Adding value to real estate doesn’t have to cost a fortune or take months of renovation work. There are lots of ways real estate investors can add value to their properties with comparatively little money and little time. At Gatsby Investment, we add value to real estate investments every day, and we have a list of industry insider value-adds you can use to boost your property values!
And, of course, the upside to increasing your property value through value-adds makes the process well worth it. By adding value to your real estate, you can:
- Charge higher rents.
- Find new residents faster, which means less vacancy loss.
- Attract high-quality residents who will take good care of the property.
- Maximize your profits when it’s time to sell.
- Find a buyer faster, allowing you to minimize holding costs while the property is on the market.
Whether you’re flipping a property for short-term profits (you might be surprised at how much you can make flipping houses), or you’re renting out the property long-term for consistent cash flow, you can benefit from our list of ways to add value to your property.
The 11 Best Ways to Add Value to Real Estate
Here are the 11 best ways to add value to real estate, starting with the easiest and most affordable options.
1. Update Finishes
In many cases of homes appearing dated, a full renovation is unnecessary. Instead, you can simply update the outdated finishes to instantly make the house feel more modern. Consider some of the finishes in your property that might change the look of the space with a quick replacement:
- Light fixtures
- Drawer pulls
- Cabinet handles
2. Freshen up curb appeal
What do prospective renters and buyers see as they approach your property? The front of your property sets a first impression that affects how people view the rest of your property. And with most buyers and renters looking for property online, having picture-perfect curb appeal is critical in generating interest in your property.
Start with a fresh coat of paint on the front door. Then make sure your landscaping is appealing. Any grass should be mowed regularly, debris should be cleared from flower beds or desert landscaping, and bushes and trees should be properly trimmed. You might even consider adding fresh mulch or new plants to help your property make the best possible first impression.
3. Add a Fresh Coat of Paint, Inside and Out
Fresh paint instantly makes a space feel cleaner and newer. You can use light colors to make a room feel larger and darker colors to make a room feel cozier. Fresh paint can even cover odors from cigarette smoke and pets that get absorbed into the walls and ceilings.
Exterior paint takes a beating from the wind, rain, and sun. But with a fresh coat of paint, your property will shine like new.
4. Add a Water Softener or Reverse Osmosis System
If your investment properties are located in an area with hard water, consider adding a water softener or reverse osmosis system to add value to your properties. Not only does this make the water better for drinking and showering, but it can also save money in the long run by reducing the wear and tear on plumbing.
5. Improve Energy Efficiency
Today’s renters and buyers are big on energy efficiency, both as a way to protect the planet and as a way to save money on utility bills.
There are lots of ways to improve the energy efficiency of your investment properties. For example, you can:
- Upgrade to energy-efficient appliances,
- Install energy-efficient windows and doors, and
- Add solar panels.
6. Add Technology
Smart home technology is in high demand by those looking to buy a home (or rent one) because it makes home life more convenient and more efficient. Residents can control home systems like security, temperature, and lighting directly from their smartphones.
As with energy efficiency, there are several ways you can incorporate smart tech into your investment properties. Options include:
- Security systems,
- Appliances, and
- Home entertainment.
7. Update Flooring
Flooring is subject to more wear and tear than most of the house, so it can look aged and worn comparatively quickly. If you’re planning to sell or rent out your property, updating the flooring is a solid way to add value.
With so many flooring options available today, there is something for every style and every budget. You could invest in trendy bamboo flooring, choose a durable laminate, or save money with a modern vinyl that’s easy to install.
8. Reduce Noise
Noise is a major turn-off for most buyers and renters. But there are improvements you can make to reduce the impact of outside noise on your properties and increase your property value. Here are a few ideas:
- Make sure the units are properly insulated.
- Replace old single-pane windows with noise-resistant double-pane windows (which will also be more energy-efficient).
- Consider adding a water fountain to outdoor spaces, which will mask less desirable noises like traffic.
9. Finish Unfinished Areas
Does your property have an unfinished area like an attic or basement? By finishing these areas, you can increase the usable square footage of the property and create additional living spaces for your residents or buyers. With more usable space, the property value instantly increases.
And it might not take much to finish these areas. Some drywall, paint, flooring, and baseboards might be all you need!
10. Renovate the Kitchen and Bathrooms
If a full renovation is necessary, kitchen and bathroom renovations statistically provide the greatest return on your investment. For rentals, stick with classic aesthetics that won’t look dated in just a few years. For flips that you plan to sell immediately, you can go with trendier materials that today’s buyers are looking for. Just keep the look fairly neutral so you can appeal to as wide a range of buyers as possible. And regardless of your investment type, make sure you upgrade the appliances. Adding new appliances, especially energy-efficient appliances instantly adds value. We should also note that renters are willing to pay more for homes with in-unit washers and dryers.
11. Build an Accessory Dwelling Unit (ADU)
An ADU is a smaller home, built on the same lot of land as the primary dwelling. Guesthouse, casitas, mother-in-law’s quarters…ADUs go by many names, but whatever you call them, they result in value-add by creating an entirely new living unit on the property.
Naturally, building an ADU is a bit more involved than the other items on our list of ways to add value to real estate. You’re essentially building an entire tiny home, so you need to:
- Confirm that the zoning allows for a secondary living space,
- Apply for permits, which can take several months to get approved, and
- Have the expertise (or a contractor you trust) to build a complete dwelling, including plumbing and electrical.
But the ROI is impressive when you effectively convert a single-family property into a multi-family property.
Renovation Ideas to Avoid
There are many mistakes to avoid when investing in real estate, and there are a few mistakes that are commonly made when trying to add value to real estate through renovations.
Here are three renovation ideas to avoid:
- Over-improving. In some real estate markets, laminate countertops and vinyl flooring are standard. Those markets wouldn’t support high-end materials like quartz countertops and ceramic tile flooring. Over-improving with materials that exceed the local standards will not provide a positive return on investment. Stick with materials that are appropriate for your market and your property.
- Hiring subpar contractors. One of the quickest ways to decrease your returns on a renovation is to hire contractors who don’t provide quality work. Best case scenario: you save some money, but you end up with a lower quality finish than the other homes in your market, which nets you lower profits. Worst case scenario: you have to hire a better contractor to fix the mistakes of the incompetent contractor, costing you time and money.
- Going in without a plan. Renovation projects require planning and organization. If you’re considering a fix and flip, check out our flipping a house checklist to help you stay organized and on track.
Let the Experts Handle It
While this article has shown you how to add value to real estate in a few ways that any property owner can handle, there are times when it’s best to leave the real estate value-adds to the experts.
If you don’t have the time or desire to renovate properties (or the cash available to buy a home and complete the necessary renovation work), real estate syndication might be a more enjoyable and potentially more profitable option for you. With real estate syndication, you make a comparatively low initial investment to buy a share of a real estate investment project, which is actively managed by industry experts.
Gatsby Investment offers fix-and-flips, new developments, and long-term rentals, both for single-family homes and multi-family properties (we often add value to our properties by adding those ADUs we mentioned previously). We also offer luxury home investments in exclusive Los Angeles neighborhoods for the discerning real estate investor. We take the stress out of real estate investing, making it as convenient and fun as possible.
It’s easy to invest with Gatsby. You simply:
- Sign up online.
- Get verified as an accredited investor.
- Choose your investment project (or perhaps several projects for an instantly-diversified real estate portfolio).
- Watch your project progress through your online dashboard.
Our team of experienced real estate analysts, architects, designers, builders, landscapers, and property managers handle every detail of your investment to maximize yield potential.
Get started today by signing up with Gatsby Investment.