If you want to learn how to increase the value of a property, you've come to the right place. Financial Samurai has been writing about real estate, its favorite asset class, since 2009.
Your property’s rental income is directly proportional to its general appearance. If the property is in great shape, it will attract reliable tenants who are willing to pay a little higher rent than the average rent in your neighborhood. You, therefore, must invest in meaningful renovations if you wish to increase your property’s value.
If you own a Lake Tahoe vacation rental in California and you want to attract visitors , you need to invest in modern bedrooms in order to make the rental appealing to traveling families.
Also, your kitchen may need to be fully equipped and have a spacious dining area. Visitors that go to Lake Tahoe want to enjoy themselves. Therefore, you can go all the way to installing a private patio, a gym, a heated pool, and a playground in your vacation rental California. Invest in anything that makes the property functional and luxurious.
With that in mind, here are 11 ideas that can bring a big difference to your rental income. Not only will these improvements increase your property's rental income, it will increase your property's resale value.
How To Increase The Value Of A Property
1. Repaint
Give your interiors and exteriors a fresh coat of paint. The exteriors will attract potential tenants from the streets while the interiors will make them stay. If any of your walls is dirty and scuffed up, that can be a major turn off, no matter how strategically located or spacious the unit is.
2. Redo the bathrooms
Potential tenants will pass your property just because the bathroom is dirty or outdated. Install better quality showerheads, toilets, and bathing tabs. Repaint the walls. Install shelves to make the bathroom functional. Replace the floor if it is worn out.
3. Add en suites
Modern private facilities – such as en suites–may attract wealthier tenants. These are tenants with clean credit history and who are willing to pay extra.
4. Redo the roof
If the roof is leaking, its appearance is deplorable, or if it is outdated, it is best that you redo it. You cannot afford to neglect a deplorable roof even if it is not leaking because when it eventually does, it can precipitate unimaginable damages both to the investment beneath it and to the tenants’ valuables.
5. Expand
Create more rooms if possible, or enlarge the existing ones. Most tenants with kids and pets are looking for a property that has at least 3 bedrooms, a spacious dining area, and a small yard. You can even add a deck and a patio if you find them financially viable.
Expanding your property really is the best way to increase a property's value. If you can build for $200/sqft and sell for $400/sqft, you are going to make a profit.
6. Replace the floors
Put in a new floor not just in the bathroom but in the entire property. It is time to get rid of that standard grade carpet and replace it with tile, hardwood, stone, or such high-end materials. Tenants are looking for floors that are easy to clean and care for, and low-cost floors just don’t fit the bill.
Before replacing the floors, you may want to first refinish the floors. It's much cheaper and quicker to do. I spent $3,000 refinishing my floors.
Related: Interior Design Ideas For Your Home
7. Redo the kitchen
The kitchen is another part of the house that can make or break a renting deal. It is probably a bigger deal-breaker/maker than a bathroom. So, go ahead and give your kitchen a fresh coat of paint. Paint the cupboards and splashbacks. Install new and more functional hardware. Replace the old and outdated taps and sinks.
Related: How Much Money To Spend Remodeling A Home
8. Install smart technology
Smart homes have grown in popularity over the last 2 years. If your property has smart carbon monoxide and smoke detectors, thermostats, lights, door locks, and garage door openers, among other smart devices, it certainly is going to be more appealing to tenants, which makes them more willing to pay more.
9. Add off-street parking
Properties in high-density living areas need to have off-street parking both for the tenants and their visitors. In a beachside suburb, e.g. most suburbs in Florida, for example, a parking space will add immeasurable value to your property. Tenants are always willing to pay more for parking space.
10. Change the windows
Big windows are appealing to tenants because they allow more light into the indoors, making it more conducive for houseplants and the temperatures more bearable. Also, you need to ensure that the windows aren’t leaking because leaky windows can inflate energy bills.
Nothing makes me happier than installing new windows with soundproofing and UV protection.
11. Make the property pet-friendly
Some rental properties do not allow pets obviously due to the fact that pets can damage walls, floors, yards, and other parts of a rental property. But people love their pets and will pay anything to be allowed to bring in their fluffy family members. If you could make the property pet-friendly and then charge renters a higher price for it, you can bet that you will get better returns.
Increase The Value Of Your Property Wisely
With some many ways to increase the value of a property, you will improve your chances of making money.
When renovating your rental property, you need to be careful not to overdo it. Just make enough investments are made to make the property pop and attract renters. But don't invest too much to scare off potential buyers just in case you want to sell it in the future.
Invest In Real Estate Through Crowdfunding
As a real estate investors, your goal is to make money. In addition to increasing the value of your property, look to diversify your real estate investments across the country where valuations are lower, net rental yields are higher, and growth rates may be higher.
Check out Fundrise and their eREITs. eREITs give investors a way to diversify their real estate exposure with lower volatility compared to stocks. Income is completely passive and there is much less concentration risk.
If you are bullish on the demographic shift towards lower-cost and less densely populated areas of the country, check out CrowdStreet. CrowdStreet focuses on individual commercial real estate opportunities in 18-hour cities. Both platforms are free to sign up and explore.
I've personally invested $810,000 in real estate crowdfunding since 2016. I believe investing in heartland real estate is where it's at. More people will relocate to lower-cost areas of the country due to technology.