When investing in property to create value, the same rules do not apply to all types of homes, cities, buyers or tenants. What one person likes, another may simply hate. What is popular in New York may be inappropriate in Arkansas. Fads of today can become outdated tomorrow. A home or feature that suits you will not necessarily appeal to the lifestyle of someone else. What you invest for a remodeled kitchen in Raleigh may pay back $4.00 for each $1.00 invested, while in Milwaukee, however, your return for similar improvements could fall to 50 cents per dollar.
There are numerous variables in the value equation. Before planning improvements you should learn what features your potential buyer or tenant is willing to pay. Planning to create value necessitates research and not reliance on personal tastes or preconceived ideas. Success at this requires that you develop a strategy for market-based home improvement.
Property managers and local realtors can tell you what potential tenants and home shoppers like and dislike. Identify unusual niches for the most wanted features. Explore popular apartment complexes and new home developments with the following in mind:
* Concentrate on the floor plans, colors, decorating themes, and floor coverings.
* Take note of which models, features and amenities are the best sellers.
* Which models are rarely selected?
* What features are functional rather than simply glitzy?
* Which apartment style dictates the highest rent?
* What type of apartment complex has the lowest vacancies?
Going to open houses will stimulate your creativity. Look at how other property owners have redecorated or remodeled their property. Talk to others with modeling experience such as your friends and relatives. Find out what they did to make their property more appealing. Purchase bookstore guides that offer ideas on improving your home or apartment. Gather as many creative ideas as possible. The more ideas you have, the more likely you will be able to develop a workable profit-generating improvement plan.
When shopping for a property with an eye toward creating value, stifle your enthusiasm and your negative reactions. Whether you like or dislike the house or apartment complex is not the main concern. But based on your market research, ask yourself this: Can I invest $5,000 to get a $15,000 return? Set your personal judgments aside and judge strictly on a property’s profit potential.
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More About Geoff Spencer: Geoff Spencer is a staff writer at Real Estate Digest and is an occasional contributor to several other websites, including Online Business Gazette. |
