To achieve the greatest return on your rental property investment, you must create a consistent and long-term property renovation budget. Although rental properties do not usually need a complete “flip” renovation, it is vital to know where you should allocate your property renovation budget to have the best effect on the Bothell market in increasing rent value.
Experienced property investors suggest assigning 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 sections of your property that fall under these percentages, factor in the overall worth of the property and get 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
Keep in mind that each adjustment should factor in your target market and what will give the most value for your future Bothell residents. Create a list of each room and feature of your property and utilize your established property renovation budget to find what needs the most improvement (you do not need to utilize the whole budget).
Some property investors will want to maximize their property renovation budget by redoing the whole kitchen or bathroom; however, it is essential to keep costs as low as possible and identify what needs the most work. For example, you could keep the core kitchen body and just replace the floors, sink and faucet, put in new appliances, and paint the cabinet doors or add new handles. Bathrooms can mostly stay the same with their walls and layout, but you can install a new shower head or heads, toilet, or vanity based on your vision for a more clean and modern aesthetic. If there are items from your property that you do not wish to keep, consider utilizing a second-hand market by selling them to have extra funds for adding new items. Alternatively, to cover costs, some Bothell investors might buy from the second-hand market or a community online classifieds section to get lower cost items for kitchens, bathtubs, windows, and doors.
Generally, a full renovation with your Bothell property renovation budget will most probably always add additional value. However, overcapitalizing can become a factor, especially when rental values can alter based on the market. As such, ensure that your budget fits your goals and that you do not perform costly renovations that are not needed to bring in higher rent.
In determining the most essential items to focus on with your property renovation budget, we have found that these items tend to attract a higher rent value:
- Updating the kitchen and bathroom to be more up-to-date
- 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 Bothell residents is to give the best presentation that you can to make a positive impression with your prospective residents that will last even after they choose to live in your property. Additionally, before contacting you, potential residents will often drive by the property itself to view the condition. If they are impressed, then they will contact you for additional information. If not, they may move on to the next rental property. As such, curb appeal can help 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.