Investment properties can vary dramatically, they can come in all shapes, sizes, and values. As a real estate investor, it’s possible to change the property value of your investments. There are many ways to measure value — and some that you think are helping may actually be hurting. Real Estate Investing is all about knowing how to make the right improvements to increase the value of your investment property. Often times investors make modifications that are either a waste of money or end up decreasing the overall value of the home. Which is not only expensive and time-consuming but ends up hurting you more than helping you over time. With property values, there are some things you can control, while others factors are completely out of your hands. This means that doing your due diligence is a crucial element in creating value for your investment property. For instance, you don’t want to make an impulse purchase to later find out that your new investment property is in an undesirable location and won’t provide a positive return on investment.
You’ll also want to make sure that you don’t neglect necessary renovations or hire an ineffective property management team. This can hurt your potential earnings and property value as well. Simply put, turnkey real estate is a long-term investing solution and you can’t afford to cut corners or make rash decisions without it affecting the value of your property. If you want to get the maximum potential out of your investments, take a look at these tips. We’ll walk you through what to avoid so that you can be sure to get the best value out of your properties!
Sometimes bad neighbors can change. Chances are, though, that they’ll stick around for a while. Here, it’s important to introduce yourself to the neighbors and ask about the neighborhood. You can learn some valuable information about the locals and get a feel for the people that your residents will be dealing with.
• Hoarders (sometimes you can only tell from the inside of a home, but if the outside is littered with junk, it can really hurt your property’s value)
• Too much noise (from people or pets)
• Signs of criminal activity
• Loud dogs, cars on blocks or cars parked in the grass
If you want your property to hold its value and have the potential for rents and value to go up, then you need to pay attention to the nearby neighbors.
You can’t fix a bad location. It’s vital to check out the surrounding of your Potential Investment Property before making a purchase. Drive by at night, check out how much crime is in the area. You’ll want your residents to feel safe in their rental home. A bad location can also mean a property that is in an inconvenient place in relation to amenities or not located in a desirable school district. Proximity to jobs, highways, bus stops and other necessities are very important. Simply put, people want to live in good areas that are convenient for what they need in life.
Some retro styles may be coming back in fashion, but pastel yellow bathrooms and outdated kitchens do nothing for your property value. You don’t have to make it perfect, but try to make renovations in bathrooms and the kitchen a priority. But be careful not to over-renovate your property either (see below). Kitchens and bathrooms are important but simply putting in new does not mean it is wise. Do not over-spend on materials or decorate in your own personal favorite colors. The renovations should be simple and clean. Improvements should be inviting and tell a potential resident that the owner cares about the property and spent time to provide a new, clean environment.
On the other hand, beware of making an investment property too nice. While you may have a vision of perfection, your residents don’t expect it and it’s often not worth it for the ROI. If you over-renovate your property in comparison to other homes in the neighborhood, it can work against your value. The same can be said for unbalanced renovations within the property.
For instance, with the kitchen and bathroom, it is important to make the right renovations without breaking your bank. Yards should be clean and windows and entrances to the house should all be clear of bushes and brush. The house numbers should be visible from the street and a new mailbox never hurt either! Trees should be trimmed up above the roof line so your property has a clean appearance from the street. None of these renovations are costly and they sure beat tearing out everything and redesigning the whole exterior of the house! Same goes for the inside. It is important that a potential resident see the effort that you have put into the property. It does not cost a lot of money or time to make the inside of a house inviting and clean. You want the space to be a good reflection of how you expect your residents to keep it. If there’s wallpaper peeling off the walls or a leaking sink when they move in, there can’t be a great expectation for them to take care of the property even better than the owner.
Make sure you know your renter market as well when keeping renovations in mind. You don’t want to overinvest in certain items, like fancy fixtures or custom blinds when not every resident is willing to pay for these upgrades. You also don’t want to not provide a fenced backyard, for instance, if your property is located in a family friendly neighborhood. Your money is best spent on the essentials, like the roof, plumbing, electrical, etc. Making sure your home is maintenance-free and built to withstand years of renting is the best use of your money.
This is something many don’t take into consideration, but bad management can hurt your potential earnings. Watch out for property managers who aren’t thorough in their work — incomplete or missing reports, laziness in addressing maintenance and safety concerns or a lack of organization could mean that you’re not making the most of your investments. Put your property in the hands of someone who will take good care of it. If the property manager only wants to get your property occupied with a breathing person and does not care about its appearance, then even a great property can be turned into a losing one very quickly. Make sure that your property management company operates the way you would operate if you were managing the property yourself. Having pride in the appearance and performance are important to you, so they should be very important for your property management company!
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