Renovations on a Tight Budget 1

Dated: November 6 2019

Views: 185

When it comes to renovating investment properties, the only justification on spending an extra dollar is when looking at the ROI (Return on Investment).

Would you be able to increase the rent after an upgrade? For flip properties how much extra value does a renovation add to the property?

If for example an improvement costs $5,000 but will only add an extra $1,000 of value to your flip it is an improvement that is not worth making.

Rental units are slightly more complicated, because if an improvement costs $5,000 and the rent increases only by $100 would it be worth doing the improvement? How about if the rent increased by $500, is the remodeling worth doing?

A way to think when working with rental units is how long time would it take for you to get your money back from the improvement. In the above mentioned example it would take under an year to pay off the improvement that pays back $500.

A factor that you should consider as well is the expected life span of the improvement. Using higher quality materials will bring a longer life span for your project. Would the improvement only last a tenancy? Or 15 years or longer ? fr example flooring is more expensive but it can last a long time, while painting is usually done after each tenancy.

If you are buying a property that will need some work done, a priority of yours should be replacing the damaged and the uglies of the property.

I present you with 5 ideas to spend on your renovation budget for max ROI and with a relatively small budget of $5,000

1. Appliances

More often than not buyers and renters expect to have property that comes with basic appliances such as washer, drier, stove. The cost of adding appliances varies based on model and year, but that will definitely help you secure higher class of applicant. Better tenants mean better returns on your property. Consider going to appliance outlets where you can buy appliances at 50% or more just because they are slightly dented on the side.

2. Flooring

Flooring is not that important for flippers, but for rental properties it is crucial that you use commercial grade flooring that can withstand heavy usage.

I recommend to all my clints that they avoid using carpets, as carpets tend to wear off very quickly, stink and are hard to maintain. Another type of flooring to stay away from is the hardwood floors - they simply get damaged very easily.

I often suggest to clients to use bamboo flooring, high end-faux hardwood or vinyl luxury tiles. The latter are available even in waterproof options.

Flooring is the most expensive item on my list, but it is the most crucial to landlords for a long -term returns and success. It will be very hard to turn any profit if you have to constantly repair your hardwood floors or replace the carpet every 5-7 years.

3. Kitchens

In real estate everyones favourite topic are kitchens and bathrooms - usually right before they try to sell you something for your kitchen or bathroom.

You do not have to break the bank to pull off a kitchen or bathroom renovation for a regular property. If you are on a tight budget, try tweaking what is mostly visible - the front of the cabinets. A simple and fast solution is painting the cabinets in either white or black - colors that have stood the test of time and look stylish in every kitchen. Another important place to pay attention in the kitchen is the countertops. Can you replace them? White marble would cost thousands of dollars, however there are options available in laminated countertops, which have the same luxurious look as real marble does.

Another idea for the countertops is to use black glossy special paint for countertops available at Benjamin Moore. It is easy, cheap and will contrast well with the freshly painted white cabinets.

4. Bathrooms 

Bathrooms are the second most looked at room in a house whether it is a flip or a rental. Owners can easily spend thousands of dollars in that room alone. Just like with the kitchens, you should look to cover the ugliest parts.

First and foremost - the entire bathroom should be sparkly clean!!! To potential buyers or tenants it does not matter how old the fixtures are as long as it is clean. Scrub down the toilet, sink, walls, use air freshener.

Point out the potential prospects attention to the new features in the bathroom. A new faucet makes the bathroom look stylish and luxurious, it also brings a sharper and cleaner look to the sink. Vanity hardware is also easily replacable and can add a stylish chic to the outdated vanity.

Scrub down your shower and make sure the tiles and grout are spotless because htey can easily distract the prospects.

A diry trick is to add an upscale curtain for the shower - it will be the object that draws most attention and will shift attention from imperfections around the room.

5. Landscaping

Curb appeal is actually more important than most people would like to think. We as humans are very quick to jump to conlusions and "judge a book by its cover" in the first few seconds from viewing a property. 

Proper landscaping instantly pleases the viewer and in many cases helps make up the prospects minds before they even enter the property.

The lawn should be kept well mowed, any bushes should be perfectly trimmed. Edge the sidewalk - it takes about twenty minutes but it makes a big difference in how sharp the walkway looks.

Backyard trimming is important as well , but if on a tight budget - I would suggest to focus mainly on the front yard. 

Personally I love potted plants as a cheap trick to make the entrance more welcoming. This trick works particularly well with urban properties which might not have a front lawn or much of a green space for that matter. 

6. Paint

When your budget is tight, your best friend is a pale of paint. It is something you can do on your own and save money. The trick while painting is to prepare well, not the actual brush strokes. Well prepared taping and neatly placed drop sheets will make your amateur paint job look almost professional.

The interior of your rental or flip should be freshly painted before showing it to potential prospects. 

When it comes to the exterior - that is a little bit more expensive and time consuming - If the exterior is dirty, but no paint is chipping, giving it a good power washing. If the paint is chipping scrape it well , sand, prep and paint it.

7. Add a WOW! factor

Nowadays the buzz word is "SMART HOME". The entire property oes not need to look like it came out of the Jetsons movie, you just need to add a couple of smart home features. A Nest thermostat is a no brainer - you can get it in a 150-250 range.

If your target demographic for your neighbourhood is eco-conscious, why not market your property as green home? You are half way there with that smart thermostat.

You can do quite a lot on a $5,000 budget, if you are willing to do some of the work yourself. When you have a huge budget you can easily make your property look lavish and stand out from the rest, however doing that on a tight budget allowes you to use your creativity instad of cash, to make your property feel fresh.

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Momo Kanev

Momo Kanev, exemplifies integrity, energy, hard work and creativity in every detail of the real estate transaction process. Momo, has over 10 years of experience in the construction industry. He speci....

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