How to Identify Cost Effective Renovations in Rental Property?
If you own an older rental property, you know you must renovate it to give it a modern look desirable for renters. It will also fetch a higher rent once it has been taken care of. How do you know which home improvements to undertake to attain your goals? Of course, they depend upon the kind of property and its location. But no matter which renovations you eventually undertake, they need to be cost effective.
If you undertake repairs that are too costly, you will not be able to recover their cost through increased rents and higher number of tenants. You should remain wary of spending too much on repairs and upgrades as the project can easily become financially unattractive for you. The repairs should be such that it is a win-win situation for both the investor as well as the tenants. Many landlords take repairs based upon what looks good to them. But experts believe that it is all about money not the visual appeal of the property.
Identifying cost effective renovations
There are some repairs and upgrades that become necessary over a period of time. If the kitchens and the bathrooms have not been upgraded for a very long time, there is no way you can escape these costly upgrades. Similarly, you have to change the carpets if they have not been replaced for a very long time. New flooring and new paint are improvements that have to be undertaken from time to time. But there is no need to go in for replacement of doors and windows if they are still functional and minor repairs can make them look like new. You have to make a judgment wisely even if the initial investment on a repair appears to be minimal.
Return on investment should really be the focus
The focus of all investors should always be on the numbers they are spending and what they can expect in return. If they feel they will not get full value of their investment, it is better not to undertake these repairs. However, it is the desire of every landlord to get good tenants in his property. A clean and well-maintained property is the first preference of all renters. This is where the investor must strike a delicate balance between repairs and their costs. Postponing repairs or using cosmetic fixes can cause renters to leave early, and this is certainly not what an investor would love to see.
Investor should desist from taking emotional decisions
Property may be owned by an investor, but it is not his personal home where he loves to undertake repairs according to his liking's. Owner must keep emotions at a bay when taking decisions regarding improvements in his rental properties. The only factor to keep in mind in this regard is the return on investment. If the answer is no, investor should never undertake the repairs. This is how an investor can identify the most cost-effective repairs in his rental property.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
