But times, they are a-changing. Gone are the days when investors could blindly believe that the homes in their portfolio will grow in value every seven to 10 years, give or take. In certain markets, some property values have barely moved in a decade – or worse, they’ve gone backwards.
But there are many ways to ‘force’ growth on your property, even if the surrounding market are stagnating. One such strategy that many investors use to create instant equity is through smart renovations.
Improving a run-down investment property increases the rent and increases the appeal to tenants. More importantly, it ‘manufactures’ instant equity. Spending $40,000 wisely can increase the value of a property by $60 to $70,000.
“You can use what I call forced appreciation to push the value up on your property and borrow against that,” says Dave Peniuk, investor and co-founder of RevNyou.com.
1. Enhance curb appeal
Marcel Greaux, founder of the Toronto Real Estate Club, says that the initial appearance of a property is going to be the first thing to look at in terms of value.
“It really comes down to how presentable it is,” he says. “I’ve seen people blow an appraisal purely on that alone.”
According to HGTV, an average of 33% would-be buyers are more likely to buy a recently renovated home. Keeping it practical and presentable is the key to making yours stand out from the crowd, particularly in tight markets or amid uncertain market conditions.
“If you want to add value to your house with some curb appeal, it’s really about sticking to the basics and keeping costs low,” says Jeff Sarty, host of the HGTV show Decked Out
“The simplest way a landlord can boost their curb appeal is simply by making sure everything is neat and tidy, making sure that your garden lines are tight, there are no dead plants out front and making sure that everything is looking as good as it can in a cost-effective way.”
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In years gone past, property investors of various means and from varying backgrounds were united in one over-riding belief: that real estate would always, eventually, increase in value.