Improving the value of investment property should always be your number one priority. The real estate industry is highly competitive. As such, you need to find ways of increasing the value of your property in order to attract buyers or tenants. The higher the value of your property, the better you are positioned when it comes to negotiating higher prices or commanding more rent.
Below are tips on increasing property value:
Make it More Energy Efficient
There are many things that buyers or tenants often consider when shopping for houses to buy or rent and one of them is energy efficiency. Upgrading property to be energy-efficient helps you in two ways: Minimizing energy and electricity bills. It doesn’t matter whether you are the one occupying the house or you are renting it out, you stand to benefit.
Besides, upgrading your house to be energy efficient makes it more attractive and marketable. A buyer would prefer to pay an additional $3,000 for a house rather than spending $300 more every month in summer. Some of the things you can do to make your home property more energy efficient include:
- Swapping your windows for low-E models
- Seal gaps around windows, doors as well as in the attic, basement, and crawl spaces
- Install low-flow toilets and showerheads
- Install a smart thermostat
Despite the fact that some rental properties have additional sources of income, rent is usually the biggest source. As a real estate investor, you should understand that rent plays a big role in determining the value of your property. Keeping it low for a long period will make it hard to break even.
You should find a way of setting rent prices that are in line with local market rates. Avoid keeping them too low or too high. Most property owners hesitate to increase rent fearing that they may end up losing tenants. While this is a genuine concern, it should not be a hindrance to matching your rent with market prices.
Make Some Targeted Upgrades
There are a lot of upgrades that help increase the value of your investment property. These can be health-focused improvements such as installing a water filtration system, adding an air purifier, or installing a carbon monoxide monitor among other improvements. This can make a big difference for your next tenant or buyer.
Besides, you can also decide to focus on high-ROI upgrades. Check out remodeling magazines where you can get ideas on the areas to focus on. Such improvements often take into account the average cost of doing each project. For instance, you may opt to replace your garage door, add stone veneer siding or remodel your kitchen.
Consider Lease Options
A lease option is a contract that gives a tenant the right to buy the leased property at a predetermined price. Sellers usually use lease options in real estate that are slow with the aim of creating more appeal to the property. It gives prospective buyers the chance to become homeowners even if they don’t have a down payment.
The good thing about lease options is that you may end up selling your property at a price above the market rate. Besides, there is always a fee that prospective buyers must pay and you get to keep it in case they don’t exercise the option. For example, if you live in Texas you may see signs that say “we buy houses in San Antonio” and this may encourage you to consider reaching out to someone who can take the house off of your hands and bring extra cash to your pocket.
Update Older and Outdated Systems
Old plumbing, HVAC, electrical, drainage, and other systems can be scary to potential buyers or tenants. They can only see three things: more hassle, more problems more costs. The system may hold on for a few months or years but it will eventually break down and need replacement.
The best thing is to do conduct an inspection and repair or replace all systems that are old or faulty. It would be a good idea to have your property inspected regularly to give you a rough idea of all the things that need to be repaired or replaced.
In a nutshell, your investment property can prove to be a major source of your income. However, you must find ways of increasing investment property value to get the most out of it. Doing things such as home improvements, making your property more energy-efficient, and increasing rent are some of the things you can do to raise the value of your property.