5 Remodeling Projects that Increase the Value of Your Investment Property

Looking for a renter to fill your vacant unit? Interested in increasing rent prices? Remodels increase the value of your rental property.

The National Association of REALTORS (NAR) and the National Association of the Remodeling Industry (NARI) created a Remodeling Impact Report in 2022, sharing the reasons a homeowner remodels, the outcome of various remodeling projects, and the level of happiness post-completion of a project. There is also an estimated cost and cost recovery for the majority of the remodels. All estimations are based on a 2,495 square foot house built after 1981 with no hidden issues. Projects and materials are standard or typical quality.

Certain remodeling projects increase how much you can charge for rent, decrease vacancies, boost the overall happiness of renters, and reduce ongoing maintenance costs. Consider these five renovations for your rental property:

1. Paint the Interior of the Unit

Upon purchase, many investment properties are outdated. Updating the place with a coat of neutral paint will make the space more appealing and feel fresh. Remove any outdated wallpaper or strange paint colors; renters are more likely to pay for a space with light, neutral colors. Plus, the space itself will appear bigger.

The cost of this renovation varies based on the size of your rental property. If you hire a company to paint your interior, it can cost anywhere from $7,500 to $10,500. Many companies book far in advance, so plan accordingly. If you decide to do it yourself, you only have to pay for the paint and supplies, so the price will be significantly lower. If you want to take on the DIY, use this paint calculator to estimate how much the project will cost.

2. Upgrade the Kitchen

A kitchen upgrade gives 78% of homeowners an increased sense of enjoyment. The same can be true for renters. Upgrading worn-out appliances and installing new flooring, countertops, and cabinets make people more likely to rent from you. People spend a lot of time in their kitchens, and it is often a focal point when people are looking for a place to live. 

NARI Remodelers estimate that this project will cost $45,000 on average for a full upgrade. 

3. Make the Property More Energy-Efficient

Reduce you and your renters’ energy costs with a few updates.

NARI Remodelers estimate that an insulation upgrade costs about $2,500, and the NAR estimates that the same amount would be recovered in the sale of the property. Proper insulation will leave your renters feeling more comfortable, keeping out the harsh cold of winter and dramatic heat of summer. They will also use heat and air conditioning less frequently, lowering the overall electric bill for the property.

Another way to improve energy efficiency is installing new windows. This can have a higher cost, with vinyl windows coming to about $30,000, per NARI Remodelers’ estimate. Same as upgrading insulation, new windows will keep outside temperatures out, increasing comfort and efficiency for your renters.

If you’re looking to use renewable energy, consider installing solar panels. In Vermont, the average cost for a 6-KW system with 26% federal tax credit applied is about $12,300. This investment depends on the type of solar panel and the installation price. This project reduces you and your renters’ carbon footprint and decreases your electricity bill significantly. In Vermont, there are several incentives for solar panel installation, including tax exemptions and a federal solar tax credit.

4. Adding Storage Opportunities

Is your rental property lacking storage space? Storage space is a necessity for many renters, so adding closets and shelving wherever possible will boost your property’s value. In fact, closet renovation gave 79% of homeowners a greater desire to be home since completion. The total cost of this project is approximately $6,000, according to NARI Remodelers. This improved people’s livability and organization in their home. Spacious storage areas are a major selling point for renters, especially because so many rentals do not have an abundance of space. 

5. Remodeling the Bathroom

Is your rental property old? Whether you recently purchased or have owned it for years, consider remodeling the bathroom. Bathroom features can easily become outdated and worn-out, and upgrading can add valuable features and improve overall livability of tenants. 

According to NARI Remodelers, a full bathroom renovation can cost about $35,000. If this amount is over your budget, think about which features in the bathroom need updating the most. Even updating a few elements can make the space look brand new.

Take the opportunity of a vacancy to update your rental property. With remodels, you can attract a wider range of tenants who are willing to pay for a higher-quality unit. Produce positive results, including reduced regular maintenance needs, happier tenants, and a higher income level. Plus, when it comes time to sell, you will be able to sell at a higher value with these renovations.

Interested in owning an investment property? Start your search with Vermont Real Estate Company.