Invariably, residential real estate investors are interested in ways to increase home value on their properties. Whether you’re flipping homes, looking for ways to charge higher rent, keeping an eye on the prospect of selling a rental property, or you have other investment plans, raising the value of your properties is key.
But it’s easy to waste a considerable amount of money making renovations, upgrades, and other improvements that don’t deliver an ROI. To maximize your profits—and even avoid the potential to lose money on some investments—you have to be familiar with the reliable ways to increase home value. These are the ones that provide a return that’s greater than the money you spend on them.
So, here’s a quick look at recommended ways to increase home value that actually provide an ROI.
Improvements that Raise Home Value and Provide an ROI
- Adding a bedroom if your property has fewer than four bedrooms and enough square footage to pull it off practically. Ideal situations include homes with a bonus room that can be converted to a bedroom with basic additions like a closet and a door, or homes with an oversized family room that can provide the square footage. If you have to build onto the home, this may be too costly an option to deliver an ROI. And adding additional bedrooms beyond three or four is unlikely to increase the home value significantly.
- Adding a bathroom can be a major expense, but it can more than pay for itself in a multi-bedroom home that only has one bathroom. Also, adding bathrooms to keep the number equal to the number of bedrooms can provide an ROI. Another good option is converting a half bath to a full bathroom when possible. Consider adding a small shower if there’s no room for a bathtub. You can do this when adding full baths, too, but it’s best to have at least one bathroom with a tub in any home.
- Upgrading bathrooms to give them a more contemporary look and to add more modern fixtures is also a smart home improvement project.
- Creating an open kitchen when it’s closed off can be a relatively simple project with a big payoff. Kitchens that are open to the living room area are highly desirable to buyers and renters alike. And, conversely, closed-off floor plans in the main public living space are often a deterrent to both.
- Creating extra storage space can be done affordably and provide a significant ROI. This is especially true in homes that don’t have larger traditional storage spaces like a basement, attic, garage, or shed, or that have limited closet and/or cabinet space. Adding a shed to the back yard may be an option. Adding or expanding closets, installing shelves, and other modes of adding storage space are all smart ways to increase home value.
- Upgrading the kitchen is a very reliable way to raise home value. Just about any type of improvements should generate a return. This may include making the layout more practical, upgrading the appliances (energy-efficient models are desirable), aesthetic improvements like nicer counters or cabinets, and more.
- Putting in new flooring is a good move when the existing flooring isn’t in great shape, is not particularly attractive, or when there’s different flooring in different rooms. Consistent flooring is a desirable look that helps create a sense of unity throughout the home. Hardwood floors are always in demand.
- Installing smart home features is a fairly simple upgrade that boosts home value. Consider adding smart lights, thermostats, locks, and similar technologies to your investment properties.
- Adding outdoor living space like a deck, patio, or porch is another savvy home improvement. Renters and buyers both appreciate a functional outdoor space.
- Making exterior improvements that boost curb appeal are always helpful for renting, selling, and raising home value. Which improvements you should make depends on the state of the existing exterior. Consider whether your investment property would clearly benefit from things like a new coat of paint on the house, new shutters, a new front door, a new garage door, new porch railings, and professional landscaping.
