3 Upgrades That Add Little to No Value to Your Investment Property

3 Upgrades That Add Little to No Value to Your Investment Property

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Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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Myth: All home upgrades will increase your home’s net value.

Truth: You’ve just wasted your time and money.

Yes, like your teacher always told you, it is a free country, and you are definitely more than welcome to make any kind of upgrade you want to your own house. But unless it was just for the sake of your own pleasure, I wouldn’t advise the following renovations, simply because addition does not equal profit.

However, if you are wishing to upgrade your house’s net worth (beyond the cost of the initial renovation itself), you should definitely keep in mind that some upgrades that may seem valuable to you might not be of any significant worth to potential buyers. So here are three of most common upgrades that quite possibly won’t see a return on your investment.

3 Property Upgrades That Add Little to No Value to Your Investment

Addition of a Pool

Honestly, pools are quite the toss up when it comes to the value of the house. It is possible that you might see some sort of return for this addition, but more often than not, it would not even be enough to pay for the addition itself. 

Related: The Top 7 Upgrades Tenants Seek When Searching for a Rental

This is because having a pool onsite could be a turnoff to some potential buyers. A large proportion of homebuyers do not wish to have to keep up with the maintenance of the pool, and those on tighter budgets would most likely not want to cope with the extra expenses that come with owning a pool. Not to mention, it poses as a safety hazard for potential buyers with young children. If you do decide to add a pool, make sure it is a desirable home feature in your local market amongst buyers.   

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Highly Customized Designs

Be sure to stay FAR away from designs that are too personalized. This is purely because your idea of a dream kitchen might not be everyone else’s idea of a dream kitchen. So unless you are planning on living in your house for many years to come, I would recommend thinking long and hard about renovations that are too “custom designed.”

Related: The Top 5 Items to Replace or Upgrade in Every Rental Property You Buy

Over-the-Top Luxury

Always remember the personality of your neighborhood when you are contemplating an upgrade because if your upgrade is too over-the-top for your area, you will be causing the alienation of buyers on two fronts: those potential homebuyers that like your neighborhood might not be able to afford your house, and those potential homebuyers that can actually afford your house would probably prefer to live in a more luxurious area. So being slightly nicer than the surrounding houses can work in your favor, but being a lot more lavish will not.

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Conclusion

If you think there is the slightest chance of selling your home in the future, think first before making costly upgrades. The worst thing you can do is dump your hard earned money into renovations that won’t benefit the value of the home if you decide to sell.

Investors: What would you add to this list?

Don’t forget to leave a comment!

Myth: All home upgrades will increase your home’s net value. Truth: You’ve just wasted your time and money. Yes, like your teacher always told you, it is a free country, […]