Are you considering purchasing an investment property, but are not sure how to flip it? Do you want to get into the real estate game, but you’re concerned about how much renovations will cost? These are all incredibly important questions that you don’t want to skip over. Knowing how to properly renovate an investment property will not only save you time and money, but it can help you gain more from your investments.
We have a few tips for you to keep in mind if you’re planning on purchasing an investment property to renovate. Whether your end goal is to sell the place, or to rent out to great tenants, following these steps will lead to your success.
Set a Budget & Timeline
The biggest mistake people make when renovating a house or apartment is not sticking to a budget or a timeline. Budget and timelines keep you organized and keep your team on track.
Let’s start with a budget first. Real estate can be expensive, so if you want to do it right, you’ll need to account for everything before you set a budget. This includes acquisition costs, contractors, lines of credit, etc. At the very least, give yourself 10% to 20% more budget than what you believe you expect to pay. This doesn’t mean you have to spend all of it, it’s just better to overestimate than be stuck. Crafting a budget doesn’t mean you want to find the cheapest options either—especially when it comes to home renovations. This is really that last play you’ll want to skimp, so it’s important to look at all your options, shop around for quotes, and make sure you’re getting the best quality for the price.
The same goes for a timeline. Renovations always take longer than you expect, so make sure you account for this. Timelines can be pushed due to projects just simply taking longer than expected. Nowadays, shipping delays and material shortages are an additional concern you’ll want to look out for. While this has always been something builders need to think about, it has escalated due to the pandemic. Give yourself a generous amount of time to complete any project, and make sure you have as much as you can (such as materials, works, supplies) before you start.
Focus on the Kitchen
If you’re going to renovate any room in an investment property, you need to focus on the kitchen. The old cliché, “the kitchen is the heart of the home” is a cliché for a reason. A great kitchen has the potential to attract buyers or renters who are on the fence about a property so it’s a great idea to funnel your budget and time into this room.
A great way to revamp a kitchen is to focus on custom kitchen cabinets. Look at the latest trends in cabinetry or speak to a professional who can offer some advice. Some examples of custom cabinets that will blow prospective buyers away include wine rack or wine glass inserts. Spice racks or inlaid Lazy Susans. These subtle features are what catches a prospective renter or buyer and might set your property apart from others. If you have enough space, a kitchen island or a hallway hutch built into the wall are other statement pieces that can really make your property shine.
Upgrade the Bathroom
Along with the kitchen, the bathroom is a space you’ll want to spend time and money renovating. Having a bathroom that’s modern and clean is important to a lot of people, but having lots of storage is also important. Look for ways to ensure that the bathroom offers all of the above. Custom cabinets are not just for the kitchen, they can be used in the bathroom for vanities or shelving units.
For example, you could design a custom vanity that has double sinks and offers tons of storage underneath for cosmetics, toiletries or towels. If the bathroom is small, work with a designer who can take advantage of awkward or distinctive corners so you maximize storage. If you choose one particular piece to focus on, like a vanity, then the other elements can quickly fall into place.
Focus on Quick Fixes & Aesthetic Appeal
If you’re really working on a budget and you want to flip a house within a specific time frame, then you want to focus on the quick fixes. Don’t purchase a house that needs a full renovation including plumbing, electrical work or add-on rooms. Focus on the larger details that can wow people the minute the step into the home.
To get the most from your investments, you’ll want to find a home that isn’t exactly a “turnkey,” but also isn’t a major fixer-upper. By turnkey, we mean a house that doesn’t need any renovations—just turn the key and start living. The best thing to look for is a house that falls just in the middle, so you can benefit from pre-built pieces while also customizing it to your liking. Find a home that maybe just needs a kitchen makeover, a bathroom renovation, and maybe some smaller adjustments to the mudroom and hallways.
Work with Contractors and Designers
The last thing we recommend to people who want to purchase an investment property is to work with professionals. While you might be able to DIY some projects, other projects are best left to contractors and designers. Professionals have the expertise to design and install all the things you need during a renovation. They’ll be able to spot possible hiccups and offer detailed advice or recommendations if you’re running into problems.
It’s always good to work with people who have experience in renovations or construction because you can bounce ideas off each other and cut down on time. As mentioned before, this is the area where you’ll want to focus some of your time and your budget. Since this is an investment property, it’s worth your while to invest into trusted professionals who want to see your dreams come true.
Make the Most From Your Investments
If you plan properly and work with professionals, you’ll be able to see the rewards from your investment property sooner. Make sure you set a budget, focus on the rooms that matter the most to home buyers, and set a reasonable timeline. Work with people who are knowledgeable about renovations and can assist you with multiple projects.
Some businesses specialize in more than one area, like Builders Cabinet, which provides custom kitchen cabinets and bathroom vanities. Reach out to them today to learn more.
Reference:
Femenías, Paula, Kristina Mjörnell, and Liane Thuvander. “Rethinking deep renovation: The perspective of rental housing in Sweden.” Journal of Cleaner Production 195 (2018): 1457-1467.
