To have the best return on your rental property investment, you must build up a consistent and long-term property renovation budget. While properties being rented out do not typically require a complete “flip” renovation, it is important to know where you have to allocate your property renovation budget to have the greatest effect on the Friendswood market in elevating its rent value.
Experienced property investors recommend distributing funds for property renovation on the main property features based on the following percentages:
- Kitchen: 30%
- Bathroom: 20%
- Exterior: 20%
- General Improvements/Other: 30%
After you determine the areas of your property that belong to these percentages, factor in the total 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 would be like this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Keep in mind, every adjustment should factor in your target market and what can maximize value for your future Friendswood residents. Create a list of each room and feature of your property and utilize your allocated property renovation budget to find what needs the most improvement (using the whole budget is not necessary).
Some property investors will want to make the most of their property renovation budget by redoing the entire kitchen or bathroom, but it is important to keep costs as low as possible and find what needs the most work. For example, you can maintain the main kitchen body and just replace the floors, sink and faucet, add new appliances, and paint the cabinet doors or add new handles. Bathrooms can generally stay the same with their walls and layout, but you could put in a new shower head or heads, toilet, or vanity based on your vision for a more clean and modern look. If there are items from your property that you do not plan on keeping, consider utilizing a second-hand market by selling them to have more funds for adding new items. Alternatively, to cover costs, some Friendswood investors buy from the second-hand market or a community online classifieds section to find cheaper items for kitchens, bathtubs, windows, and doors.
In general, a full renovation with your Friendswood property renovation budget will most likely always add more value. However, overcapitalizing could become a factor, particularly when rental values can alter depending on the market. As such, ensure that your budget fits your goals and that you do not perform expensive renovations that are not needed to attract higher rent.
In determining the most important things to focus on with your property renovation budget, we have found that these items tend to bring in a higher rent value:
- Updating the kitchen and bathroom to be more modern
- Installing blinds/window dressings and floor coverings
- Including privacy features
- Outdoor living spaces and fencing
- Ease of access to rooms
- Natural lighting in the home
The most important factor in renting out to Friendswood residents is to have the best presentation that you can to make a positive impression with your prospective residents that will last even after they decide to live in your property. Additionally, before contacting you, potential residents will often drive by the property itself to view its condition. If they are impressed, then they will contact you for more information. If not, they will probably move on to the next rental property. As such, curb appeal can help attract and retain quality residents. A well-planned property renovation budget will result in careful consideration of all the costs necessary to allocate the right resources and time to what matters most to your future residents.
Would you like a free assessment for your rental property from Real Property Management Prestige? Contact us online or call us at 281-532-5455 today to schedule an appointment or to learn more about the services we offer.
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