Flipping Houses

7 Ways to Spend a $5,000 Renovation Budget for Max ROI

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Personal Finance, Real Estate Investing Basics
115 Articles Written
turnkey-real-estate

Every penny that you spend renovating an investment property has to be justified by ROI.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

For rental properties, how much extra rent can you expect to command for this upgrade? For flips, how much extra value will that renovation add?

If an improvement will cost $1,000 but will only add $700 in value for a flip, then it’s not an improvement worth making.

Rentals are slightly more complicated. If an improvement to your rental property will cost $1,000 and will raise asking rents by $40, is it worth making?

One way to think about rental improvements is time-to-recovery. In the example above, it would take slightly over two years (25 months) to recover the up-front cost. Then you have to factor in the expected lifespan for the improvement.

For instance, that improvement is worth making if it will last you 15 years, but if it will only last through end of this tenancy? Maybe not.

If you’re buying a property that needs work, your first priority is obviously repairing or replacing anything that’s damaged or hideously ugly. But if we’re talking about an average, somewhat dated, ho-hum residential property, and your renovation budget is $5,000, what do you prioritize?

Here are seven ideas to help you spend your $5,000 renovation budget for maximum ROI.

7 Ways to Spend a $5,000 Renovation Budget for Max ROI

1. Appliance Hookups ($500+)

You don’t have to include appliances in your flip or rental property. But most buyers and renters nowadays expect to at least be able to plug in their own appliances.

The cost for adding appliance hookups will vary based on the layout of your property. As always, get at least three quotes from contractors.

If you’re a landlord, having appliance hookups (or better yet, appliances) will definitely help you secure a higher class of applicant. And better applicants mean better tenants, which in turn mean better returns.

2. Invincible Flooring ($2,000+)

This is less crucial to flippers, but landlords should install flooring that could withstand bombardment from the British navy.

I recommend to my students that they avoid carpets and hardwood floors in their rentals. They’re simply too easily damaged.

Instead, consider bamboo flooring, high-end faux hardwood, or luxury vinyl tile (LVT). The latter can even come in waterproof options.

While flooring is the most expensive item on this list, it’s also one of the most critical to landlords’ long-term returns and success. It will be hard to turn a profit as a landlord if you have to replace the carpet every two years as your units turn over.

3. Kitchens: Cover the Ugly ($250+)

Everyone loves to talk about kitchens and bathrooms in real estate—usually right before they try to sell you something for them.

You don’t need to spend an arm and a leg on kitchen renovations for an average property. If your renovation budget is tight, try simply putting a better face on the existing bone structure of your kitchen.

First, consider painting the cabinets. White or black are the classic options, but they’re not your only options, of course.

Second, look to the counters. Assuming they look like pickled death, how might you replace or cover them without going out and spending thousands on white marble?

Related: 3 Renovation Tips to Make Property Management Easier [Video!]

One idea is to replace them with butcher’s block. You can have it cut to your countertop’s dimensions and properly install it, or if the property is a lower-end rental, you could simply place an appropriately-sized piece of butcher’s block over the existing counters.

Another idea is to paint the counters a glossy black, then coat them with shellac or some other shiny surfacing agent. It's easy, cheap, and contrasts well with white painted cabinets.

If your property is a rental, you can always cover ugly kitchen flooring with a giant throw rug, too.

Here are a few more cheap DIY kitchen hacks, if you’re looking for a new look on a tight budget.

4. Bathrooms: Pull Attention to the New ($100+)

Bathrooms are another area where property owners blow thousands of dollars.

Just like kitchens, how can you cover the ugliest, most outdated parts of a bathroom?

The giant rug trick works here too, if the tile floor is old, cracked, or downright ugly. Just make sure the rug you use is brand new and spotlessly clean.

Speaking of clean, the entire bathroom should sparkle with cleanliness, no matter how old the fixtures are. Use whatever cleaning agents it takes to get the tub, toilet, sink, and walls perfectly clean.

Then, direct prospects’ attention to a few new features in the room. A new upscale faucet, for example, makes the entire sink look newer and sharper. New stylish cabinet hardware, when combined with a fresh paintjob, can make old cabinets look new and chic.

Assuming your shower tiles have also seen better days, scrub them clean, then distract viewers with a bright, en-vogue shower curtain—left in the closed position, of course.

An upscale shower curtain, especially when it’s the brightest object in the bathroom, shifts the entire feel of the room for casual observers.

5. Low-Cost Landscaping ($100+)

Curb appeal matters more than most people give it credit. Human beings, by our very nature, make quick, subconscious decisions based on emotion, then gradually our conscious mind catches up, using logic to justify a decision already made by our lizard brain.

Curb appeal calls out to that lizard brain and helps make up prospects’ minds before they even know it.

The front lawn should be kept immaculately mowed, with front-facing bushes and shrubs trimmed perfectly. Edge the sidewalks—it takes a half hour but makes a huge difference in how crisp and neat the front walkway looks.

The rear landscaping is also important, but less so than the front. When time and budgets are constraints, focus on the front first.

I like potted plants as a cheap way to make the front entrance or walkway look more welcoming. This particular trick works particularly well for urban properties, which may not have a front lawn, or any green for blocks in any direction, for that matter.

landscaping-tips

6. Paint! ($250+)

When your budget is tight, you can do your own painting and save money.

The trick to painting is preparation, not the actual strokes. Meticulous taping and draping will make your amateur paint job look professional.

The interior of your property should be freshly painted before showing it to prospects. Period.

As for the exterior, that gets more difficult and more expensive. If the exterior is only dirty, try power washing it. But if the paint is flaking, you’ll need to scrape and repaint it.

7. Add a Few Pieces of Flare ($300+)

In my property management course, I teach my students to find a couple “hooks” to make their property more marketable.

What could you do to make your property stand out from all the other listings in your neighborhood?

One idea I like is to market your property as a “smart home.” The entire house doesn’t need to look like the Jetsons; you just need two or three smart home features. A smart thermostat is a no-brainer— it costs $180-250 and you can show off statistics about how much cheaper the utility bills will be.

Here are a few more ideas for smart home upgrades to boost your property’s marketability.

If the target demographic for your neighborhood is eco-conscious, how about marketing your property as a “green home”? You’re already on your way, with that smart thermostat; you just need one or two more eco-friendly features.

Have a dingy unfinished cellar? Add a big wine rack against a wall or two and call it a wine cellar!

Find a couple hooks that will make your listing stand out from the rest. They don’t need to be expensive; they just need to create an upscale vibe.

Related: 3 Easy Multifamily Renovations That Give the Best Bang for Your Buck

The Cure for Average

You can do a lot with $5,000, if you’re willing to do some of the work (e.g. painting) yourself. It’s amazing what a fresh paint job and spick-and-span cleanliness will do to make a property feel newer.

When you have a lavish budget and you can completely renovate the kitchen and bathrooms or completely re-shingle or reside the exterior of a property, it’s easy to make your property stand out and not feel so average. So mediocre. So boring.

But when you’re on a tight budget, you need to use creativity instead of cash to make your property feel fresh and new.

The cure for average is to find a few focal points to pull attention. We touched on this in the bathroom section above; when you can’t rip out the entire bathroom, you can still pull prospects’ attention to a few salient, new features.

The same applies to the entire house. Can’t afford to repaint the entire exterior? Repaint the front door a bright, attention-grabbing color. If prospects’ eyes are drawn to the brilliant red front door, it’s hard for them to conclude that the house is drab, even if the rest of it is coated in an old, dull gray.

Use your creativity, and it will only take those few attention-grabbing features to distract from the fact that kitchen flooring is ugly, or the shower tiles are dated.

What are your tips for doing a renovation on a tight budget?

Share your secrets and hacks below!

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their living expenses. Through his company at SparkRental.com, he offers free rental tools such as a rental income calculator, free landlord software (including a free online rental application and tenant screening), and a free masterclasses on how to reach financial independence within 5 years.

    Demetrius Baldwin from Hattiesburg, MS
    Replied over 1 year ago
    Thanks for the article i plan to implement this in my first wholesaling deal I really like the general knowledge here thank you again.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks Demetrius, hope it proves useful and profitable for you!
    Remon Green from Houston, Texas
    Replied over 1 year ago
    Great article and I plan to use many of the tips given. Really enjoyed reading this article.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks Remon! Glad to hear it was useful for you!
    Christopher Giannino Real Estate Agent from Hamilton, NJ
    Replied over 1 year ago
    Lots of great tips here, thank you! I want to mention, I recently painted my 80s style melamine kitchen cabinets and now the kitchen looks completely different. Goes to show you that for anyone looking to save massive amounts of money in the kitchen should definitely consider painting the cabinets!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Glad it worked out well Christopher! Yeah it’s amazing what you can do with a little paint and some vision 🙂
    Melanie Hartmann Flipper/Rehabber from Baltimore, MD
    Replied over 1 year ago
    I did this last summer! We have oak and melamine cabinets in the kitchen. I sanded, patched, prepped, painted, and installed hardware. It looks like a brand new kitchen! Got a great deal on hardware on Amazon. They could use a few touch-ups now but still great overall as we plan to use this place as a rental in the future.
    Geno McCourt from Pittsburgh, Pennsylvania
    Replied over 1 year ago
    Number 6 is worth its weight in gold. I bought a haggard looking duplex, but after a few coats of paints it turned the dingy rooms into beautiful spaces. I’d also like to add #8 closets. I spent about $100 on new closet organizers and my tenants love them.
    Raymond Jensen from South Bend, Indiana
    Replied over 1 year ago
    Where do you get your closet organizers? I was looking at some on Wayfair but was wondering if there was any other retailer with some decent stuff.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Great suggestion Geno about the closet organizers, thanks for adding it!
    Steven Peterson from San Antonio, Texas
    Replied over 1 year ago
    Great tips. I agree that colorful flowers in the front are great for curb appeal. Also, tasteful colored mulch around the shrubs is very cheap and money well spent to create a good first impression.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Good point Steven! And so true, it can make otherwise bland landscaping stand out and look sharp.
    Sylvia B. Rental Property Investor from Douglas County, MO
    Replied over 1 year ago
    A can of spray paint can be your best friend when you’re trying to save money on a renovation. Replacing all the cabinet hardware in the kitchen and bath can get pricey, but a quick coat of spray paint makes them look brand new! I use Rustoleum in one of the hammered finishes, but even a plain satin black would look good. The same technique works for dated light fixtures. Cover that ugly brassy gold with a hammered bronze and take decades off the apparent age of the fixture!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Great suggestions Sylvia! Yeah a little cleverness and good taste can help you save hundreds or thousands, to re-touch old finishes.
    Leesonn Smith Investor from South Bend, Indiana
    Replied over 1 year ago
    Great post!! I just started installing smart thermostats in my units. I like the Honeywell Lyric T5, it ranges from $100 – $150, but can usually be found for the $100. Where I live in northern Indiana, the gas and electric utility companies offer rebates, one for $45 and the another for half of the purchase price up to $100!! So basically I’m getting an awesome smart therm for a little over five bucks.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Awesome Leesonn! And you bring up a good point about the rebates, they’re often available for smart thermostats.
    Cynthia Gillespie Investor from Seabrook, Texas
    Replied over 1 year ago
    Recently purchased a rental that needed lots of work. The bathrooms were atrocious. But instead of replacing the tubs and tile, we refinished them. We’ll see how well they do over the next several years, but the look was awesome. You can even apply the process to recolor tubs. Don’t want those pink tubs anymore? Just refinish. We paid $450 for each bath. Another $125 to restain the cabinets.
    Kaila Sachse
    Replied 2 months ago
    Great idea with refinishing the old tiles! Did the texture turn out okay despite the grout? Concerned with having uneven finish that looks like a refinish, haha.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Yeah those pink tubs from the ’80s are just awful looking. Great point about recoating them to save money!
    Bill Regan Investor from Clearwater, Florida
    Replied over 1 year ago
    Good tips! I used Rustoleum tub & tile paint on my AirBnB unit to paint an ugly kitchen back-splash, shower pan, and some outdated yellow tile. Stuff works great and is about $50/kit on Amazon. Also got some plywood ripped into 6″ planks and Lowes and made a “shiplap” wall, those are all the rage and it really adds a designer touch to the place. $50 worth of plywood and a few hours of time to put it up with a brad nailer, then paint.
    Kaila Sachse
    Replied 2 months ago
    Genius!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Awesome ideas Bill! Thanks for sharing. And I have to admit I’m not familiar with “shiplap” walls, so I learned something new today!
    Christine Johanns Rental Property Investor from Jersey City, NJ
    Replied over 1 year ago
    Great tips!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks Christine, much appreciated!
    Yuray Morales
    Replied over 1 year ago
    I have been a landlord for over 16 years and find that all of these tips are excellent! I have implemented many of those tips and have saved lots of money. What I do for kitchens when they become dated, I usually keep the skeleton and replace the doors and hardware, whether they are repainted or just new doors altogether!
    Kaila Sachse
    Replied 2 months ago
    Yes! 6-panel doors with new knobs/strike plates make a WORLD of difference!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks Yuray, and great advice on updating kitchens without all the fuss and spending!
    Cathy Lippert from Solon, Ohio
    Replied over 1 year ago
    Love the tips, but I do question why no hardwood floors? We’ve managed a 100 year old property now for 18 years as a rental (high end east coast area). Would not trade the original hardwood for anything, except for tile in all the bathrooms. Sure we have to spot sand and occasionally refinish, but I doubt other options would have done better. Even when we have to replace a floor (from linoleum to hardwood in the kitchen) the price is maybe two bucks higher per square foot, but it lasts almost forever. Time will tell, as most of these other flooring options attempt to outlive us! Note that we use traditional solid hardwood, not the thin veneer stuff. We are trying engineered bamboo over concrete with delta fl under it (different rental on slab).
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    For properties with existing hardwood, I would never tell anyone to replace it. But my experience has been that tenants just won’t treat my rentals’ flooring with the respect it deserves, and your average hardwood flooring is more expensive and less hardy than I’d like for tenants’ abuse. So I opt not to install it, when deciding what type of new flooring to put in. Super high-end rentals would be an exception to this rule, for me.
    Patrick Mcgrath
    Replied over 1 year ago
    Love the kitchen update by keeping the bones , sanding cabinets and replacing new doors. Can get a whole kitchen worth of hardware for $50. The vinyl peel and stick tiles are fantastic, you can even space them out and grout them for a real tile look. I put them in my first rehab, the appraiser loved them. Also need to freshen up your vinyl siding, use scrub bubble bathroom cleaner and a sponge mop, looks brand new and doesnt leave that white film after a few weeks like just power washing does.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Great tips Patrick, thanks for sharing them!
    Jerry W. Investor from Thermopolis, Wyoming
    Replied over 1 year ago
    Brian, I get the 2 for 30$ new ceiling light fixtures at Menards. They look new and modern, get the 2 bulb kind minimum, for big rooms pay the extra 10$ for the 3 bulb ones. Put the daylight LED lights in them. They look great. In the bathroom get a 30$ set of towel racks with hand towel holder etc. I like the stainless or brushed nickle look. They really make the bathroom look very nice especially if you do a matching faucet. Just $50 spent on these items make them really stand out.
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Awesome Jerry! Thanks for sharing these tips!
    Jaysen Medhurst Rental Property Investor from Greenwich, CT
    Replied over 1 year ago
    Hey Brian, some good tips in here. 1 important correction, shellac is a bad choice for a kitchen counter top. It’s alcohol-soluble and could be eaten away by spilled drinks, especially spirits. Water-based polyurethane is probably better and a 2-part epoxy would be really bomb-proof (though more expensive and difficult to apply).
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks for the clarification Jaysen! Good point 🙂
    Marilou Ancheta from Clovis, California
    Replied over 1 year ago
    Great article Brian! Creativity is the key. Thank you for sharing!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Thanks for reading Marilou, and I’m so glad to hear you enjoyed it!
    Cassandra Sifford Rental Property Investor from New Castle, DE
    Replied over 1 year ago
    I loved this article as I’m a designer and have a hard time scaling back … hangs head LOL When I purchase my 1st investment, I’ll be sure to utilize these tips! I paint well so that’s surely going to save some money. Thank you much for sharing!
    G. Brian Davis from Baltimore, MD
    Replied over 1 year ago
    Glad to hear it was helpful for you Cassandra, thanks for reading!
    Katie Rogers from Santa Barbara, California
    Replied about 1 year ago
    Black countertops are horrible. You can’t tell if they are clean or dirty. Counter-tops should always be a light color.
    Cheyne R Sexsmith from Bend, OR
    Replied about 1 year ago
    As a painting contractor and experienced tradesman, I see the price estimates to be really low (maybe my area is just expensive).
    Casey Culver from Madison, Alabama
    Replied about 1 year ago
    Nice article! It’s nice to know these things BEFORE prospective tenants point them out to you lol. I’ve only done 2 deals (3 if you count my own home). 1 of those I went to laminate flooring in master bedroom which I believe almost rented the place on it’s own, less than $200. The other 1 just laid some really nice mulch, mowed, and edged, less than $50, gave a great curb appeal to new tenants. It seems there’s a fine line of frugality in rentals: Don’t treat it with equal quality like you would your personal home, but like you said: “Every penny that you spend renovating an investment property has to be justified by ROI.”
    Fatima Champagne from Philadelphia, PA
    Replied about 1 year ago
    Thanks for these tips! I’ll keep them in mind going forward.
    John Teachout Rental Property Investor from Concord, GA
    Replied 10 months ago
    When we’re refurbishing a rental, we try to visualize ourselves living there and try to do things that make life easier or more convenient. ie, towel bars and robe hooks in the bathroom. We install a shower rod and cheapo shower curtains just to make it look finished. We usually install a robe hook in each bedroom, make sure there’s at least some shelving in the closets, make sure lighting is adequate, especially in the bathrooms and kitchen. We put a plunger in the bathroom, and make extensive use of high efficiency light bulbs like LED or compact fluorescent. We rarely change anything just for cosmetic purposes but ensure everything is working. ie, every outlet, switch, light fixture, ceiling fan, faucet and so forth. We do all the work ourselves and the average sfr we refurbish costs between $6000 and $10,000. We just finished the inside of a house today, have it on the rental market and will start on the outside in about a week. Good article.
    G. Brian Davis from Baltimore, MD
    Replied 10 months ago
    Thanks for the comment John, and by the way that’s great you do all the work yourself!
    John Lee from Tampa, FL
    Replied 7 months ago
    What is your thought about adding a bathroom to a 3/1 (to make it into a 3/2) even if it might not bring the rent up? Also if the property just need hardwood refinish would you just refinishing it or cough up the money for lvp for long term?
    Hao Liu Real Estate Investor from Oklahoma City, Oklahoma
    Replied about 1 month ago
    Great article! But what does appliance hookup mean? I googled but got pages like "appliance delivery" "installation" and I know you didn't mean that.
    G. Brian Davis from Baltimore, MD
    Replied 25 days ago
    Thanks Hao! Appliance hookup means having power sources and plumbing in place for appliances like washers, dryers, dishwashers, etc.