There are few ways to get started investing in real estate. Doing renovations on a condo can be an excellent way to earn money in the long term. There
There are few ways to get started investing in real estate. Doing renovations on a condo can be an excellent way to earn money in the long term. There are many returns on investment that you can get if you decide to renovate a condo.
You will want to look into all of the different areas of the condo that you will be able to improve and see which ones will give you the biggest return on investment possible.
If you’re going to invest in a renovation, it’s crucial to understand that the investment must pay off. It needs to make sense. Since a renovation is a major financial commitment and involves many months of inconvenience, you need to be confident that you’ll get back what you put into it when it comes time to sell your home or attract tenants. This chapter will help you determine 5 returns of investment of a condo renovation:
Increased Resale Value
As a condo owner, you are always free to renovate as you please as long as it does not infringe on any co-owners rights. If your condo is not in original condition, its value will probably be lower than an equivalent unit in its original condition. The cost of restoring or renovating a unit must be recouped at the time of sale, so the less money spent on renovations, the greater the profit for the seller.
Higher rental income
If your intention is to rent out your condo, renovations have the potential to increase rental rates from prospective tenants. A few minor upgrades could boost your rental rate by hundreds of dollars per month. By investing $5,000 – $8,000 on a kitchen renovation, for instance, owners can expect to recover 100% or more of their investment and add an additional 5% – 8% to the monthly rental rate. A major renovation of a one-bedroom condo, including remodeling the kitchen, bathroom and installing higher-end flooring and appliances, could boost your monthly rental income by $400 a month or more. That’s an extra $4,800 a year in your pocket. If you own multiple units, the potential return on investment is even greater.
Lower vacancy rates
Aside from increased rental rates, upgrades can also lower vacancy rates in your condo. Renters are attracted to condos that look fresh and new – not something that was built decades ago. Modern kitchens, for instance, tend to attract more interest than old-fashioned ones. A fresh coat of paint on the walls and doors will also give off the impression of a new unit. If you want to be able to rent out your condo in a short period of time, it’s crucial to undertake a condo renovation project before putting it on the market for rent.
Higher quality of life
If you’re going to live in this condo for a long time, you should also consider enhancing its comfort and functionality. While these renovations may not directly boost your resale value or rental income, they can add significantly to your quality of life.
Lower Maintenance Costs
Renovations can also reduce maintenance costs by improving the structure of your building or replacing old appliances with new ones that have lower operating costs (think LED lighting or low-flow shower heads). For example, if you install new windows and doors, this can improve the insulation of a building and reduce heating and cooling costs over time. These savings can offset some of the cost of renovations in the long run.
In conclusion, a condo renovation is usually a costly project but the returns on investment can be high, especially in the long run. A key aspect of a successful condo renovation is working with experts in order to manage the project efficiently. An experienced team will know how to complete your renovation within budget and on time. Deciding to renovate your condo will have a positive effect on your life by increasing your enjoyment of the space. However, you should make sure you are renovating for the right reasons.