All pennies spent on refurbishing investment property must be justified by the ROI.
For rental properties, how much additional rent can I request for this upgrade? In the case of flips, how much value will the refurbishment add?
If the improvement costs $ 1,000, but only $ 700 is added to the flip value, it’s not a worthwhile improvement.
Rental is a bit complicated. If it costs $ 1,000 to improve a rental property and the asking rent goes up by $ 40, is it worth it?
One way to think about improving rents is time to recovery. In the above example, it will take a little over 2 years (25 months) to recover the initial cost. Second, you need to take into account the expected lifespan for improvement.
For example, if it lasts for 15 years, the improvement is worth making, but will it only last until the end of this tenant? It may not be.
If you are buying real estate that requires work, your top priority is to repair or replace anything that is obviously damaged or horribly ugly. But if we’re talking about an average, somewhat outdated, Hoham home property and your home remodeling budget is $ 5,000, what do you prioritize?
Here are seven ideas to help you spend your $ 5,000 refurbishment budget to maximize your return on investment.
7 Ways to Spend $ 5,000 Refurbishment Budget on Maximum ROI
1. Appliance Hookups ($ 500 +)
You don’t have to include appliances in your flips or rentals. However, most buyers and borrowers these days expect at least to be able to connect their appliances.
The cost of adding an appliance connection depends on the layout of the properties. As always, get at least three quotes from your contractor.
If you are a landlord, having an appliance hookup (or better is an appliance) will definitely help you secure higher class applicants. And a better applicant means a better tenant, which in turn means a better return.
2. Invincible flooring ($ 2,000 +)
This is less important for flippers, but landlords need to have a floor that can withstand the bombardment from the Royal Navy.
I encourage students to rent and avoid carpets and hardwood floors. They are simply too easily damaged.
Instead, consider bamboo flooring, premium throat hardwood, or premium vinyl tile (LVT). The latter can even come with a waterproof option.
Flooring is the most expensive item on this list, but it is also one of the most important items for the landlord’s long-term profitability and success. If you have to change the carpet every two years when the units change, it will be difficult to make a profit as a landlord.
3. Kitchen: Cover ugly things ($ 250 +)
Everyone loves to talk about real estate kitchens and bathrooms. Usually just before they try to sell something to you.
You don’t have to spend your arms and legs refurbishing the kitchen for average properties. If your remodeling budget is tight, try a better look at the existing bone structure in your kitchen.
First, consider painting the cabinet. White or black are classic options, but of course they are not the only options.
Then look at the counter. Assuming they look like pickled death, how can they be replaced or covered without going out and spending thousands of dollars on white marble?
Related: Three Renovation Tips to Facilitate Property Management [Video!]
One idea is to replace them with butcher blocks. You can cut it to the dimensions of your countertop and install it properly, or if the property is a low-end rental, you simply have a properly sized butcher block on top of an existing countertop. Can be placed.
Another idea is to paint the counter in shiny black and coat it with shellac or other shiny surface treatments. It’s easy, cheap, and in sharp contrast to white-painted cabinets.
If your property is for rent, you can always cover the ugly kitchen floor with a huge slow rug.
Here’s a little more Cheap DIY kitchen hackIf you are looking for a new look on a tight budget.
4. Bathroom: Attention to new ones ($ 100 +)
Bathrooms are another area where real estate owners blow thousands of dollars away.
How can you cover the ugliest and most outdated parts of the bathroom, just like in the kitchen?
If the tile floor is old, cracked, or totally ugly, the giant rug trick works here as well. Make sure the rug you are using is new and clean.
Speaking of cleanliness, the entire bathroom should shine cleanly, regardless of the age of the fixtures. Use any cleaning agent needed to completely clean bathtubs, toilets, sinks and walls.
Then turn the prospect’s attention to some new features in the room. For example, the new luxury faucet makes the entire sink look newer and sharper. Combining new stylish cabinet hardware with new painting work can make your old cabinet look new and chic.
Assuming your shower tiles also had a better day, scrub them clean and, of course, distract the viewer with a bright, trendy shower curtain left in a closed position.
Luxury shower curtains change the atmosphere of the entire room for casual observers, especially if it is the brightest object in the bathroom.
5. Low cost landscaping ($ 100 +)
The charm of a curb is more important than most people trust it. Humans, by our nature, make quick, emotionally-based, subconscious decisions, and then gradually use logic to justify the decisions already made by the lizard’s brain. Catch up with your heart.
The charm of the curb calls on the lizard’s brain and helps them build the minds of prospects before they know it.
The lawn in the vestibule should be completely trimmed and completely trimmed of positive bushes and shrubs. Bordering the sidewalk — It takes 30 minutes, but there is a big difference in how the front sidewalk looks neat and clean.
The rear landscaping is also important, but not as important as the front. If time and budget are constrained, focus on the front first.
I like potted plants as a cheap way to make front doors and sidewalks more cozy. This particular trick is especially effective when there are no greens in urban properties that may not have a vestibular lawn, or blocks in any direction.
6. Paint! ($ 250 +)
When your budget is tight, you can draw your own picture and save money.
The secret of painting is not the actual stroke, but the preparation. Careful taping and drapes will make your amateur paint work look professional.
The interior of your property should be repainted before showing it to prospects. Limit.
When it comes to exteriors, it’s more difficult and more expensive. If the exterior is just dirty, try a power wash. However, if the paint has come off, you will need to rub it back.
7. Add some flares ($ 300 +)
In my property management course, I teach students to find some “hooks” to make their property more marketable.
What can you do to make your property stand out from all other lists in your neighborhood?
One of my favorite ideas is to market your property as a “smart home”. The whole house doesn’t have to look like Jetson. All you need is two or three smart home features. Smart thermostats are easy. Costs range from $ 180 to $ 250 and you can view statistics on how cheap your utility bills will be.
Here are some ideas Smart home upgrades to increase the marketability of your property..
If your neighborhood’s target demographics are environmentally friendly, why not market your property as a “green home”? You are already on your way with that smart thermostat. All you need is one or two more eco-friendly features.
Do you have a dingy unfinished cellar? Add one or two large wine racks to the wall and call it a wine cellar.
Find some hooks that make your list stand out from the others. It doesn’t have to be expensive. They just need to create an upscale atmosphere.
Related: Refurbishing 3 simple apartments that give you the best value for your spending
If you are willing to do some of the work yourself (eg drawing), you can do a lot for $ 5,000. It’s amazing what fresh painting work and boring cleanliness do to make the property feel newer.
If you’re on a budget and can completely renovate your kitchen or bathroom, completely reconstruct the look of your property, or live in it, it’s easy to make your property stand out and make it feel less average. .. So mediocre. Very boring.
But if you have a limited budget, you need to use your creativity, not cash, to make your property feel fresh and new.
The average cure is to find some focus to get your attention. I mentioned this in the bathroom section above. Even if you can’t tear the entire bathroom, you can still get the attention of prospects with some notable new features.
The same applies to the whole house. Can you afford to repaint the entire exterior? Brighten the front door and repaint it in a color that attracts attention. If the prospect’s eyes are drawn to the bright red front door, it is difficult to conclude that the house is monotonous, even if the rest of the house is covered in old, dull gray.
Use your creativity, and it only needs some of those attention-grabbing features to distract from the fact that the kitchen floor is ugly, or the shower tiles are outdated.
We are republishing this article to help new readers.
What are some tips for renovating on a tight budget?
Share your secrets and hacks below!