cost against your return on investment.
According to the 2018 Cost vs Value Report of Remodeling Magazine, big-ticket and upscale remodeling projects tend to provide a lower rate of return of investment compared to more modest renovation and refurbishment projects, since trends over the years have shown that buyers tend to become more frugal with their choices. But despite that, there are still a few buyers or leasers that are willing to invest a little more for that added grandiose and luxury.
Improving the cosmetic or structural aspects of your property does not need to be over the top. The trick is targeting the correct parts of it that will allow you to re-sell at a good price. Remember, consider small changes that make a big impact.
Here are some renovation and refurbishment projects you can consider:
Adding a fresh coat of paint is one of the most inexpensive ways to give your property a makeover. Choose a neutral and light color for your walls, moldings, and ceilings to make it appear more spacious and bigger, which is ideal for studio-type units. At the same time, this appears to be more appealing to a wider range of demographics.
Upgrade the kitchen
Leasers and buyers are easily turned off by leaky faucets and stained sinks, so investing in upgrading the kitchen is always a good move. The 2018 Cost vs Value Report shows that there was at least 50% cost recouped in minor kitchen renovations. Replace outdated kitchen countertops with a new finish for a sleeker and more modern look. Repaint the cabinetry and replace outdated hardware. Make sure that all fixtures are working properly and efficiently.
Remodel the bathroom
Bathrooms can greatly improve the resale value of your property. In fact, Forbes Magazine reports that bathroom renovations give an ROI of at least 70% in resale value in 2018. Consider installing new countertops, sinks, and faucets. Upgrade plumbing fixtures as well. Moreover, providing ample storage and a decent mirror with frames can also do the trick.
Provide better lighting
Good lighting can make or break a deal. In fact, it is one of the most cost-effective ways that can improve your property's look and market value. Correct and ample lighting can also double the space of your property. Consider replacing dining room lights with semi-flush mount lights or ceiling pendants. Since some buyers also prefer additional ambient lighting, installing recessed lights can be beneficial.
Add more storage
Having ample storage is very important for potential home buyers. It might be a good idea to have built-in closets, floating shelves, and cabinets. You might want to consider custom-built beds or sofas that can double as drawers for additional storage as well.
These small upgrades can have a lasting influence and effect on the value of your property, and at the same time, help you save you money up front by decreasing repair costs and maintenance expenses. Cosmetic renovations may increase the value of your property marginally, while completing structural renovations can add to the value to your property and would likely be more appealing to potential buyers.