Ten Quick and Easy Ways To Increase Your Property’s Value

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10 Ways to Improve Property Value

 

Do you remember 2007?

I do. It’s the year I got married, the year I graduated from college, and the year I bought my first home.

2007 was a good year.

I remember how great the real estate market was. I remember watching the various “flipping shows” as investors made tens of thousands of dollars by simply making their properties pretty and selling them for top dollar.

I also remember the slow-down, the decline, and finally the crash of the real estate market during that year and the years that followed. I remember when things changed for investors and the tide went out – leaving thousands of investors trying to desperately hang on for dear life.

I’m a young guy and entered the real estate game after the crazy climb of the early 2000’s. In my world, the market has never really improved beyond what it was when I began (in fact, in my community we are still wallowing at the bottom). While I hope the rising tide someday will come and lift all my properties to extraordinary heights again – I don’t plan on it.

I don’t wait for the market to cause my properties to appreciate. Instead, I force my properties to appreciate. No, not with a gun and the team of The Expendables (although, I’m pretty sure Chuck Norris could force any property to appreciate…)

The following is a list of ten ways that I use – and you can use – to force the value of your properties to increase without waiting for the market.

  1. Don’t Buy Stupidly
    While this first item technically does not require me to do anything special to the property, it is nevertheless the most important step in building quick value. If I buy a home for $20,000 less than it’s worth, I’ve forced the appreciation $20,000.00. While I don’t need to go into detail explaining exact methods (BiggerPockets covers this quite well), just know that your profit is made when you buy, not when you sell.
  2. The Ikea Bedroom Miracle
    One of my favorite ways to quickly improve a property is to simply turn a “bonus room” into a bedroom. The best transformation is turning a two-bedroom home into a three-bedroom home. Often times this can be accomplished for the price of an Ikea wardrobe, but can add tens of thousands of dollars to the value of the home.
  3. Curb Appeal
    It may be obvious but it is still shocking the number of investors who spend thousands remodeling a home but neglect to do anymore to the outside than a quick paint job. While fresh paint is a great way to add value, there are many more steps you can take as well to spruce up the curb appeal. A nicely manicured lawn with well-defined landscaping can help achieve higher rent or a quicker sale – both which can help force the value to climb.
  4. Raise The Rent
    If your rents are low, a small increase can add significant value to your property. This is especially true for multifamily properties. Raising rent just $25 per month per unit on a four-plex can add $1,200 per year in extra income and (depending on your area’s cap rate) up to $20,000 in forced value overnight.
  5. Rent Out The Nook and Cranny
    You may already be at the top of your rental price capacity, but that doesn’t mean you are getting all the income you can out of your properties. Are there any storage sheds, broom closets, garages, or simply vacant land that you can rent out to increase your income? Mini-storage is a multimillion dollar industry and you probably have more space to rent out than you realize. As with raising rent, additional income often means more value.
  6. Increase Your Fees
    In addition to capitalizing on all the physical ways you can increase the income in your investments, how about the fees? Are you charging for background checks, late rent fees, missed maintenance appointments or parking violations? How about your laundry facilities or paid parking? Are you getting all the fees you deserve?
  7. Lower Your Expenses
    You are probably paying too much for too many things. As an investor, one of the “hats” you wear is to be the auditor of your business. Perhaps you can negotiate a better rate for garbage pick-up. Perhaps you can transfer the Water/Sewer/Garbage expense to your tenant. Perhaps spending a few hundred dollars getting all those dripping faucets can cut down your annual water bill by thousands of dollars? Whatever your strategy is, by decreasing expenses you are able to increase the value of a property.
  8. Add A Bathroom
    In the old days, one bathroom was standard in most homes. If you are remodeling a home and find this is the case, take note of where the plumbing is located and what extra space there is around, above, or below that plumbing. Often times you can add a small half bath for several thousand dollars but add tens of thousands in value by doing so.
  9. Tear Down These Walls
    As long as a wall is not “load bearing” (and sometimes even if it is), you can often take down a wall (or half of one) in a matter of hours and create a much more “open concept” feel. This can help increase the desirability of a home and thus improve the value as well.
  10. Paint the Neighborhood
    Often times one of the biggest detriments to your property’s value is not your property at all – it’s your ugly neighbor’s home (the home is ugly, not necessarily your neighbor; but quite possibly both.) A quick paint job, landscaping, or simply a run to the dump can often be the best money you can spend when trying to increase the value on your own property. Obviously some tact is needed and many people are opposed to getting “charity,” but it’s hard to turn down a free paint job or yard clean-up.

There you have it! Those are just ten of perhaps hundreds of ways you can quickly add value to any property you own. Don’t use the “I’m waiting for the market to improve” excuse. Take the market by the throat and force it to improve.

Now it’s your turn! What are your favorite ways to quickly add value to properties? Share below in the comment section!
Image: FreeDigitalPhotos.net

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

30 Comments

  1. Brandon – You make some very good points. I am in the process of rehabbing a property right now and the first thing I did was male improvements to the landscaping, yard and exterior. The neighbors love the fact that the property looks 100% better and I have already had a few people approach me asking when the house will be listed for sale.

    I also completely agree with your point about making your profit when you buy. You must know your comps, have a relatively good sense of budgeting for repairs and understand alternative ways to add value for the lowest cost.

    Again, a very good article. Thanks!

  2. Just wanted to say that in some states (perhaps many?), adding a wardrobe doesn’t transform a non-bedroom into a bedroom. There are exit requirements, window requirements, maybe a closet requirement. You might want to call it a bedroom, but it doesn’t necessarily mean it is legally a bedroom…

      • I don’t know the in’s and out’s of California law, but that is where a mentor or lawyer would be most effective. The saying “know your local landlord/tenant laws” can’t be understated. If I may be so bold, I’ve heard enough horror stories that I wouldn’t put my investment capital into California or Section 8, but that’s just me.

        • That is simply false. Late fees can be charged in California as long as it is in the lease.

    • Greg –
      Late fees are not illegal in California. Here’s a link from the California Department of Consumer affairs that explains:
      http://www.dca.ca.gov/publications/landlordbook/living-in.shtml

      “Late fees and dishonored check fees

      A landlord can charge a late fee to a tenant who doesn’t pay rent on time. However, a landlord can do this only if the lease or rental agreement contains a late fee provision. In some communities, late fees are limited by local rent control ordinances. (See Rent Control)

      Late fees must be reasonably related to the costs that your landlord faces as a result of your rent payment being late. A properly set late fee is legally valid. However, a late fee that is so high that it amounts to a penalty is not legally valid.110

      What if you’ve signed a lease or rental agreement that contains a late-fee provision, and you’re going to be late for the first time paying your rent? If you have a good reason for being late (for example, your paycheck was late), explain this to your landlord. Some landlords will waive (forgive) the late fee if there is a good reason for the rent being late, and if the tenant has been responsible in other ways. If the landlord isn’t willing to forgive or lower the late fee, ask the landlord to justify it (for example, in terms of administrative costs for processing the payment late). However, if the late fee is reasonable, it probably is valid; you will have to pay it if your rent payment is late, and if the landlord insists.

      The landlord also can charge the tenant a fee if the tenant’s check for the rent (or any other payment) is dishonored by the tenant’s bank. (A dishonored check is often called a “bounced” or “NSF” or “returned” check.) In order for the landlord to charge the tenant a returned check fee, the lease or rental agreement must authorize the fee, and the amount of the fee must be reasonable.

      For example, a reasonable returned check fee would be the amount that the bank charges the landlord, plus the landlord’s reasonable costs because the check was returned. Under California’s “bad check” statute, the landlord can charge a service charge instead of the dishonored check fee described in this paragraph. The service charge can be up to $25 for the first check that is returned for insufficient funds, and up to $35 for each additional check.

      • I see material at http://www.dca.lacounty.gov/tsLateFees.html which says that late fees exceeding 5% can be challenged as excessive. Another lawyer at http://www.caltenantlaw.com/LateFees.htm has asserted (with an inflammatory style) that they anything more than the interest you would be charged for the tenant being late is illegal. It sounded a tad farfetched, but why should I spend my time and money finding another lawyer and paying him for an expert opinion, when places like TN and TX aren’t as harsh. Basically, it sounds risky to become a property owner in these areas, and I would take my chances in a more landlord friendly state.

        • Brandon Turner

          Any California landlords reading this who can chime in with their experience?

          Not that we want to get totally off topic, but I am curious if this has been an issue for anyone?

        • Deanna Opgenort

          IMHO the caltenant law site is someone wishfully frothing at the mouth, but the site is likely to scare some landlords into not charging late fees , which is likely it’s intention.

          NOLO press out of Berkeley does some GREAT books giving legal advice. They have a great pair of books, one covering landlord’s rights, the other covering tenant’s rights. They aren’t dirt cheap (maybe $80 for the pair) but they are well, well worth it. You can get them at a discount if you buy them both, and I consider them one of the single best investments I’ve made as a landlord.
          They cover the most common situations, can help keep you OUT of trouble, and the Landlord book comes with CD/download of forms that may be worth as much as the purchase price.
          The books are easy to read, and are easy to look things up in.

  3. I like #10. I have looked at houses before where a dump run at one of the neighbor’s houses and some “sprucing up” could change the feel of the whole block. This might work especially where elderly folks are concerned that just can’t afford to work on “curb appeal”.

    • Brandon Turner

      I once bought a house that shared a driveway with another nice house. However, during the time I owned it, the neighbors changed and the new ones completely trashed the place. They let me take several loads to the dump, but it required constant maintenance to make sure the neighbors house (and shared driveway) were presentable! Lesson learned, I guess! Thanks for the comment Sharon! Very true about being a good option for the elderly and/or low income.

  4. While all your ideas are good, not all of them are “quick and easy.” Adding a bedroom, bathroom or other addition to a house takes time, and in most cases, a good amount of capital. As you stated and has been stated many times on BP, an investor makes their money on the “buy” and not on the “sell” making your number one the most important aspect.

    In the area of “decreasing your expenses,” what I found is firing my Property Manager and hiring a better one increases cash flow and thus, value. Even if their fee is more, many times a good PM can cut your annual expenses. I will pay 1-2% more for a good PM because they can lower my annual expenses 5-10%. They have scheduled maintenance for HVAC filters, smoke detector batteries, landscape inspections, etc….

    • Brandon Turner

      Great perspective Mike! Property managers differ so much in their abilities to keep costs down. And yes, adding a bathroom or bedroom might not be super “quick and easy” unless you aren’t the one doing the work – then its kinda quick, easy, and expensive! 🙂 Thanks for the comment!

  5. Erik Hitzelberger on

    Brandon,

    Excellent article and I like your tips. One concept we’ve been experimenting with recently is renting appliances. It is fairly easy to find inexpensive quality appliances to provide at a monthly fee. Even at $40/month, a $500 w/d pair can turn into an extra $1000 or so in a few years.

  6. Brandon, great post as always with some very cool ideas. I’ve always found that updated kitchens really sell a place on the inside. If you can redo a kitchen and update it with granite if you can, resurface or replace the cabinets or add some brushed chrome hardware, it really spiffs it up on the inside.

    As far as the outside goes, we have a property in Onset that we are nearing completion and the biggest things we did on the outside was getting rid of massive overgrown bushes in the front, cutting down a tree that ovehung the house. For under $1,000 it brightened the inside immediately, eliminated the ugly moss and mold (which we powerwashed off) and made the house look like a completeley new house.

  7. You know, while evaluating whether or not to encapsulate the crawlspace of my current residence, the sales people showed me a listing of home improvements and their relative ROI. Redone kitchens are towards the top of the list, but they asserted an encapsulated crawlspace actually pays instead of costing. Not sure I believe that since I haven’t seen independent data on that yet.

    • Brandon Turner

      Interesting. I guess it makes sense, being that encapsulating the crawlspace would save a lot in energy. I, too, would want to see the independent data to back that up though.

      I know in my area, our utility company will pay the entire cost of insulation (material only) if you have primarily electric heat (which most of our rentals do). I use that program a lot. You can’t beat free!

  8. Brandon, thank you for posting these helpful tips. All 10 of them seem to be very useful. I just wanted to add one additional suggestion to tip #7. Another great way to “Lower your Expenses” is by installing energy efficient replacement windows. These will not only add immediate resell value to your home (and improve curb appeal), but they can also help to lower your heating and cooling bills. Thanks again for the informative article!

  9. Vincent Crane

    Loved this post. I’ve been looking for some articles on specific ways on how to increase a home’s value quickly and I definitely agree cost reduction, paint, and landscaping can certainly do the trick. Thanks for putting this up!

  10. John Hyatt

    Great article Brandon! Adding to your idea #10, my local church goes around the neighborhood offering free yard clean up and other services for free as a form of ministry. Just an idea would be to partner with a local church and then you might not even have to invest any money, just time.

  11. Excellent tips Brandon. I especially enjoy seeing someone recommend installing a second bathroom. This added convenience makes most older homes easier to rent or sell. Maybe it’s a regional thing but I’ve also noticed that many people don’t spend much time improving the curb appeal either. Solar lights also contribute as well for people who appreciate lighted sidewalks and the added sense of security. It helps a property look good both day and night too. You’re advice is definitely worth sharing.

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