Adding Value To Your Investments

By on March 17, 2014

If you are someone that watches real estate trends and market movements, you are aware that property values change every month. In some cases, extenuating circumstances can force them to change a few times in a month. That being said, it is important to know that your property value is very much like a moving target. There will always be other options available for buyers or renters. Your goal, as an investor, is to maximize your investment regardless of what you long term strategy is. To do this, you need to add value to your property and make it as appealing as possible.

A very simple question you can ask yourself as an investor is “why would someone want to rent or buy my property?” The answer could be as straightforward as the location of the property or complex as the tile work you did in the bathroom. If you are not adding value either through the work you do to the property or price you have it available for, you are actually losing value. If area homes are being updated and yours has stayed the same for the past few years, your property loses appeal and thus loses value.

Value really comes down to the price someone would pay for your property. In most cases, you can add to this by improving the condition and increasing the useful life of the property. People will pay for quality and the comfort in knowing they will not have to repair or replace these items in the years to come. There is a difference between having the money to buy the house and coming up with money to get the house the way they would like. If you can save them this out of pocket expense, you have added great value.

Some properties have value simply based on where they are located. If you are near the water or in a high demand vacation area, your value is created by the attractiveness of the region. Even if this is the case, you are still being stacked up against other homes around you. Small things such as how the property is furnished or getting under a perceived financial barrier make a huge difference. If you can rent your home for $1950 as opposed to $2000, it may not put a huge dent in your wallet but for the renter that $50 can make all the difference. In that $50, the renter sees affordability and ultimately value in your house. You can create value in the location and by taking a very small discount.

Properties lose money because there is not enough demand and ultimately you are forced to compensate for that by taking a lower offer. In a sense, you control this demand and the value of your property on how you take care of it, the additions you make and the little things you do. Even if you are in a declining market you can make your property stand out and get top dollar. Creating value does not always mean spending money. It means creating appeal. Demand is where you get your value from.