One of the typical errors made by new rental property investors in Cuyahoga Falls is over-improving their rental homes. While it’s natural to desire a rental in good condition to attract top tenants, too many improvements can lower or eliminate your profits. This warning is intended to make you aware of the risks and help you make better investment choices.
Our advice is to plan strategically and address any profitability obstacles before purchasing the property. By keeping your end goal clear from the start, you can avoid financial difficulties from over-improving.
Plan for the long-term
Experts usually suggest planning your investment’s exit strategy right from the beginning. It’s important to feel confident that you can refinance or sell an investment property at the right time and make a profit. Otherwise, what is the purpose of buying it in the first place?
Consult with several lenders to learn about mortgage products, costs, and whether your goals align with your finances. A good lender can identify barriers you may face and confirm if your strategy is robust.
Calculate property value after repair
An essential detail to avoid over-improving your Cuyahoga Falls rental property is its After-Repaired Value (ARV). The ARV is the estimated worth of the property once it has been repaired or renovated. Knowing the property’s value post-improvements is crucial to ensuring a profitable investment.
Use good comparable properties to calculate your ARV. Following that, talk to real estate agents, other investors, and your contractor. The more details you gather, the more confident you’ll be that your improvements are sufficient—but not excessive.
Getting the balance right can be challenging, especially for new investors. Yet, you can rely on comparables, similar properties sold or rented recently in the area, to direct your improvement decisions. Understanding the local rental market enables you to enhance your property to charge market-competitive rents.
Don’t go overboard with improvements
One of the worst errors is upgrading your property beyond the neighborhood’s average. If most homes in the neighborhood have tile floors and composite countertops, avoid installing hardwood and granite.
While it’s important for upgrades to be good quality, luxury materials and high-end products are often not worth the cost. Instead, choose mid-grade materials that are of decent quality without being the most expensive. Even in upscale neighborhoods, choose mid-grade materials and make nice but not extravagant upgrades.
Prioritize profitability over personal preference
Ultimately, avoid over-improving your rental by not becoming too attached to it. Think of it as an investment, not a home for yourself. Becoming emotionally involved in your rental can result in renovations you like but won’t significantly enhance profitability. Pride in your rental properties is natural, but it should be from owning a profitable, well-maintained investment, not from spending excessively on improvements.
Seeking expert advice to boost your rental property profits? Real Property Management Valor Team can help. We’re a team of experienced property managers in Cuyahoga Falls and nearby. Contact us online or call us at 440-534-6700 to learn more.
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