As real estate investors, home improvement is inevitable. Whether you are performing it out of necessity due to damages or you are doing it to improve the value of the property, renovating your property is a way to show your tenants that you care. In this article are seven ways to save money while renovating your investment home.
1. Plan before renovating
Planning comes before anything else. It is very important to have a set plan before carrying out any renovation work. What is the scope of the project? What is your budget? What is the timeframe for the completion of the project? These are some of the questions to ask yourself when starting the renovation project. Home improvement is not as easy as it is usually shown on HGTV or other reality TV shows. So, to have a successful renovation, plan for it!
2. Set a realistic budget
Budget is just as important as planning, so plan your finances well. Home renovation can be interesting and at the same time overwhelming if you don’t have a budget. The general rule in real estate is that ten percent of your property’s values should be for the renovation project. Also, never forget to segment the renovation budget appropriately for the work that needs to be done (kitchen, bathroom, landscaping, painting, roofing, lighting, etc.). Need help on how to plan your finances? Contact an expert!
3. Remodel areas with the highest ROI
As an investor or a homeowner, the aim of remodeling your property is to increase its value. This, however, increases the returns on the investment. To make your renovation worth it, effective and relevant, only improve on areas that will increase the value of your property. For example, the kitchen, and the bathroom have an ROI of about 85% according to realtor.com. While painting has an ROI of 100%. Also, do not forget to work on the flooring as it can also increase the property’s value—about 75% to 90% ROI.
4. Know who you are targeting
Your target audience matters a lot. Who do you want to rent your property to? Students? Retirees? Working-class? Pay attention to what your targets want. Visit competing properties and pay attention to people’s comments. This will give you a feel of what you should add (or remove) when renovating your property. Another way to know who to target and how to go about it is by building a relationship with local real estate agents and property managers.
5. Renovate one unit or room at a time
The purpose of renovating your property is to increase its value not to run into debt. So, learn to improve in stages. Instead of overhauling the renovation work at once, learn to work bit by bit. Put your planning into work. For example, if you have to renovate ten units of your property, you can work on five units at once and rent out the other five units. By doing this, you won’t be as overwhelmed by the improvement and at the same time, you will be making money from the other five units you rent out.
6. Do not forget the outdoors (landscape, Façade, etc.)
The first impression matters a lot! This is a popular saying that also applies to real estate. It means that you should make your property attractive from afar. Depending on the location and size of your property, always tend to the backyard, front yard and the surroundings. No one will be interested in properties that look unkempt on the outside, so give the outside the same attention you gave to the interior. If you are too busy to consistently maintain this, you can hire someone to help you look after the surrounding area of the property.
7. Go green for efficiency and reduced cost
Change those old appliances in your kitchen and bathroom to modern efficient ones. Apart from being beneficial to the environment, going green is efficient and cost-effective. So, if you are looking for ways to increase your home value and reduce expenses, replace your appliances to energy-saving ones. Also, prospective tenants prefer a home with modern appliances, which means, the competition to rent your home would increase. This would allow you to increase your rent and in-turn increase your ROI.
Home renovation can be overwhelming especially when things are not going as planned. However, whether you are just starting or you are an expert real estate investor, following these seven tips will help you to get things right!