Real Estate Investing – How to Increase the Rental Or Resale Value of Real Estate Investments

Once you have purchased the house and taken possession, you will want to fix it up as quickly as possible, putting your money where it goes the furthest in raising the rental or resale value of the house.

These are the key places to invest in renovating and upgrading:

1. Paint It Attractively

First, top of the list, is good quality paint, using designer colors like white or off-white, cream, beige or peach.

A designer color is one that is acceptable to almost everyone, especially the woman who will be the key decision maker in the home purchase or rental. You will increase the value of the home by as much as $5 for every $1 that you invest on paint.

2. Upgrade the Carpeting

The second place to invest in a home that you are fixing up to rent or resale is in upgrading or replacing the carpets. You always put better quality carpets in high traffic areas and cheaper carpets in bedrooms, dens and basements. New carpets will increase your value by as much as $4 for every $1 that you invest in carpet.

There are some key rules with regard to purchasing and installing new carpets. First of all, use neutral colors. Stick with beige, salmon, cream or white. Select colors that go with anyone’s furniture and which are acceptable to almost any taste.

The second rule is that you should use only one color throughout the entire house or apartment. Use the same color in the living room, bathrooms and bedrooms. This gives the house an overall uniform look of quality, cleanliness and attractiveness.

3. Fix up the Yard

The third place to invest prior to renting or resale is into landscaping. Clean up the outside yard completely so that it makes a good first impression when a renter or purchaser arrives to see it. Look at this house through the eyes of a prospective purchaser at all times. Do everything possible to create what is called curb appeal…

When the purchaser pulls up to the house, the first thing you want them to do when they see the house is to say, Wow! That looks attractive…

Experience shows that you can get a pay-off in increased rental or resale value of as much as $25 back for every $1 that you put into cleaning up the yard. In other words, if you spend $1000 to landscape the front and clean it up so that it is attractive, this can increase the curb appeal, and the value of the house, by as much as $25,000!

When a person is buying a house, one of the first things they think is: What will my friends and family say when they drive up to this house?

If they think that their family and friends will be impressed when they see this house, because it is freshly painted with the yard cleaned up and looking attractive, they will be much more likely to pay the kind of price that you want to get for it.

4. Put in a Fireplace

The fourth place to invest in fixing up a house is in fireplaces. According to real estate appraisers, fireplaces add $1.23 in value for every $1 you spend. This means that you get a 23% increase in value for every $1 that you invest. That is a good investment, and a good return.

This is true even if you put in a false gas fireplace. Any kind of fireplace increases the value in excess of the amount that you spend. This is the sort of thing that assures that you will get all your money back, and more besides, when you sell the house.

5. Add a Bathroom

The fifth thing that you can do when renovating a home is to add a full bathroom. This increases the value by $1.10 for every $1 that you spend. The more bathrooms that a house possesses, the more attractive it is to the purchaser or renter.

6. Replace the Siding

The sixth thing that you can do to increase the attractiveness and value of a home is to put new siding on the outside.

New siding increases the value of the home on a dollar for dollar basis. For every dollar that you put into new siding, you’ll get a dollar back when you sell.

But the most important factor is that the home will sell faster, and you will realize your return on investment sooner with new siding rather than without.

7. Remodel the Kitchen

The seventh thing that you can do to increase the attractiveness of the house is a minor kitchen remodel. New appliances, paint and wallpaper in the kitchen will give you back 90 cents in added value for every dollar you spend. It will also increase the speed at which you rent the house or resell it to a purchaser.

A major kitchen remodel will give you 89 cents back for every dollar you spend. It may not be a great investment in terms of your return, but sometimes you need to invest in remodeling the kitchen to enhance and protect your investment in the rest of the house.

Some Improvements Don’t Pay Off

Everything else that you might do to a house, aside from the seven improvements listed above will add less than 90 cents per dollar that you spend. Sometimes, improvements will yield much less.

For example, new roofing adds only 80 cents in value for every dollar you invest. Skylights add only 75 cents in value for every dollar you spend.

Adding a wooden deck adds only 72 cents in value. Remodeling the bathroom adds only 75 cents. Installing a swimming pool adds only 32 cents for every dollar you spend on the pool. In fact, many houses are considered less attractive because of the upkeep and maintenance required by a swimming pool.

So don’t put in a swimming pool with the thought that you are going to increase the value. It may backfire on you.

Repair the Basics

Once you have purchased a home, if there is repair work that needs to be done on plumbing, electrical or carpentry, you will have to do these, as well.

You should make a detailed calculation of how much you will have to spend to renovate the house before you make an offer in the first place.

You then use your list of needed repairs and their costs to get the seller to come down in price. The better prepared you are with your list of necessary improvements, the more likely you are to drive a good bargain.

Never forget that you make your profit by buying right, and you realize your profit by selling right.

Once you have completed the face-lift on the house, inside and out, you are now ready to refinance, sell or rent out and move onto the next project.