Property Renovations - A Detailed and Comprehensive Guide for 2023

Following years of rapid growth, rental prices are beginning to decrease and flatten across Canada. As a real estate investor, you may be asking what steps you can take to keep raising your profit margins and increasing your investment returns.

Increasing the value of existing assets through value-add property renovations is one approach to boost the amount of passive income you generate from your real estate investments. You may reposition your home and command better rental rates from both existing and future occupants by implementing a few easy, cost-effective improvements.

While upgrading an existing house is usually an excellent approach to increase the amount of passive income you can create, there are a few things you'll need to do to make this plan work. For example, you'll have to consider your current tenants' needs and legal rights. You'll also need to balance the remodeling costs with the higher rentals you'll be able to demand, as well as possibly obtaining a loan to renovate the house.

But first, before we dive into property renovations, if you want to learn how you can use your existing home equity to finance your renovations, click the link below for a free strategy call today.

What Should You Think About Before You Start Property Renovations?

While it may appear that remodeling your rental home is a no-brainer, there are several things to consider before heading to the appliance and hardware store.

Consider your present tenants first. Before you start renovating, inform them about the upgrades and encourage them to discuss any issues they may have. Property renovations might make tenants feel like they're being forced out - after all, they're noisy and inconvenient, and they usually coincide with a rent increase.

Following that, contact any regional or provincial housing authorities. You may need to inquire about the laws and regulations governing multi-family property improvements. The way you handle refurbishment projects may be governed by local rent control and tenant protection rules.

You'll also need to consider how you'll fund property renovations. If you have enough cash on hand to completely rebuild your home, it may be preferable to pay for the improvements upfront. You might also take out a second mortgage on your home or another line of credit to finance property renovations to preserve liquidity.

Property Renovations That Are Simple and Cost-effective

As a real estate investor, you want to maximize your profit margins while keeping your running costs to a minimum. As a result, look for low-cost renovation options to increase the value of your rental properties as much as feasible. Here are three low-cost renovation ideas that will help your property attract better rentals.

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Upgrade the exterior of your building

Investing in the body of your building can dramatically improve its curb appeal. This could significantly increase the value of your rental. If you're redesigning a large property, consider recruiting a landscape architect. Applying a fresh coat of exterior paint, installing new outside window trim, and tidying up the garden beds can all help to increase the value of your home.

Install new appliances

If your rental property's devices appear like they haven't been updated since the 1990s, or if they are off-white, off-brand cheap equipment, it might seriously reduce the rental unit's value to prospective renters. They're considerably more likely to identify your rental apartment with value if they see name-brand, cutting-edge appliances.

Invest in higher-quality flooring

Few things aid in the sale of an apartment more than its flooring. If you want to raise the rent on your flat, get rid of the old carpeting and cheap laminate and replace it with hardwood or a modern composite equivalent. Because they are appealing and durable, hardwood flooring and concrete or tile flooring are good choices for rental properties.

Getting Ready for Property Renovations

To start a renovation project, you'll need to spend a lot of time planning. Taking the proper steps to plan an upgrade will prevent you from becoming confused and spending more time and money than expected. Here are some things to think about:

Plan with the help of a pro

Prepare for a property renovation by working with a certified professional contractor to design the project. Even if you're a reasonably proficient handyman, a professional should always handle significant home upgrades. Professionals can complete the job faster and with more minor disturbances to current renters.

Get into agreement

Create a contract with your contractor that specifies the expenses and timeline for your renovations. It's always ideal for working under contract, both for your safety and the contractors. If you're renovating in the middle of a tenancy, your contract should include move-out and completion deadlines. This permits you to evaluate how long your rental will be without a source of income.

Choose your items

Once your contract is signed, you may begin choosing the materials and goods you want to use to restore your home. While it may be tempting to use the cheapest materials available, keep in mind that the primary point of upgrading your rental is to increase its value. Choose high-quality items, but keep your budget in mind.

Maintain a communicative tone

Maintain a transparent and open communication channel with your contractor and existing inhabitants during the refurbishment process. Notify your contractor about future move-in and move-out dates at your property and inform residents of possibly disruptive changes in the workflow on the horizon. When upgrading a multi-family home, keep in mind that some flexibility on both sides will be required.

While remodeling your rental property can be difficult, it is frequently the most effective approach to increase the profitability of your investment. Taking the necessary steps to improve your property will help you save money on repairs while maintaining solid relationships with your current tenants.

Keep in mind that if you plan on holding your investment for more than a decade, you'll need to consider property renovations. Many investors associate property improvements with fix-and-flip techniques, but they're also necessary for long-term holdings to retain their value. Consider what you upgrade, how much you spend, and how you recoup the cost of your upgrades.

Once again, if you want to learn how you can use existing investments to finance your renovations, click the link below for a free strategy call today.

The Quick Guide To Renovating Tenant Occupied Properties, With Scott Dillingham