Improving your investment property's value should always be the long-term goal. For one, a higher property value lets you command more in rent. That's an automatic win right there. More than that, though? It guarantees you returns -- good ones -- when it comes time to sell.
Some bumps in value come for free. Your neighborhood might get popular, sending home prices up and your property value up with it. Others, though, you'll need to work for.
Want to give your investment property's value a boost? Here are five ways to do it.
1. Make it more energy efficient
Energy-efficient upgrades help you twofold. First, they reduce your energy and electric bills. Even if that only helps you when the home is occupied, that could equate to serious savings over the years.
Additionally, it also makes your home more marketable. Buyers would much rather pay an extra $5,000 for a house than spend $200 more a month in summer cooling bills.
Here are a few ideas for making the home more efficient:
- Swap out your windows for low-E models.
- Seal up gaps around doors, windows, and in the attic, basement, and crawl space.
- Add in solar panels or solar-powered water heaters and appliances.
- Install a smart thermostat (such as Nest or ecobee).
- Install low-flow toilets and showerheads.
2. Invest in long-term landscaping
Curb appeal plays a big role in your home's value, but it can also be very expensive -- especially if you're updating it every season or even annually.
A better option is to invest in more durable landscaping now -- things like large shade trees (this can eventually cut down on your HVAC bills, too), gravel gardens, perennial bushes and ferns, and other plants that will stand the test of time. You could even hardscape or xeriscape the yard entirely -- because what renter really wants to mow the lawn anyway?
3. Improve the home's health features
Everyone wants a home that helps them lead longer, healthier lives -- and they'll typically pay more for it, too. Consider making some health-focused improvements, like adding an air purifier, installing a water filtration system, or putting in a carbon monoxide monitor. Even little additions can make a big difference for your next tenant.
4. Make some high-ROI upgrades
Lots of home upgrades can boost your property's value -- not just health-focused ones. For some guidance, look to Remodeling Magazine's Cost vs. Value report. It takes into account average costs for various projects as well as the resale value they add to a property. This year, replacing your garage door, adding stone veneer siding, remodeling your kitchen, and installing a wood deck topped the list for highest-ROI projects.
5. Update older and outdated systems
Older HVAC, plumbing, electrical, and other systems mean three things for your future tenants or buyers: more problems, more hassle, and more costs. Whether the system holds on for one more year or five, eventually it will break down and need to be replaced.
That breakdown might mean a flood in the laundry room, a no-A/C week in the middle of summer, or an overflowing toilet when a guest is over. Whatever the issue is, you can bet that your tenants don't want to deal with it (and they'll probably pay more to make sure it doesn't happen).
The bottom line
If you want to raise your rent or just ensure bigger returns once you're ready to sell, investing in your property is critical. Just make sure you choose your projects carefully and focus on long-term benefits for the future buyer (health, energy-efficiency, safety, etc.). That's what buyers are willing to pay the biggest premium for.