Investing in real estate can be a lucrative venture, but not all renovations add value to your property. In fact, some upgrades can drain your budget without providing a significant return on investment.
To help you make informed decisions, we've compiled a list of five renovations to skip in your investment property. By avoiding these costly mistakes, you can maximize your profits and ensure your property appeals to potential buyers or renters.
Swimming Pools
Don’t add a pool. It’s that simple. Some people love pools, but most people don’t want to deal with the headache of owning and maintaining a pool. Even if you find a tenant who wants a pool, as an investor, you aren’t going to make your money back with a pool. It costs a lot of money and limits the number of prospective tenants for the property.
As a landlord, you could also be liable for injuries and accidents that happen. You will also need a sufficient insurance policy to cover the pool and possible liability. If your investment property already has a pool, make sure you have the proper insurance coverage, and spell out pool rules and responsibilities in a written and signed agreement with the tenant.
On the same note, avoid hot tub Jacuzzis.
Removing Bedrooms
Don’t remove bedrooms to create fewer larger bedrooms. This is often done to create large master suites. Master suites as a whole can be skipped. As long as the bedroom has a fresh coat of paint, good flooring, and a decent light fixture, you’re good to go.
If your house already has a master suite, renovations to skip in your investment property are expensive custom closets and high-end bathrooms. Make sure it is fresh and practical, but more than that is going to cost you without the return.
Bigger bedrooms were common for years but are now moving back to more usable spaces designed for sleeping, not for living. Families generally want a minimum of 3 bedrooms, so knocking down walls will hurt you in the long run. Put down the sledgehammer and stop making unnecessary projects.
Converting Rooms Into Specific Spaces
Like removing walls, converting a bedroom into something else (i.e. a library, media room) is another unnecessary investment. These luxury style rooms and renovations should definitely be skipped in your investment property. They work in an upscale neighbourhood with the extra square footage, but for the average family home, they aren’t necessary.
A bedroom can be used as another room, but don’t put money into built-ins or permanent changes that keep the room from functioning as a bedroom. It’s better to keep the bedroom a nice usable blank canvas and let the tenant decide how they want to use the space.
The same goes for the garage. Don’t convert your garage into an elaborate workshop, playroom, or living space. People want big open garages where they can park their cars (and stuff). Don’t waste money making your garage into something it’s not meant to be.
Just like converting bedrooms into specific spaces upstairs, you don’t want to convert basement square footage into very specific rooms (i.e. wine cellars, home gyms). Keep things simple and let your tenant use the space in a way that meets their needs.
Other Updates and Upgrades to Avoid
Sunrooms are beautiful but unnecessary. This added room doesn’t add real value to the home, and it can cost you extra in heating and cooling, and if you’ve added square footage to the home, it can increase your property taxes. If you’re putting time and money into expanding the home, make sure the space is useful and adding real value.
Being green can be smart and you should do what you can to help reduce your carbon footprint, but solar panels are a big cost without the ROI. Ultimately, they’re an unnecessary investment.
In the End, Know Your Neighbourhood
What level of finishes are expected in your area? In some neighbourhoods, stone countertops in the kitchen and bathroom may be expected, in others, a nice laminate may be all you need.
Unnecessary renovations can eat into your profits, but you don’t need to do the bare minimum. Going for an option that’s a grade above the “expected” can set your house apart without completely breaking the bank. Showing that you care about the house enough to make it look nice goes a long way.
Paying that little bit extra for durability is a smart choice when it comes to upgrades in income properties. Even if your lease agreement states the tenant covers the cost of damages, it is a lot easier making sure your home holds up to life. If things don’t break, you’ll naturally have fewer tenant phone calls to worry about.
Be smart with the renovations you undertake. Don’t create unnecessary projects. Remove the emotions and use your brain to decide if things in your home legitimately should be updated or if they're renovations to skip in your investment property.
If you are thinking of becoming a real estate investor yourself, or you are already an investor and would like to leverage your current investment(s) into more properties, or you are looking to sell one or more of your investment properties, give me a call at 905-683-7800.
I’ll be more than happy to answer any and all of your questions and help you with all your real estate investment needs.
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Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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