Renovating Your Property with an Eye on the Bottom Line
Even if the weather is cold and grey right now, property owners across the nation are planning their summer renovations. Home improvement shows and DIY blogs make the process look easy — and more importantly, profitable. But if you’re preparing for improvements or repairs with the goal of increasing sale price, beware of overcapitalizing. Spending money on flashy upgrades may seem like a good idea at the moment, but many don’t deliver real profit at sales time.
What Will the Property be Worth in Five Years?
The ultimate goal of any property owner is to carefully steward their investment and increase its value. Ideally, this means that any upgrade or renovation is worthwhile. However, in the real world, it’s important to carefully analyze the costs and benefits of any planned construction before starting work.
The first step is finding out two key pieces of information: the average sale price for houses in the area, and how your property’s assessed value compares to it. Once you have these facts, it’s much easier to decide on a realistic plan. If the projected price falls below the average, you may want to concentrate on structural supports or improvement of basic utilities. If you’re already ahead of the game, you can maximize value with decorative features or additional lighting.
Choosing Features Carefully
Expensive fixtures and custom kitchen fittings are eye-catching, but will they pay for themselves in the end? Sometimes, emotions have a way of overriding logical decisions.
Unless you are sure that your property is going to have the same long-term tenants, avoid making big investments in aesthetics. Splashy wallpaper, tiling, and light fixtures are all of subjective value, and run the risk turning off buyers with different stylistic preferences.
Focusing on improving assets the property already has is generally a better idea than adding entirely new features. A period home’s hardwood floors may be scuffed, but it’s usually better to invest in having them polished than replacing them with new, cheaper materials.
The Economic Factor
There is also the question of the housing market in your area—and in the nation in general. With the economy still shaky and real estate prices predicted to soften, any potential renovation must be primarily evaluated for its effect on the overall resale value.
With the Federal Reserve’s recent interest rate hike, many property owners are concerned about increased difficulty in obtaining renovation loans. Having a thought-out construction plan and builder contacts to show banking officials can help you find an approved loan at a favorable interest rate.
Asset Management and Development with New Vistas Corporation
New Vista Corporation specializes in helping property owners get the most out of their investment with seamless maintenance, management, and building services. We’re here to tailor solutions to clients throughout New York, New Jersey, Pennsylvania, and Delaware. Learn more by visiting our homepage.