Are you interested in investing in real estate? If so, you need to do everything within your power to maximize the value of the property you purchase. Even though that might mean renting them out, it might also mean some home improvement projects. There are plenty of renovation projects available, but you need to select ones that will increase the value of your property. It is tempting to get swept up by the emotion of everything, but instead of thinking with your heart, you need to think with your head. You need to view the property itself as a blank canvas, and you are going to turn it into something that someone else is going to pay a lot of money for.
As an example, you are probably thinking about renovating the kitchen or bathroom. As long as you do a good job, it should provide you with a nice return. On the other hand, there are several common mistakes that real estate investors make. What are a few examples of renovation projects you should avoid?
Installing a Swimming Pool
You probably think that having a swimming pool in your backyard is a great idea. It will provide you with a place where you can relax and hang out with your family members and friends. Even though a swimming pool may have a lot of emotional value for you, it is not going to have a lot of investment value. If you want to put a swimming pool in your own house, go ahead, if you feel like you will use it all the time. On the other hand, you are probably not living in your investment property. Therefore, you need to stay away from installing a swimming pool.
The reality is that swimming pools are incredibly expensive. It will cost you tens of thousands of dollars to install, and you will have to spend several thousand dollars every year maintaining it. Furthermore, there is always a chance that something could go wrong with your swimming pool, meaning that you may have to spend a significant amount of money on a repair bill.
Worst of all, there is no guarantee that your swimming pool is going to increase the value of your house. The reality is that a lot of people do not want to purchase a house with a swimming pool because they do not want to spend time or money taking care of it. Because a swimming pool is not necessarily going to add to the value of your home, you should try to avoid installing one.
Cheap Materials
If you need to repair or renovate an area of the house, try to avoid selecting cheap materials. You may think that you need to maximize your profit by minimizing your overhead expenses, but this is a double-edged sword. If you choose cheap materials when you complete your renovation projects, potential real estate agents and buyers are going to notice. They will realize that you have essentially put a band-aid on a house that has some other issues, which means that they might not be willing to offer as much money for it. If you are trying to get the most money possible when you sell that property, you need to choose quality materials that are going to last a long time. Even though you don’t necessarily need to use the best option on the market, you need to show potential buyers that you have put forth a decent amount of effort. That way, they will know that they will not have to do a bunch of repairs when they purchase the property.
Only Purchasing a Few Luxury Upgrades
Now, you do not necessarily have to purchase luxury appliances for the kitchen, but if you decide to do so, you need to go all out. If you only purchase a few luxury, high-end upgrades for the house, other people are going to notice that the house doesn’t quite match. For example, you may have a fancy refrigerator, but the stove looks to be a bit old. If the appliances don’t match, buyers are going to get confused, and they will simply go somewhere else because they do not want to rectify the situation.
Importantly, purchasing a bunch of high-end upgrades is not necessarily going to give you the return on investment that you expect. You are better off purchasing quality appliances in the middle of the price range if you want to maximize the value of your property.
Creating the Most Expensive House on the Block
When you try to maximize the value of the property you have just purchased, you may have visions of being the most expensive house on the block. Even though generating more money is nice, you do not necessarily want to be the most expensive house on the block. Even if someone can afford your asking price, they may not want to purchase the house because the neighborhood might not be as desirable for them. In addition, if they purchase the most expensive house in the neighborhood already, how much value are they really going to get? How much is the house going to continue to appreciate in value if it is already the most expensive property in the neighborhood? You don’t necessarily want to try to sell the most expensive house on the block because you may have a difficult time getting what you asked for.
Skipping What the Buyer Cannot See
It is true that there is never a second chance to make a first impression. You need to make that first impression count, which means presenting a clean, professional, finished product to someone who is interested in buying your house. On the other hand, you need to spend some time and money investing in things that the buyer cannot necessarily see on the surface, which includes the utilities.
For example, you must make sure you do a great job with the plumbing. You don’t want the buyer to deal with a water leak shortly after buying the home. You also need to pay close attention to the HVAC unit. The buyer will ask how old the HVAC unit is, and they want to know if it still has some life left in it. If you show that you are willing to go underneath the surface to provide the buyer with a beautiful home, you might be able to get more money for your property.
Get the Cash You Need for Your Real Estate Investment from Barrett Financial Group in AZ
Ultimately, there are many mistakes that real estate investors make, but as long as you think about them ahead of time, you can avoid making them yourself. That is where we can help you. We are Barrett Financial Group, and we have a tremendous amount of experience providing real estate investors and homebuyers with loans of all types in Arizona. It would be our pleasure to provide you with the cash you need for your next real estate investment. If you would like to learn more about the options we have available, give us a call today to speak to a member of our team!
