According to Realtor.com, the most expensive house listed recently was $400 million, with others closely trailing at $271 million and $237 million. High-end properties can offer significant income and appreciation potential for real estate investors, but they aren’t always ready to go on the market, nor are they rent-ready. They may want to retain ownership of the property while still renting it out, but renovations may be necessary before doing so.
High-end properties come with high-end fixes, and they can be hefty for investors. These are the ways they can finance renovations without having to sell.
Use Home Equity to Fund High-Value Interior Upgrades
Real estate investors can tap into equity without selling a rental property by considering home equity loans and other property-secured financing options. For investors exploring Griffin’s DSCR home equity, a DSCR home equity loan can provide access to equity in an investment property while using the property’s rental income and debt-service coverage as key considerations in qualification. The resulting funds can then be considered alongside renovation costs and the property’s expected rental performance.
Once the investor receives the financing, it’s important to prioritize improvements that can strengthen the property’s rental appeal and long-term value. The focus should be on strategic luxury, where improvements enhance the property’s market position.
Finance Bathroom Renovations Without Disrupting Ownership
Luxury bathrooms have a huge return on investment (ROI) since they have a significant effect on how prospective tenants perceive a rental property. Investors can use refinancing, home equity financing, or other property-secured options to preserve ownership.
From there, their renovation budgets can target:
- Walk-in showers
- Freestanding tubs
- Premium tiles
- Heated floors
- Upgraded vanities
- Better lighting
- High-quality fixtures
The important thing is to focus on things that improve the tenant experience instead of providing little additional rental value.
Use Financing for Custom Finishes That Differentiate Luxury Rentals
Custom finishes can help high-end rentals stand out, especially in competitive markets. It can be wise to use financing for additions such as:
- Built-in cabinetry
- Custom millwork
- Statement fireplaces
- Wine storage
- Upgraded flooring
- Architectural details
It’s best to make improvements that reinforce the property’s existing character, as that’ll ensure the look is still cohesive. It’s also good to target the preferences of the tenants the investor wants to attract.
Because custom work can be more expensive for both labor and materials, investors may want to divide projects into phases. Tackling improvements with the clearest potential return first can really pay off.
Turn Outdoor Spaces Into Income-Supporting Amenities
Luxury renters want outdoor spaces to function as extensions of the indoor living space, so renovating patios, terraces, pools, landscaping, and outdoor kitchens can be worthwhile. Suggestions here include:
- Built-in grills
- Covered entertaining areas
- Landscape lighting
- Premium decking
- Privacy landscaping
- Improved pool areas
- Fire features
Don’t forget to take into account the property’s climate, as well as tenant profile and local rental market. Also, factor in maintenance, insurance, utilities, and seasonal use to get a better picture of the overall financial benefit.
Finance Energy-Efficient Improvements That Reduce Long-Term Costs
Energy-efficient upgrades can improve operating economics, and they can make luxury rentals more comfortable and attractive to tenants, too. Investors can consider:
- High-efficiency HVAC equipment
- Upgraded insulation
- Smart thermostats
- Energy-efficient windows
- Improved lighting
- Heat-pump technology
- Solar installations
It can also be very effective to combine these efficiency improvements with visible upgrades. This helps tenants feel more drawn to properties and stay comfortable while in them, while investors
Use Financing to Make Smart Renovation Choices
Investors don’t have to give up their high-value properties to make them better. Instead, they can seek financing options to make smart renovation choices that’ll have high ROIs. Not only can they improve long-term value, but they can attract luxury renters, too.
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