Spending on remodeling and home improvements show growth potential going into 2016 and are projected to more than double, at least according to a study from the Joint Center for Housing at Harvard University. “Strengthening housing market conditions are encouraging owners to invest in more discretionary home improvements, such as kitchen and bath remodeling and room additions, in addition to the necessary replacements of worn components, such as roofing and siding,” Chris Herbert [Managing Director of the Joint Board study.] said. What does this mean for the real-estate investor? The ante has just been upped!
The predictions on an increase in remodeling by homeowners will affect real-estate investing. Now, as always, you can’t just be concerned with inventory (how many homes offered in your area), your concern may need to shift to the quality of that inventory as it relates to your future viability and competitiveness in the rental market. With many homebuyers opting to rent rather than purchase—either for practicality or financial factors—if you want to maintain continuous occupancy or at the very least place yourself in the position to be able to secure new renters quickly after a lease termination, you have to make your rental an attractive option for renters.
While the study may have been focused on homeowners as residents over investors, the study shows the things that will be a focus of home improvement. Residents who improve for themselves could potentially one day be your competition, and thusly, what they do needs to be what you do.
Tips to stay competitive:
- Stay knowledgeable. Network with area contractors and even hardware stores to see what is being done in the way of home improvements. A competent realtor is also a good connection to have to know what is being done in your area.
- Always Improve. Though you may have made improvements upon purchase, always leave room and budget to improve as needed. Things change. The market changes. And, a successful investor is amenable to change as needed. The longer you own your property, the more outdated the updates you made in the beginning will become!
- Make smart choices. Though you need to make changes and improvements to keep up with the market, only do what’s necessary. Always remember this is not your personal home. Updates should be high quality, neutral, and give as high a return on your investment as possible. *If you can’t keep it rented, then you may need to sell. Don’t price yourself out of the market or make your home unappealing to buyers by making unwise renovations.
Keep up with the market and you will keep up with the Joneses. Smart remodeling decisions will keep your investment property viable, competitive, and most importantly…RENTED! As always, Carod Properties is here to help.
