To achieve the best return on your rental property investment, you must develop a consistent and long-term property renovation budget. While rental properties do not usually need a complete “flip” renovation, it is crucial to know where you should allocate your property renovation budget to get the greatest effect on the Mt. Vernon market in increasing rent value.
Experienced property investors recommend distributing funds for property renovation on the main features of the property based on the following percentages:
- Kitchen: 30%
- Bathroom: 20%
- Exterior: 20%
- General Improvements/Other: 30%
Once you have determined the areas of your property that fall under these percentages, factor in the overall 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 look like this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Do remember that each adjustment must factor in your target market and what will maximize value for your potential Mt. Vernon residents. Create a list of every room and feature of your property and utilize your allocated property renovation budget to figure out what needs the most improvement (you do not need to use the whole budget).
Certain property investors will want to maximize their property renovation budget by redoing the entire kitchen or bathroom; on the other hand, it is important to keep costs as low as possible and realize what needs the most work. For example, you could keep the main kitchen body and just change the floors, sink and faucet, add new appliances, and paint the cabinet doors or add new handles. Bathrooms can usually 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 polished and modern look. If there are items from your property that you don’t plan on keeping, consider selling them in a second-hand market to have more funds for getting new items. Alternatively, to cover costs, some Mt. Vernon investors might buy from the second-hand market or a community online classifieds section to get cheaper items for kitchens, bathtubs, windows, and doors.
Generally, a complete renovation with your Mt. Vernon property renovation budget will most likely add additional value. But, overcapitalizing can become a factor, mainly when rental values can alter depending on the market. As such, ensure that your budget matches your goals and that you do not perform unnecessary expensive renovations to attract higher rent.
In determining the most vital items to focus on with your property renovation budget, we have found that these items tend to invite a higher rent value:
- Updating the kitchen and bathroom to be more modern
- Adding blinds/window dressings and floor coverings
- Including privacy features
- Outdoor living areas and fencing
- Ease of access to rooms
- Natural lighting in the home
The most important factor in renting to Mt. Vernon residents is to have the best presentation to make a positive impression with your prospective residents that will remain even after they decide to live in your property. Additionally, prior to communicating with you, potential residents will often drive by the property itself to view the condition. If they are impressed, then they will contact you for more information. If not, they will move on to the next rental property. As such, curb appeal can aid in attracting and retaining quality residents. An effectively planned property renovation budget will result in careful consideration of all the costs needed to allocate the right resources and time to what matters most to your future residents.
Are you interested in learning more about Real Property Management Results, or would you like a free assessment of your Mt. Vernon property? Contact us online or call us at 812-461-1676 today!
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