After securing an investment property through one of 14th Street Capital’s fix and flip loans, how do you ensure that you do the upgrades that matter? After all, the right renos will boost your property’s market value and help protect your finances for years to come.
However, not all reno projects are equal. For instance, in-ground pools typically add only 8% to a home’s resale value, retaining only 15-20% of the money invested into the project. On the other hand, interior paint reclaims every penny plus another 7% beyond your initial investment.
As a guest from the real estate sphere, I am happy to share some insights from Remodeling Magazine’s 2022 Cost vs. Value Report and the National Association of Realtors 2022 Remodeling Impact Report, which contain the highest-impact improvements investors can make to their flips. What are they? Here is the top 10 high ROI fixes list based on the most recent data on return on investment (ROI) figures.
Top 10 High ROI Renos
#1: Hardwood Floor Refinish
- ROI: 147%
Hardwood floors are awesome. Not only do they look great, but they have evergreen appeal. If you have existing wood floors, you can spruce them up by refinishing them. This project recoups all the money you invest while adding up to half the original cost to your home’s value. Not to mention, you don’t need to buy new flooring to complete the job either. That’s a win-win for every landlord.
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#2: New Wood Floor Installation
- ROI: 118%
Property owners also win when they install new hardwood floors. Since they can be refinished up to 10 times, you can get a lot of use out of this installation. You can wait up to a decade to refinish hardwood floors, which means that you can get at least 100 years of solid use.
#3: Fresh Interior Paint
- ROI: 107%
Painting pros have crunched the numbers and found that new interior paint reclaims the entire project cost plus a little extra. Using high-quality paint will produce longer-lasting results and enrich your property’s appeal. However, beware that exterior paint only has an ROI of 55%.
#4: New Insulation
- ROI: 100%
In the 2020s, energy efficiency and eco-friendliness are more on top of mind than ever before. This upgrade is significant for your property because residents like saving on utility bills. Landlords also enjoy savings if they are responsible for energy costs. Also, new insulation reduces wear on your HVAC, giving it more years of life.
#5: New Roof Installation
- ROI: 100%
A new roof removes some risk of financing falling through if you plan for a future open-market sale. If your flip’s roof is over 20 years old, it’s wise to replace it, even if you plan to buy and hold it too. A new roof retains all its value and makes your property look better, regardless of the material you choose.
#6: New Garage Door
- ROI: 93.3%-100%
Appraisers love new garage doors. Both of our sources report an ROI of over 90% for this project, which is a good assurance that it’s a worthwhile upgrade. Not only will it make your home look better, but it can make it more secure.
#7: Faux Stone Veneer Siding
- ROI: 91.4%
Curb appeal is king, and faux stone strikes that sweet spot between great aesthetics and reasonable cost. A typical stone veneer project costs $11,066 and retains $10,109 of the investment, which is promising for any property owner looking for a worthwhile reno.
#8: Finished Basement
- ROI: 86%
As at-home culture shifts toward more working and learning at home, practically any project that turns unfinished spaces into finished, liveable areas recaptures much of its original cost.
#9: Upgraded Closet Spaces
- ROI: 83%
Home organization has more value than you can shake a stick at. Expanded closet space, extra shelves in walk-in closets, and other tweaks can boost your property’s livability appeal.
#10: New Fiber Cement Siding
- ROI: 63%-86%
Fiber cement siding lasts up to 50 years, making it an upgrade you may need to do just once in your property’s lifetime. This sturdy material has an excellent reputation and can retain its appearance for decades.
Caveat: Know Your Market
Before you do any renovation, compare your property to others in its neighborhood or surrounding area. It’s always wise to keep up with the Joneses but not go over the top. Your property will likely cap its listing price according to comparable surrounding properties.
Doing what matters within the context of your neighborhood will ensure you get maximum returns without doing too much (or too little). Light maintenance, fresh paint, and some power washing can be more than enough for some properties, while other properties will require new siding and flooring to be up to par with competitors.
Propel Your Future With Hard Money Loans
Need to pay for a fix and flip plus upgrades? 14th Street Capital offers quick financial solutions and loans that close within a few days. Their financial experts will assist you in securing a hard money loan from a seasoned lender for non-owner-occupied buildings. To get the ball rolling on a loan, apply now, and one of their pros will contact you as soon as possible.