When you hear people talk about investing in real estate, what is the first thing you think of? If you’re like most people, the first thing that comes to your mind is buying a home and renting it out to earn a source of income through monthly rent payments. Well, to be fair, that is definitely investing in real estate but when it comes to value-add real estate investing, property owners have the opportunity to drastically increase the equity in their single or multi-family homes. How? Through renovations to the home, specifically, the amenities.
A value-add opportunity is a property that needs substantial improvements in order to increase its overall value. So now the question is how do these properties get so rundown? Well, it can happen for a couple of reasons:
Reason 1: Not Enough Finances
Sometimes it’s not that the property owners don’t want to make the necessary improvements to the home but most times, it’s that they simply don’t have enough money to make the home improvements… it’snot cheap.
Sometimes people want to get into real estate but don’t have enough money and they have bad credit… This is a bit of a “double whammy” that makes it seem like you can’t invest in real estate but the secret to investing in real estate, whether you have bad credit or no money, is to find a property owner who wants to sell just a bad as you want to buy.
Reason 2: Intentional Neglect
Property owners, especially ones with multiple properties, can sometimes be so invested in other properties that they neglect the one that needs the most improvements because it’s too costly of an investment.
When it comes to attracting potential home buyers or tenants, you’re going to have to attract them from the outside first and then “wow” them with the rest of the property. The whole aspect of “curb appeal” is to enhance your home’s appearance from the viewpoint of the curb. So how can you improve a property’s curb appeal? Well, that can be done in several ways.
- Replacing the siding
- Hire a professional landscaping company
- Replace house numbers/door knocker
- Add a front porch
Those are just a few suggestions but the more improvements you can make on your property’s exteriors, the more you’ll increase the interest in people to check out your property’s exteriors
Homes with backyard decks are perfect for potential homebuyers who enjoy entertaining or those who simply enjoy being outdoors. When people go house showings and see that there’s a deck, they automatically start picturing their own family and friends socializing in that outdoor living space.
With having a deck installed, it would be considered as a major renovation as well as a major investment in the property. According to homes.com, adding a deck to a home can recover 106% of its value when the house is sold. So it’s pretty safe to say that decks are definitely a value-add opportunity.
If you have properties in Missouri, a deck builder in Kansas City will be able to add value to your property with their premium deck installation services.
An open floor plan is on every homebuyer’s wishlist so if your property has walls separating the social areas of the house, then you might have to do a major “gutting” of the home’s interiors.
Today’s homeowners aren’t like they were in the early 1800s where every room had a purpose. Today’s family and social dynamics have completely changed. It’s a renovation-must to incorporate an open floor plan in homes today. The kitchen, dining room, and living room all need to be formed into one big room.
Updating a home’s plumbing and wiring is a major renovation and it’s one that needs to be done first before any other aesthetic improvements happen simply because it requires tearing down walls and ripping through the floor… it just depends on how old the plumbing and wiring is.
You’ll want to install a new fuse box if the home has an old one, install stylish faceplates for light switches and electrical sockets, and replace all rusty pipes with new and improved rust-proof ones. It’s more efficient to make these improvements first in case it leads to the discovery of other issues. These improvements take precedence over aesthetic improvements.