For the greatest return on your rental property investment, you must develop a consistent and long-term property renovation budget. Although rental properties do not usually need an overall “flip” renovation, it is crucial to know where you need to allocate your property renovation budget to get the greatest effect on the Killeen market in increasing rent value.
Experienced property investors recommend allocating funds for property renovation on the primary features of the property based on the following percentages:
- Kitchen: 30%
- Bathroom: 20%
- Exterior: 20%
- General Improvements/Other: 30%
Once you have determined the areas of your property that fall under these percentages, factor in the total worth of the property and take a percentage of it. For example, if you have a $40,000 property renovation budget based on 10% of a $400,000 property value, it would look like this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Bear in mind that each adjustment needs to factor in your target market and what would maximize value for your future Killeen renters. Make a list of each room and feature of your property and utilize your allocated property renovation budget to see what needs the most improvement (you do not need to use the entire budget).
Some property investors will want to make the most out of their property renovation budget by redoing the entire kitchen or bathroom; however, it is important to keep costs as low as possible and find what requires the most work. For example, you could keep the main kitchen body and just replace the floors, sink and faucet, install new appliances, and paint the cabinet doors or add new handles. Bathrooms can generally stay the same with their walls and layout, but you can place a new shower head or heads, toilet, or vanity based on your vision for a cleaner and more modern feel. If there are items from your property that you don’t want to keep, consider utilizing a second-hand market by selling them to have extra funds for adding new items. Alternatively, to cover costs, several Killeen investors might buy from the second-hand market or a community online classifieds section to find cheaper items for kitchens, bathtubs, windows, and doors.
Generally, a complete renovation with your Killeen property renovation budget will most likely always add additional value. However, overcapitalizing could become a factor, especially when rental values can change based on the market. As such, ensure that your budget fits your goals and that you do not do expensive renovations that are not needed to attract higher rent.
In establishing the most important items to focus on with your property renovation budget, we have found that these items tend to draw a higher rent value:
- Updating the kitchen and bathroom to be more modern
- Adding blinds/window dressings and floor coverings
- Including privacy features
- Outdoor living areas and fencing
- Ease of access to rooms
- Natural lighting in the home
The most vital factor in renting to Killeen residents is to have the best presentation that you can to make a positive impression with your prospective residents that will last even after they choose to live in your property. Moreover, prior to contacting you, potential residents will usually drive by the property itself to view its condition. If they are impressed, then they will contact you for more information. If not, they may move on to the next rental property. As such, curb appeal can help attract and retain quality residents. An effectively planned property renovation budget will result in a thorough consideration of all the costs necessary to allocate the right resources and time to what matters most to your future residents.
Would you like a free property assessment from Real Property Management Talent? Contact us online or call us at 254-4010-0400 today!
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