To get the greatest return on your rental property investment, you must create a consistent and long-term property renovation budget. Although properties being rented out do not usually require a complete “flip” renovation, it is important to know where you should distribute your property renovation budget to have the greatest effect on the Marlborough market in boosting rent value.
Experienced property investors suggest allocating 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 determining the areas of your property that belong to these percentages, factor in the total worth of the property and get 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 look similar to this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Keep in mind that each adjustment must factor in your target market and what would maximize value for your future Marlborough residents. Make a list of each room and feature of your property and utilize your allocated property renovation budget to figure out which ones need the most improvement (you do not need to use the whole budget).
A number of property investors will want to maximize 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 requires the most work. For example, you can keep the main kitchen body and just replace the floors, sink, and faucet, add new appliances, and paint the cabinet doors or put in new handles. Bathrooms can generally maintain their walls and layout, but you could place a new shower head or heads, toilet, or vanity based on your idea for a cleaner and more modern look. If there are items from your property that you do not want to keep, think about utilizing a second-hand market by selling them to get more funds for adding new items. Alternatively, to cover costs, some Marlborough investors might purchase from the second-hand market or a community online classifieds section to find lower cost items for kitchens and bathrooms and item like windows and doors.
A full renovation with your Marlborough property renovation budget will most likely always add additional value. However, overcapitalizing can be a factor, especially when rental values can alter based on the market. As such, make certain that your budget fits your goals and that you do not perform costly renovations that are not needed to attract higher rent.
In determining the most important items to concentrate on with your property renovation budget, we have deduced that these items tend to attract a higher rent value:
- Updating the kitchen and bathroom to be more up-to-date
- Adding blinds/window dressings and floor coverings
- Putting privacy features
- Having outdoor living areas and fencing
- Providing ease of access to rooms
- Adding natural lighting in the home
The most important factor in renting to Marlborough residents is to give the best presentation that you can to make a positive impression with your potential residents that will last even after they decide to rent 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 additional information. If not, they may move on to the next rental property. As such, curb appeal can help bring in and retain quality residents. An effectively strategized property renovation budget will result in careful consideration of all the costs necessary to allocate the correct resources and time to what matters most to your future residents.
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