To Upgrade or Not to Upgrade?

real estate upgrades

Whether you are fixing and flipping a home, rehabbing it and holding it as a rental, or living in it yourself, there is much discussion among real estate investors in terms of affordable ways to add appeal to a property. Some of these ideas include:

  • Ensuring each tenant or resident has a space for their possessions
  • Adding new light fixtures with daylight style LEDs in them
  • Installing baseboard and window and door frame trim in either stained or painted wood for a nice accent
  • Installing a nice light/ceiling fan/heater in the ceiling of the bathroom
  • Installing new doors and doorjambs
  • Installing new light switches and outlets is inexpensive—particularly when purchased in bulk—and can freshen up a room and make it look modern
  • Adding a fresh coat of paint in a neutral color
  • Updating cabinet hardware (go with classic selections—nothing too trendy)
  • Updating window coverings
  • Painting kitchen cabinets (white is very popular right now)
  • Installing a low-cost stair runner
  • Refreshing bathroom caulk
  • Having carpets cleaned
  • Having grout refreshed
  • Adding an accent wall (paint or wallpaper)
  • Adding a medicine cabinet to allow for more storage
  • Adding a backsplash in the kitchen (can even be a peel-and-stick version)
  • Changing light switches to dimmer switches
  • Installing a closet organization system
  • Replacing the shower head with a more efficient model

The outside of the home should not be forgotten in the quest to economically add appeal to a property. The following are just a few examples of small changes that can be impactful:

  • Painting the front door to add a pop of color (for more “curb appeal” ideas, check out our previous blog post)
  • Having house exterior, walkway, driveway and deck pressure washed
  • Adding path lighting
  • Building raised garden beds
  • Adding fresh house numbers
  • Adding a new doormat

Once it comes to what can truly add resale value to a home, the investment needed to add that value becomes more significant. Some of the more value-added improvements include:

  • Installing new appliances, including water heaters. Buyers will appreciate energy-efficient appliances.
  • Replacing worn carpet with pet-friendly, hard water-resistant floors.
  • Maximizing the bed-to-bath ratio.
  • Finishing the basement.
  • Updating the kitchen.
  • Removing wood paneling from walls. While some think that wood paneling can simply be painted to improve its look, the benefit to removing it entirely will likely outweigh the cost of doing so.

The pandemic has meant that certain upgrades that were not necessarily traditionally value-added upgrades have now become much more attractive to prospective buyers. The pandemic means that many people are spending more time at home than they traditionally did, which means that having separate spaces for relaxation and for work has become more important. In short, they want their homes to be more multi-functional. For example:

  • Outdoor home entertainment options have become more popular. This includes, but is not limited to,
    • hot tubs,
    • fire pits,
    • deck construction,
    • fences,
    • screened in porches,
    • outdoor kitchens, and
    • outdoor televisions.
  • Dedicated home office space has also become more popular, as we discussed in a previous publication. This dedicated home office space should provide both privacy and storage options.
  • Home gyms have also increased in popularity given that many people are reluctant to exercise at a shared facility.

Interestingly, it is not just that there has been more focus on undertaking renovations that reflect lifestyle changes. It is also the case that some people have found themselves with more time on their hands during the pandemic, allowing them to focus on home improvement projects that they had long delayed. In fact, during the holiday season, a Mastercard report showed that “Furniture and furnishing sales rose 6.2%, while spending on home improvement rose 14.1% [emphasis added].”