Remodeling projects with the greatest return on investment for your rental properties
Maintaining Your Properties

Today’s rental market boasts an increase of over 10 million households since 2000, and the trend shows no sign of slowing. As rental properties compete for residents, updates and remodeling can help you to differentiate your units from the competition. However, you should always have your property’s long-term growth potential in mind–so it’s critical to estimate the return on investment of each upgrade you make, as well as your overall capital expenditure rate for each property.

Which home renovations pay off? Here’s how to find out.

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How to Tell Which Home Renovations Pay Off
Run Comparable Data
Check out recent sale prices for similar units in the area. You can track those numbers over time to determine local market trends. Which demographics appear to be driving the trend–for example, do renters tend to be Millennials or Baby Boomers? The home renovations that you undertake should resonate meaningfully with the concerns of your specific market.

Research Realtor Assessment
The National Association of Realtors’ Research Department is a great place to glean such information. Its 2017 Remodeling Impact Report cites improved spatial functionality as the most important benefit of residential upgrades nationwide. Respondents report valuing efficient livability over home beauty and design aesthetics by a margin of 2:1. We recommend seeking out NAR data reports specific to your property parameters.

Source Labor and Material Options
An essential factor to consider with any remodeling project is the cost of labor and materials. What kind of bulk pricing might be available from area distributors? Do you have established relationships with any licensed plumbers or electricians? Looking into cost-saving options even before a particular upgrade is approved may seem out of order; but the potential to lower your labor and material costs gives you more room in the budget to work with. Plus, you’re already a significant step ahead in coordinating the details of your project once it’s approved.

Weigh Cost vs. Value
Finally, consider the cost versus value of different upgrades for your specific location. Upgrading your deck might add more value to warm-weather units, while wall insulation appeals to those in colder climates. Remodeling Magazine is a great source for average cost versus value percentages of popular projects. Its updated annual report compares data across major geographic U.S. regions as well as specific cities.

How do you calculate the ROI of rental property renovations? Find out on the #BuildiumBlog! CLICK TO TWEET
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Once you’re armed with these numbers, you’re ready to compare remodeling options. So, which home renovations pay off in the long run? Consider these promising possibilities:

From: https://www.buildium.com