5 Rental Updates That will help increase ROI by 400%
Aug 10, 2021
Are you thinking about selling one of your rental properties? Perhaps you're considering selling as-is and severing ties. While a major remodel may be prohibitively expensive, there are some minor upgrades that can pay for themselves and then some (up to 400 percent ROI— keep reading!). Upgrades also have the potential to accelerate the sale.
Boosting ROI vs. Adding Value
The percentage of value gained on investment is known as the return on investment (ROI). Essentially, profit is calculated as a percentage of the property's cost. On the other hand, Adding Value refers to improving and upgrading a property's rental rate potential.
Let's say an investor decides to redo the master bath to increase the property's value by $5,000. That appears to be a good idea. However, if the renovation cost to add that value is $8,000, the investor will have a negative return on investment immediately by $3,000.
Consider these 5 common upgrades that I do in my real estate business and see how this will help you.
- Minor Bathroom Renovation
The tub, tile surround, floor, toilet, sink, vanity, and fixtures cost around $10,500 to replace. You'll get an average of $10,700 back at resale for a recoup rate of 102 percent.
If your old tub is too big to fit through the door, re-glaze it to give it a new look. The price ranges from $300 to $400.
Remove any outdated wall coverings and re-paint the room. Spray-on texture provides quick coverage for damaged walls.
Replace or remove old shower doors to create the illusion of more space.
- Minor Kitchen Upgrade
Consider a minor remodel when your kitchen only needs a cosmetic update and not a completely different floor plan. A little kitchen remodels costs $15,000.
With this budget, you can get some good 30-feet cabinet and drawer refacing, a new wall oven, cooktop, sink, fixtures, laminate or granite countertops, and resilient flooring.
To avoid the pattern bleed through, cover old vinyl with a floor leveler. If the subfloor is concrete, you won't be able to apply a second layer of vinyl.
By sanding and painting the existing cabinets, you can brighten up the kitchen.
Changing the drapes and window molding adds decorator detail without the cost.
- Curb Appeal and Landscaping
According to HGTV, the average resale value of landscaping is 100%. When it comes to updating your landscaping, HGTV suggests going to a local garden center, which often offers free design advice.
A splash of color in the front yard is a welcome addition. Use a single color and vary the height of the plants for the maximum picture.
Entry doors, siding, and exterior paint are some other high-return curb appeal updates.
Overgrown shrubs should be replaced with flowering foundation plants, mixed in heights and colors for a dramatic effect.
A charming focal point, such as a walkway and fountain, can significantly increase the value of your home. Apply a sealant to flagstones to give them a permanent wet look that will bring out the color.
- Lighting and Electrical
According to Landmark Home Warranty, this is another major payoff of up to 400%. Replacing light bulbs, updating outdoor lighting, cleaning switch plates and light fixtures, and adding dimmers all have a 200-400 % return on investment. This is such a no-brainer!
- Redo the Roof
At resale, a roof replacement recovers 107% of its cost. So a house that costs $250,000 and has a brand-new roof will be worth more than the house next door with the same floor plan but a 15-year-old roof.
Sounds exciting to start the renovations? Good luck!
I am waiting for you here on top of The Mountain, so go make your property a money-making asset.
-Phillip Warrick
