Episode 5: 4 Rules to Renovating Your Property
This episode of The Real Investor Podcast dives into the rules of renovating rental property. Based on Dennis’ U.S. News & World Report article, he covers what he sees as the four most important considerations when it comes to renovating.
Make sure the renovations meet municipal and building code standards. You need to ensure the property is legally habitable, particularly if you’re purchasing distressed property.
Improve the property to the appropriate condition of the local market. Only make renovations that make sense! You don’t need to add granite countertops to a B class property because quite frankly, that renovation won’t be worth the additional rent cost to the renters in that market.
Understand the return on investment (ROI) and lifespan of your renovations. A good rule of thumb is to consider renovations that yield at least 20% on your initial annual return on your renovation investment and a lifespan that provides return well beyond the initial cost.
Consider the next owner of your property. As an investor, you may need to sell your property at some point and it’s important to consider the overall value your renovations add so you don’t end up losing money.