When it comes to rehabbing investment property, there are some improvements that devalue the investment and make it less desirable.
Here is our list of 5 things you should avoid when rehabbing investment property.
#1 Luxury Headaches
There is certainly a market for luxury investment property and rentals, but this is typically a small segment of the overall market. Therefore, many real estate investors choose not to focus on the luxury market.
For many renters, luxury items such as pools, hot tubs, and extravagant landscapes are not items they are interested in maintaining while renting a property. They are not interested in the added expense of maintaining these items, nor in devoting the time to take care of amenities they’ll seldom use.
When rehabbing investment property without luxury items, be very judicial when adding them.
And if you already own investment property with luxury items, consider protecting yourself (and your property) by including maintenance of these items in the property rent. But, realize that many renters will not be interested in the more expensive rent.
#2 Overly Specialized Spaces
Overly specialized spaces, like a garage that’s been converted into a sunroom, are appealing to a limited number of renters. Most renters would opt for a garage rather than a sunroom.
When rehabbing investment property, keep in mind the physical characteristics renters prefer in a home that will result in the highest rents and cash flow.
#3 Over-the-Top Kitchens and Bathrooms
Renters are looking for a conventional floor plan with a good size kitchen and updated bathrooms that have modern fixtures and appliances.
But with everything in life, there should be balance.
Except in the luxury market, renters are unwilling to pay for over-the-top kitchens and bathrooms. They want to live comfortably in a modern and functional space without “breaking the bank”.
For more information, read: Top 10 Physical Characteristics Identifying the Best Cash Flow Properties.
#4 Cheap Fixtures
One of the most cost effective upgrades for a home is modern fixtures. For a few additional dollars, you can upgrade from cheap fixtures to modern and appealing fixtures that are desired by tenants.
The investment to install higher-quality fixtures will pay off over and over again, as you collect higher rents for the property and have shorter vacancies.
#5 A Bad Coat of Paint
Like fixtures, it cost just a few dollars to upgrade from an unappealing paint job to paint that provokes prospective tenants to rent your property.
Fresh, modern paint that appeals to the masses is a “must-have” for high cash flow properties demanding the highest rents.
Renters are seeking properties that are affordable, while also being modern and functional. They want to rent a safe property that feels like home, where they are proud to entertain family and friends.
As with many things in life, less is more in some respects when rehabbing investment property. In most cases, renters are not look for over-the-top features and expensive amenities that will take away free time to maintain.
Knowing your tenant base, and keeping your rehab balanced, is the key to rehabbing properties that will yield high cash flow while bringing in the highest rents.