Whether you are buying a property to sell on for a quick profit or buying something to rent out for long-term gains, you’re probably looking for ways to add value to an investment property.
That’s one of the smartest things you can do as it will maximise your returns even on modest investments. If you’ll be renting your property out, then adding value doesn’t just increase the price when you eventually sell, it can also give you higher rental incomes and better yields.
So, with that in mind, here are our top 5 ways to add value to an investment property:
1. Loft Conversion
If you have a property with lost space that hasn’t yet been converted, it’s worth looking into. Loft conversions are estimated to add around 12% the price of a property. You can expect to pay upwards of £20,000 for a loft conversion so it’s usually only suitable for properties valued at £180,000 or more. Although it does, of course, depend on the property.
Typically, loft conversions do not require planning permission (although it’s worth checking with your local planning office) but they do need to be carried out to current building regulations. That may involve replacing the floor joists and ensuring there is enough head height on all escape routes.
Adding a dormer is more costly than a skylight but it will increase the amount of space and head height in the room and is often worth the additional cost.
2. Update Bathroom/Kitchen
Bathrooms and kitchens sell houses. People love a nice, modern kitchen and bathroom in a house. Ideally, you’ll want to make sure both are up to scratch, but, if you can only choose one, choose the kitchen.
Despite our move to convenience food, people still spend a surprising amount of time in the kitchen, particularly if it’s a kitchen-diner.
Therefore, sprucing up an old kitchen with a new layout, new cabinets, and modern equipment can add as much as 5% on to the value of a property. If you think the costs of a complete revamp of the kitchen well outweigh the value increase, consider simply changing the doors and worktops for a low-cost way to add value.
3. Increase The Living Space
Increasing the available living space is one of the sure-fire ways to add value to a property. This can be done in several ways including a garage conversion, adding a conservatory or building an extension.
Garages are rarely used to park cars in these days. In fact, most garages are just too narrow for modern-day cars. For this reason, if it’s viable, changing into an extra living space can have a significant impact on the value of the property. If you’re worried about losing the storage space, look at whether you can leave part of the space as a storeroom.
Conservatories are very much in demand with buyers. With the unreliable British weather, they bring the outside inside and allow people to enjoy their garden in all weathers. A conservatory is likely to cost around £5,000-£30,000 and can add up to 7% to the value of a property.
Building an extension is the number one way to increase the amount of living space in a property. They don’t just become extra rooms, they truly become part of the house. From a simple single-storey extension, through to a full-blown extension, you can go as far as you want.
You can expect a full-blown extension to add around 11% to the value of a property. Just be sure to get planning permission for any extensions you want to build and ensure the work meets any building regulations that apply.
If your funds don’t stretch to building an extension yourself, at least apply for planning permission. If it’s granted, your property will immediately become more attractive than similar properties without the planning permission.
4. Add Extra Parking
Having your own transport is no longer considered a luxury, it’s an essential item for many households. And, with more couples working, the demand for parking spots has never been higher, particularly in busy cities.
You can solve parking problems by paving over the front garden and adding a dropped kerb if you need to. Of course, not all properties are suitable for this and again, you may need planning permission. But, a paved front garden can add as much as £50,000 to the value of a property in an expensive urban area.
5. Modernise It
Having up-to-date plumbing and electrics is essential when selling on an investment property. If the consumer unit and wiring is out of date, bring in a Part P qualified electrician do bring it up to current standards.
Better yet, if the property does not already have central heating installed, add it. Central heating is a must for most buyers and tenants now and installing central heating may cost around £1,000 to £3,000 but will add around £5,000 or more in value to the property. Gas SafeRemember than any work involving gas will need to be carried out by a registered plumber.
As you can see, lots of things affect the value of a house, so there are many ways you can add value to an investment property. The key thing is to understand your local area, know how much any work you plan will cost, and have a good idea of how much the property value will grow when the work is complete. This way you’ll always know if its worth doing the work.
Keep in mind that many areas have a ‘ceiling’ price, that’s essentially the maximum price people will pay for a house in that area regardless of how nice it is. It’s always worth talking to an estate agent before carrying out any work to get their views on what is in demand in that area and what the best improvements you could make to a property are at the moment.