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4 Upgrades That Won’t Add Value to Your Investment Property

It’s been a few years since you’ve invested in a new house. Now that you have finally unpacked that last box stowed in the back of the closet and saved a little money, you’re ready to make some upgrades to increase the value of your investment (either for rent or sale,) but you’re not quite sure where to start.

You have an idea: you’ll look up a few million-dollar listings to see what the rich and famous have in their homes, just for inspiration. Besides, wouldn’t a pasta arm be super cool to have in the kitchen?

Pasta arm does not increase property value

photo credit: Pinterest

Heck, you can even peruse your real estate agent’s custom idx website and take a few virtual tours of the houses available in your area for some quick ideas. But hold up just a minute: Is a pasta arm a little, well, extravagant? You don’t want people thinking you’re putting on airs. And what if the upgrades you make end up costing more than they’re worth? Is there a chance that what you thought to be an upgrade is actually a downgraded bid five or ten years down the line, when you want to sell your property for a nice gain?

Don’t worry, the answers are here. Read on about the four upgrades that simply won’t add value to your investment property, and how some “upgrades” might cost you later.

New HVAC System

What Investopedia terms an “invisible improvement,” an HVAC (Heating, Venting and Air Conditioning) system is a necessary upgrade in some cases. HVAC systems help reduce energy use and expenses all while giving you complete control over the temperature in your home. However, when it comes time to sell, Investopedia writes that prospective homebuyers will expect the house to have an updated and well-running system. Because an HVAC system is an expectation and not a luxury, you won’t make back what you spent on its refurbishment.

Swimming Pool

Swimming pool

Ah, pools are a wonderful reprieve from the heat during those hot summer months! And when the HVAC system is on the fritz and you’re sweating through your sheets, you can take a dip in the pool under the stars. Sounds quite lovely, doesn’t it?

For all the pool’s loveliness, an in-ground pool comes with a hefty price tag of $30K, not including the cost of upkeep. Did we mention that a swimming pool raises homeowners’ insurance rates too? Not all buyers want a pool; the cost of upkeep and potential dangers is enough to keep serious buyers at bay.

Room Conversions

Trulia tells homeowners that room conversions, while initially seeming like a great idea in the beginning, can actually ruin a sale in the end. “Buyers look to check certain boxes when they tour your home: For example, three bedrooms, two baths, and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value.”

A small guest room made into a walk-in closet will not satisfy potential buyers; they want the bedrooms!

Customized Tile

Bathroom tiles

Homeownership will make you want to give the space a makeover. After all, the house is yours, why not design it to your specifications, right? Well, if you want to eventually sell your home, the specific upgrades and renovations you make to the space could depreciate its resale value.

Think about the custom-made black and white tile you’re thinking about laying down in the master bath. Does it work with the rest of the house? Would investing in new kitchen appliances better serve you in the grand scheme of things?

Here again Trulia advises against the highly-customized home. “[Custom] features may wind up costing you come listing time, as many buyers will factor in the money they’ll need to spend to change the house to suit their own tastes. If you’re going to upgrade your [space] just for the sake of selling, stick with neutral, builder-grade design decisions.”

Conclusion

Gee, who would have thought that a downgrade could disguise itself as an upgrade? Don’t hurt your chances in a buyers’ market; keep your upgrades minimal and in good (majority-approved) taste.

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  • Lennon_Stravato

    Is the converse also true, then? Are homes that have add such upgrades better than priced?