Should You Renovate Your Investment Property Before Selling?

September 19, 2011

Renovate to Sell

The question bothering all those who wish to sell their investment property is should they renovate the property before selling or not.renovate to sell

An investment property is one that has been purchased with the intention of selling it at a later date after it has appreciated and is an investment channel more than a permanent home.

These investment properties are purchased at low prices and sold when prices appreciate, and are seldom used for living by the owner. They generate returns in two ways, one as regular income supplements in the form of rent, and secondly through price appreciation.

Investment property is generally bought by those who follow the “buy and hold” strategy for property purchase. However over time,  property becomes old and may look run down and if the owner believes it is time to sell, he has to decide whether to sell it the way it is or renovate it.  How do you decide which option – to renovate before selling or not? The two possible answers are:

Yes, you should renovate and this is why….

  • Renovation more often than not enhances the value of the property.  Any property that is renovated adds to its value. Even the most basic cosmetic changes like a fresh coat of paint can give a brand new look to an old property. This will make it appealing to prospective buyers.
  • Renovation adds to appeal – the appearance of newness and renovations help to hide blemishes even in property and make it more appealing to prospective buyers.
  • Helps to bargain for higher prices – when property is run down, customers like to bargain and bring prices down. But a property in good condition gives the property owner the upper hand in demanding a higher price, since there are no grounds for giving discounts.
  • Renovated properties fare better in competition – Property buyers look at numerous houses before buying. A renovated house is sure to score better and will be preferred over a rundown place.
  • Easier to sell – a renovated property is always easier to sell, since it seems ready for the buyer to move in. The idea of not having to spend on renovations is immensely appealing to the buyer who has spent a huge amount to buy it.

No, you should not renovate for these reasons…

  • Renovation is physically and mentally taxing – renovating is not easy. It involves a proper plan, buying materials and replacing old fitting s and fixtures, besides painting and polishing. It also requires supervision, and the owner has to pitch in, when labor is not sufficient. This becomes physically tiring since the renovation process can take weeks if not months. The planning and implementation of the multifaceted renovation program can be mentally exhausting since it involves too much coordination, and multitasking. Above all, it is not necessary, and is therefore an avoidable headache.
  • Renovation is expensive – it costs too much money, which may not be compensated sufficiently when the property is sold. The difference between a rundown old place and the renovated one may not be substantial.
  • Renovation delays sale since it is time consuming – Renovations take time and till they are complete, the sale process cannot be initiated. During this time, the demand and supply situation of property may change and with it the prices also.
  • Buyers may wish to renovate themselves – buyers may want their own designs, layout and shades, so why bother.
  • Renovation is a personal choice, which may help some who wish to maximize profits, and not help those who are in a hurry to sell, since they need the money for an urgent expense.