As asset managers, our responsibility goes far beyond rent collection and repairs. We are committed to the long run: equity growth. Part of that growth is not only upkeep but diligence in maximizing return through necessary and optimal renovations. And like everything else, renovations are a multifaceted undertaking. However, of all the factors at play, building materials play a significant role as it directly impacts the supply and demand cycle of an investment’s return.
The building materials you renovate a property with will directly affect how long the update will last and the property’s overall value. Although some projects are inherently worth more money and offer a larger return, if you use the wrong materials, you may see an equally large loss instead.
Here is our list of factors to consider before you embark on a remodel.
Value Versus Cost Analysis of Materials for Updates
All updates can increase your property’s value; the important thing to consider is if that increase is enough to cover the cost of the update and leave you with a profit. Although we would all prefer to spend less money to make more profit, it doesn’t always work that way. Yet we find people are more willing to spend money if they perceive value in the outcome.
So when it comes time to purchase materials, consider how much their value will translate into an increased property value. For example, you can get cheap wood, but how much will its value increase when that wood is in the form of cabinets? How much more valuable are those cabinets if it’s a more expensive wood? Is this difference worth it?
It’s important to consider each update carefully. This means doing your homework and looking into, say, garage door installation costs before jumping and hiring a company.
What’s A Reasonable Cost for Renovations?
There’s no set price to renovate a home. People spend between $15,000 to $200,000 updating their home, most of which boils down to how much homeowners are willing to invest in comparative to when returns are no longer worth it. For example, a small kitchen remodel brings back more money in correlation to how much it costs than a full kitchen remodel would. On the other hand, slate roof shingles are an expensive update, but replacing your roof increases the home’s value and increases interest in the property.
You can take this further by breaking it down room by room. Some areas aren’t worth updating or renovating because they don’t bring enough of a return. Projects like this are finishing basements since you only get back an 80% return, with the average finished basement costing around $65,000. This leaves you with an $8,000 loss that you can’t recover.
When Are Materials Cheaper and More Available?
Building materials have been extremely expensive over the last couple of years because of a supply shortage, but the good news is things are turning around. Lumber costs dropped by 40% between June and July of 2021, despite general building materials rising by 19.4% over the last year.
In an average year, the cheapest time to find building materials is in late fall or early winter, when there’s less demand and many hardware stores and companies are trying to sell what they have available. Although items are more general in early spring, they can quickly sell out, and prices will move back up even for simple things like vinyl windows.
What Projects Bring the Highest Return?
Although some cosmetic updates like a heated bathroom floor can bring back its share of increased value, it’s not the most reliable update to add value. Instead, consider updating your windows, siding, and roof and completing a minor kitchen remodel. A major bathroom remodel for the master bath can be a huge addition to the home’s value as well, since many renters and homebuyers are looking for properties with a five-piece bathroom.
Is DIY Worth It, or Are Contractors a Necessity
Some property owners try to save money in their investments by updating portions themselves instead of hiring a contractor. Although DIY is feasible in some areas, it’s not useful in others.
Staining or painting your kitchen cabinets can be possible for most property owners. Still, if you try to get a kitchen and remodel the entire room on your own with no prior experience, you could end up costing yourself more money to fix any mistakes you make.
Contractors may be pricey, but they’re worth what you pay for them because they have the training and tools necessary to repair and update anything you need. This also frees up your time to do other things instead of spending every moment that you’re not at work updating your property.
What Materials Are Most Sought After?
Just like how marble counters have been popular for the last fifteen years, some materials go in and out of trend. The most sought-after materials are generally classic wood, strong and dependable brick, and copper. Copper is expensive, but it ensures that your pipes evenly carry temperature, and brick and wood are classic and reliable though incredibly inexpensive. Do some research, and above all else, consult local businesses specializing in building materials.
Every Investment Should Be Weighed
Whether you’re deciding to purchase another property or choosing between two different expensive projects to take on, you should take the time to carefully consider the long-term returns and what makes most sense at the present. An investment could offer a good return, or a loss, depending on its success.
As investors ourselves, we understand the significance of making the right choice at the right time in an effort to gain value and profit. Our tried and true expertise can help guide you through precarious decisions such as these. After all, we are more than property managers: we are caretakers, carefully navigating the nuances of an investment’s return. So let us be your resource and help you maximize your potential.
Ryan Shure is an editor for the Innovative Building Materials blog and a content writer for the building materials industry. He is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that save money, improve energy efficiency, and increase property value.