When done strategically, renovating an investment property can yield you a sizable profit. Before you plan on knocking down walls or overhauling the kitchen, have a plan in place to ensure you’re making the right renovation choices for your rental property.
Find the right property
First, find a property you can work with. Look for properties that still have potential. These may include old-fashioned interiors but with a good structural foundation or unpleasant paintwork. Work on the necessary improvement in order to appraise their value.
Research what tenants want
Decide first what type of tenants you wish to target or are best suited for the rental property. From there, you can be even more strategic with your renovation plans. For example, a large family home will require an extra bedroom or a home office. If you want to target pet owners, you’ll want to include a fully-fenced yard in your to-do list.
Budget and plan
When planning your budget, what you really need to look at is the difference between the profit and your investment. Make sure that the return is all worth it. Another common mistake property owners make is attempting to do everything on their own in order to save more. Hire a trusted builder to make sure the work is up to standard.
Repairs are considered as partial correction of items that have become damaged mainly because of fair wear and tear. This can help you save on taxes as they would be fully deductible in that year.
A partial restoration of a fence is regarded as a deductible repair but if you are going to replace the entire fence, it would be classified as a capital improvement which will then be depreciated over time.
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