4 types of Renovations that aren’t worth the headache
When you find a house that you want to fix up and sell, the first step is mapping out a plan of exactly what renovations will give you the most bang for your buck and what is better left untouched.
There are obvious changes, like painting the exterior of a worn out aesthetic but when it comes to optional upgrades, where is it best to draw the line? Read below to find out which renovations are not worth your time or money.
- Making a property TOO nice
If you’re fixing up a house in the nicest neighborhood of Beverly Hills, by all means install a built-in Swiss cappuccino maker with a frothing spout or a walk-in closet that tells you what the weather forecast is. But most of us RE investors are looking for fixer uppers in neighborhoods that have pride of ownership yet still fall in the middle class range. We need finished and functional, not glamorous.
High end upgrades to avoid:
- Intricate crown molding
- Granite countertops
- Stainless steel appliances
- Bay windows
- Expensive lighting fixtures (think elaborate chandeliers)
It’s easy to see potential in a space and feel inspired by the idea of maxing it out, but leave that to someone who actually wants to live in the house. Cheap materials are never the answer because you could run into repair issues if you’re using this property as a long term rental. Aim for the sweet spot; reliable but inexpensive.
PS You may want to check your “Comparable recent Sold properties” to see what the competition is doing! Mike
- Repairs with a low ROI
The National Association of Realtors released a study on the repairs that impact the value of a house. Here are a few examples:
- Full Bathroom: 23% increase
- Half Bathroom: 15% increase
- Garage: 13% increase
- Central A/C: 12% increase
- Fireplace: 12% increase
- Basement: 9% increase
- Proximity to Golf Course: 8% increase
- Higher Ceilings (9 Feet): 6% increase
- Extra Bedroom: 4% increase
- Laundry Room: 2% increase
- Above-Ground Swimming Pool: 0% increase
- In-Law Suite: 5% decrease
- Home Office: 5% decrease
As you can see, the highest increase in value would be a new full bathroom. After all, who wants to share a bathroom anyway? An In-Law Suite and a Home Office are two changes that actually DECREASE the value of a home, so stay far away from those.
- Upgrades that require a lot of maintenance
If you’re investing in rental properties, do yourself a favor and avoid anything that needs a lot of tweaking and fixing. You will already have your hands full with everyday wear and tear. Skylights are nice and add a lot of natural light to a space but they are very well known for leaking when it rains.
Swimming pools, no thanks! The national average cost of installing a pool is $49,500 and as you’ll recall from my previous point, putting in a pool adds a whole ZERO percent increase to the value of a house. Plus, if you’re renting out the house, the liabilities of having a pool are endless.
- Upgrades that don’t suit the property
As soon as you walk into a home, unnatural upgrades stick out like a flashing neon sign. My best advice is try to think about what you would want if you were living in that home, really sit in it and imagine your day to day.
Next, try to avoid additions. Putting an addition on a house should be an upgrade that someone who has been living in the space has really thought long and hard about. If you just bought an investment property and you slap on an addition, sometimes it can look very unnatural.
Also, it’s really not worth finishing a basement. I’ve walked through several open houses only to find an expensive finished basement that smells like mold or has flood damage.
If you’re going to add a bedroom, it needs to make sense. Don’t have the only access to that bedroom be through another bedroom, you won’t even legally be able to market that bedroom. Converting a tiny room into a “bedroom” is also a big no-no. A bedroom should be at least 100 sqft with a closet and widow. If you list the house with a certain number of bedrooms and one of them is the size of a pantry, you’ll probably annoy anyone who came to see the property.
Can you think of any other improvements that aren’t worth our time? Comment below!