BRRRR- My first home investment

[Jewell Arceneaux]

Purchased home with potential upside in hoping to force appreciation in the house in order to create equity and eventually utilize the equity (HELOC) to begin investing in other properties. What do you feel are the most important things to upgrade in a home that you've seen increase home value?

[Connor Hibbs]

Hi Jewell,

The first thing is to see what is lacking the most in the property since small upgrades will have the biggest impact in the areas of low quality to start. Aside from that the biggest value add areas I see are as follows: Kitchens, Bathrooms, decks/patios (if added), additional rooms/baths

Kitchens and bathrooms tend to be the go-to, but all of those can help you get the most bang for your buck. just keep in mind that if the area is already of high quality, then it may not be the best area to spend the money vs something that is blaringly in need of an update.

[Evan Polaski]

@Jewell Arceneaux, you are selling an experience to both your lender, appraiser and tenant.  There is no given answer here, because the whole property needs to be relatively consistent.

Kitchens and baths are the common answer, but if they are passable and you choose to invest in them anyways at the expense of peeling paint (or off putting exterior color) and overgrown landscaping, the appraiser and tenant will be walking up with a bad taste in their mouth, thereby not valuing the interior work you have done.

But think about the general flow of someone looking to rent: more bedrooms will typically dictate more rent.  Can you easily add a bedroom without making the flow feel weird (i.e. accessing one bedroom by going through another) or taking away from common area making them feel small?  If you can reasonably throw up a new wall and closet, turning a 3 bed into a 4 bed, that is a great place to start, but only if it works for the property and you have at least 2 full bathrooms.  A 4 bed, 1 bath is typically a non-starter.

Improving kitchens and baths.  again, this tends to be the go to renovation for many.  Taste and style changes more frequently in these areas, so they feel dated faster.  

I, personally, tend to go nicer on both design and finish.  I.e. quartz countertops look nicer than granite and are much more durable than laminate.  Tiling your tub surrounds to the ceiling not only looks nicer, but also helps waterproof the area better, and will likely never need replaced (versus vinyl surround which last about 3 yrs before tenants start cracking them, in my experiences).

[Jake Baker]

@Jewell Arceneaux

How to drive ARV (my opinion)

Improvements that drive the ARV the most: Roof, New Kitchen & Bathrooms, Flooring, Paint

Improvements that DON'T drive the ARV as much: Windows, Landscaping, Driveway, Rough Plumbing & Electrical

[Wale Lawal]

@Jewell Arceneaux

From my experience, focusing on impactful upgrades like kitchens, bathrooms, flooring, and curb appeal yields the best results. Neutral colors work well, and energy-efficient upgrades not only attract buyers but can also qualify for tax benefits. Adding livable space or smart home features can significantly boost home value. Stick to a budget, align with local trends, and consider DIY projects to maximize your ROI.

Good luck!

[Jewell Arceneaux]

Greatly appreciate each and every one of your responses. Gave me things to research and projects to focus on. Have middle room that I am focusing on adding closet to to add bedroom!

[Megan Duncanson]

Jewell, you're spot on about focusing on a property's weakest areas. Small improvements there make a big difference!

Kitchens and bathrooms are always a good bet, but think beyond the basics. A fresh coat of paint in a modern neutral color and updated lighting can really elevate those spaces.

Adding a deck or patio can be a great way to increase usable living space and boost value. And don't underestimate the power of a strong first impression – a well-maintained exterior with a fresh paint job is key.

Just remember, even with the best upgrades, color choices matter. Stick with classic neutrals to appeal to the widest range of buyers.

There are situations where clients touring homes immediately pass on properties due to strong or unusual color choices. For example, I've had clients walk into homes with vibrant orange kitchens or neon green bathrooms and instantly feel overwhelmed. This shock factor often leads them to question what other elements of the house may need updating, even if the paint is a relatively easy fix.