There are many different types of investors in real estate. Some look for “turn key ready” properties that can be rented out the day after closing. Others love distressed properties that need thousands of dollars to get rent ready. And then there are mixes of both types in between. Regardless, all investors should be interested in getting higher returns to increase their cash flow. Simple home improvements could do just that.
Currently, Real Property Management Investors Choice has partnered with Troy Shafer of Nashville Flipped for a property in the West End area. A large portion of what is being done are major renovations, but there are some small improvements as well, including tasks such as re-finishing the floors, putting in new carpet and removing unwanted trees outside. Given that these tasks are not mandatory, they are not considered repairs. Still, doing them is often in the best interest of the landlord.
For example, let’s say a landlord decides to put in brand new carpet in the three bedrooms of their townhome. The initial cost is around $1,000, depending on the size and grade of carpet. But what if the rental price goes up by $200 because there is brand new carpet? Well, in one year’s time, the owner makes an extra $2,400. A net return of $1,200 sounds pretty good. Even if the value goes up by just $100, the landlord still comes out ahead by $200 by year’s end.
Another benefit of making small improvements is to get a tax break from Uncle Sam. Improvements can not be fully deducted in one year like repairs, but there are still some benefits. With improvements, you can deduct a small portion on your taxes each year through depreciation. For more, check out this article from Landlordology.
Not all home improvements are equal. In general, it is wise to make an improvement that will appeal to a wide variety of people. Tiling the bathroom floor is appealing to many while installing a security system probably is not.
It may be a smart idea to consult a property manager or another professional in the industry before making an improvement.
Pictures of home improvements
The kitchen floors needed to be refinished
This tree was in the neighbors lawn and on power lines