In this post, I’ll cover 4 ways you can increase the value of your investment property.
1) Convert attached garage into additional living space
This is possibly one my favorite ways to add value to my investment properties, when there’s an attached garage, of course. Converting a single car garage into additional living space can be done for around $5-$10K. The work required will include the following:
- framing a floor
- removing garage door and framing wall & window in its place
- adding additional receptables/switches as needed
- extending HVAC into garage
- framing a closet (if room will be bedroom)
- installing interior door from garage to house (if needed)
This is a great way to add equity. One time I even converted a single car garage into a bedroom with an ensuite bathroom.
Make sure you check with your HOA/covenant/city to ensure this is allowed, and, if so, always pull a permit, if required.
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2) Convert detached garage into a separate rental unit
If you’ve got a detached garage, consider converting the garage into a separate rental unit. This will not only add value, but it will dramatically increase your cash flow from your investment property.
You’ll have to carefully consider what will be needed to extend electrical and plumbing, but it may be worth looking into. Also, if you go this route, setting up separate utilities for the converted garage can be very costly, so it might make sense to keep both units on the same meter, and just increase the rent for both units to include utilities.
3) Finish out the basement
If you’ve got an investment property that has an unfinished basement, consider finishing it out. I realize some basements can be pretty gnarly and not worth finishing, but if it’s just a matter of throwing up some sheetrock, paint, and laying down some inexpensive carpet, you might be able to add a ton of equity and charge more for rent.
4) Increase the rent
Especially with multi-family properties, appraisers often use an income approach when determining value, so gross rental income really is an influencing factor. Make sure you’re not undercharging for rent.