- Landlords can earn an average net rental yield of 10 percent, and rental income is often tax deductible.
- Upgrading the exterior of a property with landscaping, painting, walkways/driveways, and garage upgrades can increase its value by 8%.
- Plumbing, electrical, and HVAC systems should be regularly inspected or upgraded to ensure safety and efficiency.
- Interior upgrades such as new flooring, updated kitchen/bathroom fixtures, and appliances can significantly increase the value of a property and make it more attractive to potential buyers or tenants.
Investing in real estate can be a highly profitable endeavor, and with the right strategies, it can be a great way to make money and generate long-term wealth. Real estate investments have historically provided some of the highest returns of any asset class and tend to appreciate over time. According to the National Association of Realtors, most single-family homes have increased in value by an average of 4.3 percent each year since 1968.
In addition to potential capital appreciation, real estate offers investors consistent tenant rental payments income. For example, according to MarketWatch, landlords who own multiple units can earn an average net rental yield as high as 10 percent or more based on their monthly rental payments relative to their original purchase price. It is also worth noting that rental income is often tax deductible for many landlords, which can help reduce their taxable income and maximize their ROI.
Still, buying and selling will not be sustainable, especially in the short term. As a result, you might have to invest more to get the most value out of the real estate. Upgrading your properties can help you with that, and focusing on these areas will be ideal.
Curb Appeal
It is a well-known fact that first impressions are crucial, especially regarding real estate. Potential buyers or tenants will be immediately drawn to properties with great curb appeal, so taking the time to spruce up your property’s exterior can yield great results. Here are a few upgrades that can help you achieve this:
Landscaping
A well-manicured lawn and garden can significantly increase the attractiveness of a property. Adding trees, shrubs, flower beds, and other greenery can give your property an inviting look.
Painting
Giving your property’s exterior a new coat of paint can make it look brand new again. Be sure to use high-quality colors that will last for years.
Walkways and driveways
Installing walkways and driveways made from materials like concrete, stone, or brick can add dimension to the front of your home and create great visual interest. These upgrades also offer practical benefits since they provide easy access for people in and out of the property.
Garage upgrades
Upgrading your garage can add a lot of value to your property. Installing new doors and windows and replacing worn-out parts can make the area look much better. You could also add built-in storage or shelving if desired.
Improving curb appeal can result in an average increase of 8 percent in the value of your home. This is an excellent return on investment and will help you maximize the value of your property.
Well-Maintained Home Systems
A home is not a home without the proper systems in place. Potential buyers or tenants want to ensure these systems are up-to-date and functioning correctly. Here are some of the essential home systems you should focus on:
Plumbing
Regularly inspecting your plumbing system can help identify issues before they become major problems, saving you time and money in the long run. You should also consider replacing old pipes with more durable materials like copper or PEX piping if needed. Hiring a reliable plumber will be essential to upgrading your real estate properties.
Electrical System
Upgrading your electrical panel is essential if your property has outdated wiring that could be a fire hazard. An updated electrical panel will ensure that all electric appliances function safely and efficiently. You should also be able to install additional outlets throughout the house as needed.
HVAC System
The HVAC system is one of the most important investments you can make in your real estate property. A well-maintained HVAC system will ensure a comfortable environment for potential buyers or tenants and help you save money on energy costs.
These upgrades can result in an increase of 10 percent or more to the value of your home, making it a sound investment.
Interior Upgrades
The interior of a real estate property can have a significant impact on its value. Upgrading the interior with quality finishes and materials will create an inviting atmosphere that potential buyers or tenants want. Here are some upgrades to consider:
Flooring
Installing new floors is one of the most cost-effective ways to transform the look of a home’s interior. Depending on your budget and preference, consider adding hardwood, laminate, tile, or carpet.
Kitchen Updates
Updating your kitchen is another excellent way to add value and make it more attractive to potential buyers or tenants. Replacing cabinets, countertops, fixtures, and appliances with newer models can completely change the look of a kitchen in just a few days.
Bathroom Updates
If your real estate property has outdated bathrooms, it can be a huge turn-off to potential buyers or tenants. Replacing tubs and showers with more modern fixtures and upgrading the tile will give the bathroom a new look.
These upgrades can significantly increase the value of your property and make it much more attractive to potential buyers or tenants.
The Bottom Line
Regarding real estate investing, upgrades are the key to making your properties more desirable and increasing their value. Investing in curb appeal, home systems, and interior design can significantly impact ROI. Properly maintaining and upgrading your real estate property will help you maximize its value and ensure that your investment pays off in the long run.
