Are you about to put your unit on the market? Whether it’s your home or an investment, you’ll want to score the most bang-for-your-buck with apartment upgrades that deliver the best return.
Conventional wisdom cites improving curb appeal as the first step to improve returns. But as an apartment owner, you aren’t likely to be doing work on the exterior. What you’ll want to be doing is concentrating the apartment upgrades on the more noticeable elements.
What You See
On an almost instinctive level people notice floors, paint, and countertops. Refinishing hardwood floors, for example, are huge apartment upgrades for increasing value. When you think that buyers have a short period of time to tour a property, it makes sense that the best returns are on elements that are very visible.
On the other hand, everything is about perception, and buyers begin discounting when they notice something needs renovation. When you see floors that need to be replaced or re-sanded, you start to look for other things as well.
There’s always the risk that the more costly the work you do on apartment upgrades, the less buyers will be willing to pay for them. If your kitchen is old and dated and you totally refurbish it, you’re betting that the buyer is going to like your taste.
Most apartment upgrades relate to appearance, and the first impression a buyer might get for a property. Potential buyers aren’t necessarily anxious about what’s behind the wall, as long as the “Wow” factor grabs them. That’s why expensive apartment upgrades involving plumbing or electrical work might not do as well, being mainly hidden from view.
Getting the Balance Right
By following these basic guidelines, many apartment owners have succeeded in employing apartment upgrades that significantly increase the value of their units.
One property investor has seen firsthand how relatively small enhancements can produce higher returns. Faced with a vacant unit after the death of the tenant, he was considering selling the studio apartment but it was in very bad condition with terrible floors and an outdated and broken up kitchen.
The investor could have sold the unit as-is but felt it could produce a much better return were it brought up to move-in condition. He hired a contractor to install an Ikea kitchen, fix the floors and bleach and re-grout the subway tiles in the bathroom, all for just over $13,500.
The apartment was listed in July and got 10 offers within three weeks; four months later, the unit sold for the full asking price.
Another investor who owns several high-end city apartments with renters in place has had similar experiences. Last year, she sold a co-op after the person who had been living there moved into an assisted living facility.
Although the unit looked rundown, the investor considered selling it as-is, quick and easy. But she knew that a restored unit in the same line of the building had just been sold for a premium price of several hundred thousand dollars, compared with un-renovated apartments.
In trying to find a solution that would work for her, the owner calculated what minimal apartment upgrades would cost, to improve the look and functionality without having to knock any walls down.
The renovation job included refinishing the wood floors, sprucing up the bathroom tiles, painting the walls and installed new light fixtures. To modernize the kitchen, she had some of the existing cabinets altered, added a few new ones, and fitted new countertops and appliances.
The updated apartment was listed last November and sold after the first open house, for the full asking price. The agent estimated that the apartment upgrades had earned his client an additional $300,000.
Carefully considered, well thought-out apartment upgrades can add that “Wow” factor to your unit, earning you a better return on your investment.