Understanding which improvements are best for your property will help you attract renters or buyers and maximize your profit.
You’re a real estate investor. Maybe you flip properties. Perhaps you hold properties and rent.
Whatever your investment strategy, as a real estate investor, your success depends on your ability to choose the right improvements for your investment properties. Striking a balance between curb appeal and current design trends is crucial to attract buyers or renters and ensure profitability.
Understanding what today’s buyers and renters want in a property is essential, but at the same time you must stay keenly aware of your investment property’s potential profit margin. For example, if your property is in a high-end neighborhood, prepare to invest in more high-end fixtures and ensure the layout and decor reflect current styles and trends. On the other hand, if you are flipping a property in a mid-range neighborhood, you must moderate your investment in improvements so you don’t drag down your profit.
But how do you know which improvements will bring the best ROI? In this article, we’ll explore a few of the key factors to consider when choosing improvements for your property.
Keep in mind that with design trends changing constantly, you should combine some evergreen design ideas and current trends, depending on your market. Knowing what the market, the neighborhood, and the comps can support is critical to choosing improvements that boost value in a way that will give you the most ROI.
Sustainability
Now more than ever, there is a focus on sustainable options to save operating costs and appeal to environmental consciousness. Choosing something as simple as LED lights makes a statement that the property is eco-friendly and more cost-efficient. If your property is in a higher-end market, your budget can sustain higher investments, such as radiant floor heating.
Rooms
Renovating kitchens and bathrooms have always been great ways to improve a property. According to the National Kitchen and Bath Association, people still want larger spaces and less clutter.
If your flip is in a high-end market, consider adding small appliance work areas and larger (or even double) islands in the kitchen. People are not just seeking more energy-efficient appliances; they also are seeking things like second freezers in the garage or basement. More moderate properties, on the other hand, tend to stay with the basic smart technology that buyers and renters consider to be convenient and valuable. Those with a smaller kitchen footprint should consider adding some features that help maximize space.
In bathrooms, there is still a trend toward larger showers (even at the expense of having a tub), and people are looking for additional space, like sitting areas. Here, a less costly investment is smart tech for faucets and lighting.
An area where the pendulum has made a big swing is in open concept floor plans. With the pandemic creating a need for home office space and the job market turning remote, creating work nooks can be an excellent way to generate ROI for your renovations. Whether renting or selling your investment property, people are looking for comfort, coziness, and a little privacy in layouts. This is excellent news for investors in older properties that never went open concept in the first place.
Color
An easy and cost-effective way to look on-trend without blowing your reno budget is with interior and exterior color choices. “Greige” has been in fashion for years, but now people are ready for some color, including blues and greens (even bold ones). Earthier color schemes and more natural materials like stone, which add color and texture, are affordable on-trend touches to consider.
Insulation
One timeless investment that’s also sound is insulation. The cost of attic insulation can be recouped by more than 100%. Front door and garage door replacements are more subtle, but have excellent curb appeal and have massive resale value.
Exterior
When considering the exterior, think about the area’s climate. Face it. Whether you are presenting to a renter or a new buyer, a house’s façade and landscaping make the first impression.
Native plants and drought-tolerant landscaping is becoming more important to buyers. Renters want something low maintenance and presentable to guests. As always, ensuring you have a nice, inviting front door with nice hardware and some inviting outdoor lighting will also make your investment property more inviting to renters and buyers. Think about installing a smart doorbell camera.
As you choose improvements for your investment properties, keep in mind market trends, your budget, and potential ROI. By focusing on appealing design that includes functional rooms, open space, trendy colors, and exterior features, you can create a property that will attract buyers or renters and generate a solid return on investment.
John V. Santilli is the chief revenue officer for RFG. He joined the company in July 2019 and is responsible for all opportunities connected to its RFG, including expanding the company’s sales channels to maintain its position as a leader in rehab financing.
Before joining RFG, Santilli had 25 years of lending and marketing executive leadership experience across multiple private and public marketing-dependent companies. He managed companies from startup to maturity, ranging from $2.5 million to more than $50 million in annual revenue.
Santilli earned a master’s degree in management from the University of Pennsylvania and a bachelor’s degree in business administration with a concentration in marketing from Drexel University.
