One way to get ahead quickly in real estate is to add value to the properties you buy. This can be done in a number of ways, but in general the idea is to somehow add value so that you can charge more rent.
A lot of people like to buy properties that are turnkey and ready to go. That’s fine, and it’s the easiest for the buyer, it means no extra work! But it also means no extra money for the buyer. The seller has already made the extra money before selling it.
If you are ok with that and you just want something that is ready to go, that’s just fine!
But we like deals where we can make a little bit extra out of them. Here are some ways to do that
Completely renovate a property
Buy a property that is in rough shape for a good price. You can create value and equity by rehabbing the property and then renting out for a higher amount. This takes some expertise in knowing how much money it would take to fix up the property. You have to be careful not to overpay on a property that needs a lot of work.
But it can be very profitable. Often a little bit of paint and some new flooring will go a long way in upgrading the property for a very small amount of cash.
Add A Bedroom Or 2
When you are looking at potential properties to buy, brainstorm how you could add bedrooms with not much work. Turning a 2 bedroom suite into a 3 bedroom suite can command a significantly higher monthly rent.
A recent purchase for us is a great example. This property had a 2 bedroom suite in the lower level, and it had a huge storage room that wasn’t being used right beside the suite. All we had to do was add one door and we turned it into a 3 bedroom suite, and were able to charge an extra $350 per month! Two months of rent paid for the door project.
Add A Suite
Often basements of houses are not utilized very efficiently. This can be a perfect opportunity to add a secondary suite to the property. Having a second suite is what can make a rental property profitable or not.
If the basement is finished with some bedrooms and a bathroom, then adding a suite could be fairly inexpensive. All you may have to do is add some plumbing for a small kitchen and you have your suite!
You do need to check on the following:
-zoning for your area (does that area allow secondary suites)
-all the requirements of secondary suites according to your city bylaws
-that there is a separate entrance for the basement tenants
-that the windows are large enough for fire escape in an emergency
Add a garage
Garage packages can be very inexpensive. Sometimes you can get a 2 car garage built for $15000. You can rent 2 spots in the garage for $200 each (depending on your market) for a total of $400 per month. In 3 years the garage will have paid for itself! Now that’s a good ROI
Turn an existing 2 car garage into 2 separate rental units
Already have a 2 car garage on a property? Add a divider wall down the center and turn it into 2 separate bays! You will be able to get more rent out of it that way for a very easy renovation
There are many ways to create extra value which means more cashflow for you. Let us know more of your own ideas! We love creating value.