Renovating for Maximum Value
Friday Jan 06th, 2017Share
As investors looking to create value in their investment properties we are often faced with tough financial decisions. Do we pay extra for that expensive hardwood, or those high end appliances in the hopes to get higher then market rents for our investment property? Or do we cheap out and buy used appliances, and leave in the worn out existing flooring? I find the key is to find the right balance between new and existing, for each individual property.
Not everyone has the same investment model, some people specialize in ultra high end rentals, furnished suites for travelling business professionals, where very high finishes are a necessity and are well cared for by the tenants. On the flip side, others prefer lower-income neighbourhoods where unit turnover is high, rent is late and damages are frequent, as this allows for a much larger portfolio for the same dollar value. This being said, we find most investors are neither of these two extremes and fit somewhere in the middle.
When we look at units for our clients in Toronto there are typically a few select things we find require replacement to bring the units up to the standard of living that is expected by most Toronto tenants.
As you may already know, one of the simplest ways to add value to your home is with a new coat of paint. Rental properties are no different. The smell alone lets potential tenants know you’ve done work as soon as they walk in the door. It also works to mask other basic household odours. Prior to painting, always make sure to patch and smooth out any old holes or damages in walls for as even a look as possible. As for colour choice, light greys are vey popular right now, brightening up the space and providing a modern/neutral tone to go with most furniture tenants may have.
Flooring quality and condition often vary greatly from property to property. In some properties you will find parquet or old hardwood floors that are still immaculate and may be good to keep, or even refinish. In most cases however these floors are buckling, damaged, or worn beyond repair and should be replaced. When replacing flooring a good basic option would be a 12.3mm laminate flooring, I make this suggestion for a few reasons. Price is the major factor, most laminate is very inexpensive and easy to lay translating to less labour cost. Availability is another factor, you can find many different styles and colours to go with your property without having to greatly increase your budget. Finally, and perhaps most important is durability, laminate flooring can take a beating and still look good which is exactly what you need in a rental unit.
Kitchens & Bathrooms
Kitchens and bathrooms I treat similar to flooring for rental units. If they are fairly up to date and in good shape often times they can be kept as they are. If you have a bathroom with a pink toilet however it definitely has to go! When replacing you don’t need anything too expensive, your focus should a compromise between durability, affordability, and style. Granite or quartz countertops look great and are quite durable, but are exponentially more expensive then basic countertops which could be replaced multiple times for the same cost. As for cabinetry and vanities, the basic builder grade Home Depot options typically do just fine. If you’d like to splash add a little something extra to draw in good tenants, the place to do this is in the tiling. Backsplash, floor, and shower tile can be found very affordably from the clearance section of your local tile store, allowing you to save a little for much nicer finish materials.
Is there anything you never leave untouched in your renovations? Let us know in the comments below!
Director, Property Management
My Capital Corner Team