You can get different answers based on what 'value' means to you and that changes over time.
1. Value as in increasing the selling price of the prop - but you are not selling for at least a decade. Answer: Fresh flooring, paint, bath fixtures, updated kitchen. And the lights and switch plates like mentioned above. Cleaned up landscaping. At least 2 baths. Finished basement. New doors and doorjambs
2. Increasing your pleasure while living in it? Great kitchen. Nice lighting. Outdoor entertainment upgrades, new doorknobs. new switches, outlets and faceplates.
3. Increasing the rent. Fresh paint, flooring, add a bedroom - this can be converting a room so that it meets basic bedroom code - window, closet, door. 4. Increasing the speed that you can rent it? Get it super clean, no smells, new lights, switch and outlet face plates.
We had the same intention of buying our home in Seattle with a couple year plan to move out and rent. We ended up liking the school district, prices rose super fast, and I found myself more or less stuck in a home that I'm not super happy with. On the plus side, it eventually enabled us to get a FAT HELOC which we used for other investments. We may still move out and rent one day and things that I tend to focus on are the infrastructure to a good rental unit. New water heaters, appliances, pet friendly hard water resistant floors, tight plumbing, etc. Room rentals are big money makers in some areas so retrofitting the home to cater to multiple lifestyle tenants might also be worth looking into. Maximizing the bed to bath ratio, ensuring each tenant has a space for their possessions, and plenty of room out front for parking. These are the things I'm considering when renting our home some day. Idk.. probably not quite the answer you were looking for, but maybe it offers a different approach to your plan.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
5y
Really cheap ways to improve a home that add value? One easy one if new light fixtures, You can get some really nice light fixtures for all the rooms $10 to $50 per fixture. Put daylight style LEDs in them. They really make the space sparkle and shine. Put nice baseboard and window and door frame trim on in either stained wood or painted for a nice accent. For about $150 or so you can install a nice light/ceiling fan/heater in the ceiling of the bathroom. It is a nice touch to have a heater running while you are in the shower. New light switches and outlets are often only a dollar or 2 in bulk to freshen up a room and make it look modern.
You can get different answers based on what 'value' means to you and that changes over time.
1. Value as in increasing the selling price of the prop - but you are not selling for at least a decade. Answer: Fresh flooring, paint, bath fixtures, updated kitchen. And the lights and switch plates like mentioned above. Cleaned up landscaping. At least 2 baths. Finished basement. New doors and doorjambs
2. Increasing your pleasure while living in it? Great kitchen. Nice lighting. Outdoor entertainment upgrades, new doorknobs. new switches, outlets and faceplates.
3. Increasing the rent. Fresh paint, flooring, add a bedroom - this can be converting a room so that it meets basic bedroom code - window, closet, door. 4. Increasing the speed that you can rent it? Get it super clean, no smells, new lights, switch and outlet face plates.
First, I'd look at a longer term for your mortgage as it will lower payments which will increase your cash flow once you do rent it out.
Easy ways (assuming they haven't been done already): fresh coat of paint, update light fixtures and cabinet hardware (go with classic, not trendy), replace outdated carpet and window coverings and paint your front door to add a pop of colour.
Check out the cost vs value report talked about on episode 399 with contractor Jeff Thorman. You can drill down to your region or just look at national trends.
Rental Property Investor · Member since 2020 · 24 posts · 18 votes
5y
@Dan Hudson
Thanks for the reply Dan.
As to #1 of your post, the property we are looking at already has these upgrades. Can you think of anything else that would add value on a property that already has these existing upgrades?
Lender · Lexington, MA · Member since 2020 · 10 posts · 14 votes
5y
consider remeasuring the space to see if living area is more than recorded (perhaps property grew over the years), and look for any additional areas like attic/basement that can be finished and included in rentable square footage. Look for creative opportunities to add a bedroom (window/closet), which would help with rentability. If not your long term residence, keep upgrades modest and consistent throughout the house
Attorney · New York City / Long Island, NY · Member since 2020 · 597 posts · 248 votes
5y
Often the best way to add value is to add an additional bedroom. Markets vary but often going from a 2 bedroom to a 3 bedroom adds the most value, then a bit less going from a 3 to a 4 bedroom, etc.
Check the layout to see if you can fit in another bedroom logically. Also, either Brandon Turner or David Greene on the BP podcast has mentioned looking for a house with an enclosed porch or sunroom to convert into another bedroom. The foundation, roof, (partial) walls, & electricity (the biggest costs) are already there, reducing the cost.
In some markets you can turn basement space into additional bedrooms, but you have to check the building codes on this. For example, you'll need ways for tenants to exit in case of fire so often there are multiple exits required to be available.
Investor · US · Member since 2017 · 71 posts · 80 votes
5y
I think this depends on the price range of your property. I buy older homes with very dated finishes. For my market, new vinyl floors in kitchens and baths, new laminate countertops, new plumbing fixtures, new light fixtures, new switches and receptacles (white), new paint, and either painting or replacing kitchen cabinets give a very worthwhile increase on rent. They also make a place look exceptional vs most competition in my area.
Investor · Fort Collins, CO · Member since 2020 · 6 posts · 10 votes
5y
Fresh neutral color paint is one of the cheapest and most effective. Additionally, paint the kitchen and bath cabinets white, add New vinyl flooring if the flooring is old, and clean up the yard will also all add alot of value. If you have a basement, finishing it would also add value per sq ft.
Considering buying our first home as a primary residence.
We want to start a family and move into a house we can call home.
With interest rates so low, we can get a great rate on a 15-year mortgage.
However, we do not plan to stay in this home for the next 15 years.
Our plan is to try to rent it out or sell it when we are ready for another upgrade.
That being said, what are your favorite ways to add value to a home that is already in good shape?
What do you see the best returns on?
New interior paint and new flooring.
If it doesn’t need that, then you bought the wrong property and likely paid too much.
Second, improve the kitchens and bathrooms. New lighting is cheap way to update them. In bathrooms, upgrade to curved shower rod, a cheap way to improve the quality of life for your tenants.
Investor · Wellington, KS · Member since 2016 · 256 posts · 188 votes
5y
@Frank Lo. Focus your goal for the property. If it will be a rental, the numbers have to work which often precludes the neighborhoods and value of house where my wife wants to live. On the other hand, if it will be my primary home, I am more interested in my cost to live and then look for appreciation to support a HELOC or sale later. Another way to say it is that I needed a large house with good schools and a nice neighborhood for my larger family. It wouldn't rent for enough or easily enough to financially compete with my rentals. I have forced appreciation with all the properties.
Get into a primary home with a low down payment and a 30 year loan that doesn't stretch you. Then save for the investment down payments. Your personal home is an expense not an investment. Equity in your primary home is trapped and not earning any thing because you have to sell it to put it to work. Later in life that changes somewhat.
Considering buying our first home as a primary residence.
We want to start a family and move into a house we can call home.
With interest rates so low, we can get a great rate on a 15-year mortgage.
However, we do not plan to stay in this home for the next 15 years.
Our plan is to try to rent it out or sell it when we are ready for another upgrade.
That being said, what are your favorite ways to add value to a home that is already in good shape?
What do you see the best returns on?
Kitchens & Baths are the easiest ways to add value. If you only have a couple bucks, consider adding some subway tile to either area. If you have a bit more consider adding granite counter tops, water fall shower heads, and sheet glass.
Hey @Frank Lo you should get a 30 year mortgage and just pay it off in 15 years, that way the price you pay each month will be cheaper so when you would like to upgrade you can rent it out for a good rate and the tenant will pay most of the mortgage for you and you can cash flow.
@Frank Lo as others have mentioned, adding a bedroom or bath definitely adds significant value. Kitchen about medium ROI comparatively. Adding a detached ADU adds about 75% of the square footage of your main home and definitely a great investment for rental income and home value impact. For example, if your current home is 1200 sq. ft. and valued at $400k - that's $333/sq. ft. 75% of 333 = $250. So if you were to build a 750 sq. ft 2 bed, 2 bath you'd add approximately $187k in home value immediately and can likely construct this size unit under $180k - great investment for immediate impact! Add rental income and it's a no-brainer! Depending on your area.