There are many different types of investment properties. Two of the most common types of real estate investments include properties you buy, renovate, then sell. These are typically called fix-and-flips. Another type of investment property is one you buy and hold, usually to rent to tenants. Here are nine tips to help you save money and maximize revenue for your investment properties:
- Don’t buy top-of-the-line materials – Especially for rental properties, every dollar you spend on renovation materials cuts into your profits. Tenants don’t treat real estate with the same care that owners do. For that reason, get your property in livable condition, but don’t go top-of-the-line on anything. For properties you plan to sell, you can go higher quality, but always think in terms of functionality.
- Don’t buy the cheapest materials – While you don’t want to stress the wallet by purchasing the most expensive renovation materials, you’ll also want to stay away from the least expensive. Cheaper usually means lower quality and you’ll likely find yourself replacing cheap plumbing and other materials more often, which means lower returns on investment.
- Clean and repair first – Replace carpets, floors, light fixtures, etc. as needed. Clean and repair first. Replace only what needs to be replaced.
- Landscape the front yard – You will rent and sell more properties if you spruce up the outside before showing them off. Buyers’ and renters’ first impressions can make or break your investments.
- Give a proper notice to current residents – If you have tenants living in your investment property now, give them a 60- to 90-day notice before you start renovating, especially if you are working on your property while it is still occupied. If you need to move old residents out and new residents in, try to perform renovations in between.
- Update kitchens and bathrooms – Believe it or not, kitchens and bathrooms sell properties. If your kitchen or bathroom looks dated, you’ll have a harder time selling or renting the entire house. So get rid of wallpaper, flooring, countertops, cabinets, and anything else that makes the house look dated.
- Paint and replace hardware – It’s much easier to repaint cabinets and backsplashes and replace the handles and other hardware on faucets, cabinet doors, etc. than it is to completely re-do it all. It’s also lighter on your pocketbook, which means a bigger return on your investment. That includes door knobs and light fixtures. If you do have to replace cabinets, sinks, tubs, or countertops, don’t go custom. Stick with off-the-shelf items that don’t cost too much.
- Give it a fresh coat of paint – You’ll be surprised how a fresh coat of paint can make an old house look new. This could be your best investment for a higher profit margin.
- Establish your budget up front, and stick to it – If you’re a serious property investor, you’ll analyze every investment to determine your investment cost versus the value of the property. That means, you should have some idea about the cost of renovation before you buy the property. Once you close on the property, establish your renovation budget, then stick to it. If you have to make adjustments due to unforeseen expenses, cut the budget on non-essential repairs and updates.
With the proper planning and your mind set on a positive return on investment, your property renovation will cost less and go more smoothly.
About the author: Allen Shayanfekr is the CEO & co-founder of Sharestates