For the greatest return on your rental property investment, you need a consistent and long-term property renovation budget. While properties being rented out do not usually need a total “flip” renovation, it is essential to know where you have to allocate your property renovation budget to have the best effect on the Rolesville market in increasing rent value.
Experienced property investors suggest allocating property renovation funds on the key features of the property based on the following percentages:
- Kitchen: 30%
- Bathroom: 20%
- Exterior: 20%
- General Improvements/Other: 30%
After deciding on the areas of your property that fall under these percentages, factor in the complete worth of the property and take a percentage of it. For example, if you have a $40,000 property renovation budget based on 10% of a $400,000 property value, it should look like this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Keep in mind that every adjustment needs to consider your target market and what will maximize value for your future Roseville residents. Create a list of every room and feature of your property and utilize your allocated property renovation budget to identify what needs the most improvement (you don’t need to use the whole budget).
Certain property investors might want to maximize their property renovation budget by redoing the entire kitchen or bathroom, but it is important to keep costs as low as possible and find which ones need the most work. For instance, you could keep the core kitchen body and just replace the floors, sink and faucet, install new appliances, and paint the cabinet doors or add new handles. Bathrooms can mostly stay the same with their walls and layout, but you can place a new shower head or heads, toilet, or vanity based on your vision for a cleaner and more modern look. If there are items from your property you do not want to keep, consider utilizing a second-hand market by selling them to have extra funds for adding new items. Alternatively, to cover costs, some Roseville investors may purchase from the second-hand market or a community online classifieds section to find lower cost items for kitchens, bathtubs, windows, and doors.
Generally, a full renovation with your Roseville property renovation budget will most likely always give added value. However, overcapitalizing can be a factor, specifically when rental values can alter according to the market. As such, ensure that your budget suits your goals and that you do not do unnecessary expensive renovations to attract higher rent.
In determining the most crucial parts to focus on with your property renovation budget, we have found that these items tend to attract a higher rent value:
- Updating the kitchen and bathroom to be more modern
- Adding blinds/window dressings and floor coverings
- Installing privacy features
- Outdoor living areas and fencing
- Ease of access to rooms
- Natural lighting in the home
The most important factor in renting to Roseville residents is to have the best presentation that you can to make a positive impression with your potential residents that will last even after they decide to stay in your property. Additionally, prior to contacting you, potential residents will often drive by the property itself to observe its condition. If they are impressed, then they will contact you for more information. If not, they may move on to the next rental property. As such, curb appeal can help bring in and retain quality residents. A well-planned property renovation budget will result in careful consideration of all the costs needed to allocate the right resources and time to what matters most to your future residents.
Would you like a free assessment of your Roseville rental property from Real Property Management Raleigh? Contact us online or call us at 919-481-0008 today!
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