Renovations for selling a house- How to determine return on investment

Renovations for selling a house- How to determine return on investment

Member since 2023 · 5 posts · 0 votes

I have never sold a home, but I am considering selling one of my long-term rental single-family homes which needs some repairs and updating.  I don't know how to figure out which renovations are worth doing to get good return on investment if I sell.  What research, metrics or people should I contact to understand this?

The property needs a new roof and landscaping retaining wall, some repair and paint to the deck, and all of the exterior door frames need to be fixed/replaced.  I will do these regardless of sale or hold.

My tenants are ok with keeping the existing worn-out carpet, but I would prefer to put in new luxury vinyl plank flooring, however, I'm not sure a new floor will be a good idea if I'm going to sell.  How do I know that the cost of new flooring will pay off if I sell?  The same with painting- I wasn't going to paint, and I'm not sure how to do painting with tenants in place, but a new buyer may prefer to pick their own colors and have that done themselves.  Same with flooring- a buyer may want to choose their own.

I'd also like to know if any paperwork or receipts about renovations is usually required by a buyers' agent or lender, and if so, what they want to see. 

I welcome any feedback on this.

Thanks!

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  • Taylor CartledgeBusiness Member
    Real Estate Agent · Augusta, GA · Member since 2020 · 27 posts · 14 votes
    3y

    Have you looked at the comps in the area to see if they have LVP flooring? If most of them have carpet then I would probably just keep that, depending on how bad the carpet currently is. Typically, the highest ROI renovations are kitchen and bathrooms. The only time I have provided a receipt to a buyer is for the roof after it was just replaced, and they were mainly curious about the warranty. Hopefully some of this helps you, but without knowing your specific market and neighborhood it's hard to say on some things...

    The Cartledge Group at REAL Broker520 Reviews
  • Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    Roof/HVAC/electrical/retaining wall will not be dollar for dollar investments. It is assumed you price to market with property in good condition or you have to discount deeply from the comparables.

    Scrub and paint everything neutral. Worn, torn or dirty carpet is going to show bad and smell turns off in person buyers. I wouldn't put in new flooring with tenants in place it will get, you know... Paint the front door in the style of the house. Add flower pots to flank the door. Fix the door frames, power wash and seal the deck, fix any holes in walls, make sure the bathroom vanity closes properly and new paint, maybe new shower curtain if theirs is tattered. Clean the grout with bleach and a toothbrush. 

  • Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes
    3y

    @nicci coffie

    First off, congrats on potentially selling!

    I'd agree with the other responses. I wouldn't do any flooring or anything else that can get worn until tenants move out.  Then, start doing those renovations. To the other responses point, check and see what comps have sold in the neighborhood the last 90-120 days.  Then from there, see what they did in their home to compare to yours.  It is a subjective opinion when valuing a home and the upgrades within it, but this should get you an idea if other homes are updated, what you need to do to get the price they did.

    I would agree, kitchens and bathrooms should always be the top choice.  I wouldn't focus on landscaping..that typically is the last thing you should be looking at.

    I would talk with a local Realtor who can walk the property with you and make recommendations on what to do and your estimated ROI.

    Best of luck!

  • Member since 2023 · 5 posts · 0 votes
    3y

    Thank you all for your feedback!

  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @J. Nicci Coffie price moves in both directions, up and down. Remodeling and room additions can generally improve your price to the upside. Other projects, like replacing the roof, HVAC, etc help defend your price from being pulled downward due to deferred maintenance. Both types of projects are valuable. I recommend looking at the comps in the area to find out what the best properties are trading for based on their condition and updates. This should give you an idea what projects can provide the best bang for the buck.

    Ryan Kelly Group - Keller Williams5112 Reviews
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