ADDING VALUE
RENOVATIONS
times, you can even use an app on your phone to provide access to evaluate issues. Of course, there are many other considerations when you are renovating to rent. You must consider the non-negotiables that have to do with health, livability, and safety. These include the roof, HVAC, electric, plumbing, and other safety and THINGS TO CONSIDERWHEN RENOVATING-TO-RETAIL If you are planning to fix-and-flip your investment property, you also want to evaluate the market for some reference points before you start any renovation. Certainly, you must bring the property up-to-date, but that can mean different things in different markets and at different price points. In some markets, you may want to consider following various design trends, while in others, clean finishes and a neutral color scheme will likely suffice. Here are a few examples of upgrades, repairs, and changes you might make to a property that you plan to sell to a retail buyer: REPAINT USING A LIGHT PAINT PALETTE THAT IS NOT NECESSARILY JUST BEIGE. You might use light grays to keep things bright and airy. UPDATE ALL THE LIGHT FIXTURES. Brushed nickel lighting and plumbing fixtures look particularly modern and help to update even older properties. Don’t forget to replace the doorknobs, hinges and cabinet pulls as well so that everything has that modern finish. code standards. These non- negotiables hold firm for both rentals and retail sales.
outlets and replace any old ones with three-prong outlets. Consider installing some outlets with USB ports which can really make your property stand out in buyers’ or potential tenants’ minds. Have the electrician install ground fault circuit interrupter (GFCI) outlets in the kitchen and bathrooms and ensure that everything is safe and will pass inspection. A standard receptacle can be replaced with a GFCI outlet if there is proper ground-conductor at the receptacle box. Your electrician will know what you have and what you need. Finally, replace all old cover and switch plates for a cohesive, clean look. that the molding and baseboards are not just clean, but also painted cleanly. There is nothing worse than going into a property and seeing a sloppy paint job where the lines are not straight. This may require replacing molding that has been painted over too many times in the past. UPDATE THE KITCHEN AND BATHS. Depending on the property’s price point, you may need to replace cabinets and countertops in the kitchen and bathrooms or you might be able to just give them a fresh coat of paint. Although many investors are still using granite, a lot of the newer laminates actually look more modern and are less expensive. Pair that MIND THE MOLDING. In every property, you should make sure
new countertop with a stainless-steel sink and new faucet, some updated lighting, clean blinds, and as much natural light as possible, and you will get a finished product that looks up-to-date, modern, and clean in any price point. KEEP IT CLEAN. Make sure the property is clean, smells fresh, and is free of any sign of pests. This extends to the exterior as well. The yard should be maintained, shrubs trimmed, and beds mulched. Don’t forget about the mailbox and house numbers. Details matter! MATCH YOUR REHAB TO YOUR MARKET STRATEGY In our business, we find every client has a slightly different strategy. Matching your rehab to your market and aligning those demands with your personal investment strategy will enable you to optimize your returns while creating the most attractive property possible for your real estate investing purposes. •
How to Choose the Right Renovations forYour Investing Goals DIFFERENT INVESTING STRATEGIES REQUIRE DIFFERENT PROPERTY UPGRADES.
by Susan Dupont
O
• Are you investing in an area where certain materials (flooring, fixtures, appliances) are more prevalent? It’s also important to consider if there are any modern amenities that renters may desire or, depending on the mar- ket, demand. For example, high speed WiFi and/or electronic security systems. These offerings can be really valuable to the renter and the landlord because they enable the property manager to send someone, with permission of the occu- pant, to deal with any maintenance issues without having to wait for the occupant to get home and let unlock the door. Some-
need to know what rental rate you hope to achieve (and if they are achievable), what kind of demand there is for properties renting at that level, and what your com- petition looks like in the geographic area where the property is located. Here are a few examples of things to look for in the market before making upgrades to your rental property: • What might distinguish your proper- ty from other, similar rentals? • Is there anything that creates a negative impression upon entering your property (and how can you change it)?
ne of the most common ways investors add value to a property
is to “force” appreciation of the property by making upgrades and renovations. To successfully leverage this strategy, you must make sure that your renovations meet the requirements associated with your goals for the property. The simplest distinction is whether you plan to rent the property or sell it.
Susan Dupont is the president of SGF Contracting Services. SGF provides
THINGS TO CONSIDERWHEN RENOVATING-TO-RENT If the goal is to rent the property, you want to have a sense of the market. You
renovation, rehab and repair services in 15 states and expanding. She may be reached at www.sgfcontracting.com for more information or service@sgfcontracting.com.
DO A COMPLETE OUTLET OVERHAUL. Have a licensed electrician evaluate the
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