A common goal with owning an investment property is to sell it for a higher price than what it was bought for.
One of the best ways to achieve this is to make ROI-friendly improvements that help to increase the property’s value in the long term.
Additionally, as reported by the Mortgage Sandbox, Canada’s real estate market is currently volatile, owing to the recent rate hikes and other economic factors, making focusing on the long term the best option for achieving a profit on your rental property.
In this article by Maplescapes, we’ll explore a host of strategies homeowners can utilize to increase the value of their investment property.
Make Key Upgrades Across the Home
While upgrading most parts of the home will help to increase ROI, here’s a list of a few key areas that provide the best returns:
- Renovate the Kitchen: According to research, kitchen renovations can fetch 20% ROI, making it one of the best options to choose from. Additionally, you can consider upgrading or adding appliances to the space to increase your property’s value further.
- Update Your Bathrooms: While major bathroom renovations can be expensive, making budget-friendly changes can go a long way in boosting your home’s appraisal value.
For instance, swapping out old, dingy flooring for something more modern, adding a new toilet, upgrading the lighting, or even updating the hardware on your sink and cabinets won’t put a huge dent in your wallet but will instantly give bathrooms new life.
As a bonus, many of these can be done by a skilled DIYer, so you’ll save on hiring a professional installer or handyman.
- Add a Fresh Coat of Paint: Applying a fresh coat of paint is an affordable way to revitalize your property. The safe bet is to choose neutral colours that appeal to a wide range of tastes. Moreover, consider adding accent walls to the bedrooms to increase their appeal.
- Add an Outdoor Living Space: An outdoor living space is a fantastic addition that not only expands your home’s functional square footage but also enhances its overall appeal and value.
It creates a versatile area for entertainment, relaxation, and dining, effectively extending your usable living space into the outdoors.
Not only will you add as much as 10% to your home’s value, but because potential homebuyers appreciate these versatile spaces and see them as valuable extensions of the home, you can earn an ROI of 80% if you ever decide to sell the property. - Invest in Gardening: Having a well-kept lawn and other outdoor spaces instantly increases your home’s curb appeal.
Depending on your location and climate, you can also consider adding good landscaping, such as shrubs, flowers, or water fixtures.
Not only will these changes help to make your property more appealing in comparison to others, but they can also increase its value.
Document All Improvements
From the smallest additions, such as appliances, to the biggest ones, like kitchen improvements and landscaping, take before and after photographs and save all receipts.
Not only will this serve as a great way to track the step-by-step improvements of your home, but they’ll also be factored in during the next appraisal process when you plan to sell your home.
This ensures that the monetary effects of your investments will be shown in the improved property value.
Track Financials With an Accounting Software
Making home improvements will involve working with multiple contractors, resulting in numerous payments and projects to keep track of.
While every contractor will track the budget on their side, there is nothing wrong with you keeping accounts yourself.
The easiest way to do this is to use accounting software, which will allow you to track budgets in real-time and never overpay on charges.
Additionally, the software will help you accurately calculate the tax implications of your upgrades and make the right deductions.
Take an Energy Efficient Approach
Along with making upgrades, reducing costs is another way to increase returns on your investment property.
Making the following energy-efficient changes can help to decrease monthly utility costs and can have great compounding benefits in the long term:
- Solar Panels: If your home is located in an area with abundant sunlight, installing a solar panel can help decrease your electricity bill significantly. Additionally, it is a good long-term investment as well.
- Smart Thermostats: As reported by Consumer Reports, smart thermostat users save up to 8% on their utility bills. Moreover, it automatically maintains the desired temperature and shifts to a power-saving mode when there is no need for cooling or heating.
- Energy-Efficient Appliances: Energy-efficient appliances are champions for trimming utility bills. By using less power to perform their tasks, they significantly reduce energy consumption. Plus, their innovative designs and technologies maximize performance while minimizing energy wastage, making them a smart choice for investment property owners.
Following a long-term approach can help investment property owners enjoy the best returns on their property.
Making key home improvements and improving your curb appeal through gardening will put you on the right path to achieving these goals.
However, keeping costs low will also be key, for which using accounting software is the best option.
Danny Knight is a dad living in Philadelphia. He enjoys DIY projects almost as much as raising his two children. He is the co-creator of Fix It Dads, which offers tips for home improvement projects.
