It is all too common that people invest in income properties and then renovate them to the standard they would like. They use their own preferences as the blueprint for the renovation. They ignore the preferences of the people who rent houses in the area. To build an income property designed to suit yourself is a big mistake. It can be a big waste of money and can make the house almost impossible to rent out.
If you use your taste as the blueprint for how to renovate the house, you might end up with a house that is too high-end or too low-end for the area i which it is located.
Income properties in your neighbourhood
If you are looking to invest in an income property in the same community that you live in then it might be acceptable to use your preferences as a blueprint for the house. If you live in the area then you are likely to have similar taste and preferences as the people who want to rent in the area. This is due to the fact that the renters are likely to hail from a similar socioeconomic background as you. This is however far from guaranteed. I recommend that you research what renters are looking for before you do any changes to your income property.
It is also very important to remember that an income property is an economic venture. You should not try to provide everything that your renters might want. You should only provide features that will increase you ROI (return on investment). Do not do any changes that will not increase how much you can rent your property for. You need to make sure that the property keeps an acceptable standard but you will not benefit from offering a standard that is higher then it needs to be. Be smart with your renovations.
Income properties in low-cost neighbourhoods
If you buy an income property in an area that offers cheap housing and low rents than it is essential that you renovate the house to the standard of the area. If you renovate the house to the standard you would like then it is likely that you will renovate it to a higher standard then necessary. Doing so will cause you to spend more money than you need to spend to be able to rent the house. This will not allow you to charge higher rent. The renters looking for houses in these areas are looking for budget housing. The price is the most important factor. A higher standard than they need will not cause them to want to pay more. People who are willing to pay for the higher standard seldom wish to live in these neighbourhoods. The result is that you will end up with an income property you can not rent unless you lower the price. This can, in turn, make it impossible for you to earn the return you want to receive from your investment.
Make sure you know what people want and provide that, nothing more, if you are investing in areas with low-cost housing. The key to making money in these areas is to keep cost down while still offering an acceptable standard.
Income properties in upscale neighbourhoods
The problem with using your own preferences as a blueprint for your income property in a high-end neighbourhood is the opposite of the challenges you face in a low-end neighbourhood. You risk ending up with a property that does not live up to the standard that the renters want and expects. A house that does not offer the standard that is expected in a neighbourhood can be very hard to rent. No one that can afford to live in that neighbourhood will be interested in renting the house. You can rent it to someone that normally would not expect to be able to afford to live in that area. To do that you will need to lower the rent considerable and this will often make it very hard to make money from the property. It can even be hard to break even. The reason for this is that properties in these areas are expensive and you need to invest a lot of money to build them. You will need to be able to charge a high rent to make money from them.
Executive rentals are a special type of income properties. They are designed to be rented by companies to accommodate employees that are temporary working in the city. These employees are often sent there by the company from another office in another part of the world. Executive rentals can be very lucrative since companies are willing to pay high rent and can provide you with a lot of business. These properties need to be designed to rent as executive rentals. It is imperative to get it right to become successful.
Think like the renter
It is always best to ignore your own preferences and make sure that you provide the right property for the market you want to rent it on. To do this require you to do some research. This is the key to become a successful investor in income properties. Buying the right property at the right price and making the right improvements is the key to success. Many ventures are doomed to fail or destined to become successes before the investor even bought the house.
Know the market you want to invest in and you are unlikely to fail.