For the highest return on your rental property investment, you must develop a reliable and long-term property renovation budget. While rental properties do not typically need a complete “flip” renovation, it is important to know where you have to allocate your property renovation budget to get the greatest effect on the Milwaukee market in increasing rent value.
Seasoned property investors recommend allocating your budget for property renovation on the main property features according to the following percentages:
- Kitchen: 30%
- Bathroom: 20%
- Exterior: 20%
- General Improvements/Other: 30%
After you determine the areas of your property that belong to these percentages, factor in the total worth of the property and get a percentage of it. For example, if you have a $40,000 property renovation budget based on 10% of a $400,000 property value, it should look like this:
- Kitchen: $12,000
- Bathroom: $8,000
- Exterior: $8,000
- General Improvements/Other: $12,000
Keep in mind that each adjustment needs to factor in your target market and what will maximize value for your future Milwaukee renters. Create a list of every room and feature in your property and utilize your determined property renovation budget to identify what needs improvement the most (you do not need to use the whole budget).
Certain property investors will want to maximize their property renovation budget by redoing the entire kitchen or bathroom, but keeping costs as low as possible and finding what needs the most work is essential. For instance, you could keep the primary kitchen body and just change the floors, sink and faucet, add new appliances, and paint the cabinet doors or add new handles. In general, bathrooms can stay the same with their walls and layout, but you could install a new shower head or heads, toilet, or vanity based on your aim for a more clean and modern look. If there are items from your property that you do not plan on keeping, consider utilizing a second-hand market by selling them to get extra funds for adding new items. Alternatively, to cover costs, other Milwaukee investors might buy from the second-hand market or a community online classifieds section to find cheaper items for kitchens, bathtubs, windows, and doors.
A full renovation with your Milwaukee property renovation budget will usually add additional value. However, overcapitalizing can be a factor, especially when rental values can change according to the market. As such, ensure that your budget matches your goals and that you do not perform unnecessary pricey renovations to attract higher rent.
In determining the most important items to concentrate on with your property renovation budget, we have learned that these things tend to attract a better rent value:
- Updating the kitchen and bathroom to be more modern
- Installing blinds/window dressings and floor coverings
- Including privacy features
- Outdoor living spaces and fencing
- Ease of access to rooms
- Natural lighting in the home
The most crucial factor in renting to Milwaukee residents is to have the best presentation that you can to make a good impression with your prospective residents that will last long after they decide to rent your property. Also, before contacting you, potential residents will often drive by the property itself to see its condition. If they are impressed, then they will contact you for more information. If not, they may move on to the next rental property. As such, curb appeal can help attract and retain quality tenants. A successfully planned property renovation budget will result in a thorough consideration of all the costs necessary to allocate the right resources and time to what matters most to your future renters.
Would you like a free assessment of your rental property, or would you like more information about Real Property Management Greater Milwaukee? Contact us online or call us at 262-309-6961 today!
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