Your First Income Property Renovation: What to Avoid
While some renovations can add value to your property, others can cripple it and bring it down. As a beginner investor, you might be confused as to what parts of the property you should be renovating. I answered this question in another blog post on the types of renos that add value to a rental property.
However, you should also be aware of the types of renos you should avoid when renovating your first income property. What's certain is that you shouldn’t dig too deep of a hole here because you might just end up falling into it.
First Income Property Renovations to Avoid
Here are certain renovations it’s best to avoid as you’re just starting out with real estate investing:
#1 Renovations That Lead To Property Overpricing
While the goal of doing renos is to increase value, you should be careful not to push the price too high. The plans you make for renovations shouldn't push you out of your neighborhood. If you upgrade the home to the point where it's value is way higher than the average value of homes in that area, you might not be able to get a return on investment in the future.
#2 Adding A Swimming Pool
One of the biggest mistakes that beginner investors are making is adding a pool to the property. A pool addition rarely increases the value of the home more than the cost of installation. That means you can't really boost your return on investment with this reno. Besides, pool installation can get messy and quite expensive. You'd just be adding more work to your plate. Thus, it should be avoided if you're trying to get a good return on investment.
#3 Removing Period Detail
Removing original period windows and exterior doors can destroy a period property’s character and its value. If the property is in a really bad condition, you can invest in authentic replicas that will look just the same as the original. However, keep in mind that authentic replicas are expensive. You should always consider repair as a first option.
#4 Taking on Too Much DIY
While DIY work can allow you to cut down costs and control the overall process, I would not recommend you to do too much of it. DIY projects are risky because you could be sacrificing quality. Besides, without a proper plan, you would just slow the whole project down. Bad DIY can cost you extra money since you might have to do additional repairs later on. Focus on DIY projects only in areas you're confident about - find something that fits your set of skills and that won't be too demanding to complete by yourself.
#5 Making Piecemeal Additions
It is important to plan your renovations properly and get them all done at once. Try not to renovate your property by making small, half-hearted additions. Such additions can eventually decrease the value of the property. Instead of adding sections to the property each year, try to stick to one coherent plan and get it all done in one go if possible.