How Could Property Renovations Yield Attractive Returns For Real Estate Investors In An Inflationary Environment?

Dana on January 18, 2022



After a fabulous market run in 2020 and 2021, investors are looking for attractive opportunities in 2022 to continue the hot streak.


The market today is facing an enormous optimism for the future of the real estate market that is pointing real estate investors to look for various strategies that could help them achieve better and more attractive returns.


At the same time the Bureau of Labor Statistics reported that the CPI index rose 7% in 2021. This represents the highest inflation reading in 40 years.


How can real investors successfully navigate an inflationary environment and achieve excellent returns in the process?

Which property improvements could provide the best return?

Spending more does not always mean higher return on investment and not all renovation and remodeling projects will have the same impact.


Kitchen and bathroom remodeling, in-room washers and dryers and amenity upgrades relevant to the property location and target group preferences could usually provide the biggest return on investment for real estate investors.


Tax benefits

One of the biggest tax perks comes in the form of deductions. As a real estate investor, you can write off mortgage interest, property taxes, depreciation, operating expenses, and money you spend to repair or maintain the property.


When it comes to repair and maintenance fees that are deductible, investors need to take into account the thin line between repairs and capital improvements. Replacing a broken window falls into the category of repairs, while replacing all your windows to improve the energy efficiency of your property is considered a capital improvement.


Any completed renovations could increase your depreciation claim for eligible items and might reduce your tax bill. You should always consult with your lawyers and accountants before deciding which option is best for you.

Cost segregation

If real estate investors are planning to build, acquire or renovate a building, or have done so in the past several years, a cost segregation study could be a powerful tool that might help boost their cash flow and could decrease their tax liability.


You should always conduct an independent research and consult with your lawyers and accountants before deciding if this could be a good strategy for you.


Improved energy efficiency

Installing water and energy conservation programs will not only make your investment property look more appealing and further enhance its value but it will enable your current and future tenants to reap the rewards instantly.


People today and millennials in particular, as a large group of the population are becoming more environmentally conscious, look for better amenities that match their lifestyle and tend to rent for longer periods of time.


With the current rise in electricity prices, improved energy efficiency of your investment property will not only save your tenants money each month, but it will make them happier and stay longer committed to your property that is creating a win-win situation both for the landlord and the tenant.


Attract and keep high quality tenants

Newly improved rental units tend to attract more serious and high-quality renters with higher purchasing power that value property and amenity improvements that are matching their lifestyle.


When this target group is getting what they exactly want, they are willing to pay more and stay longer, that is generating higher and more stable income for real estate investors in the long run.


Reduced maintenance costs

Lower annual expenses matched with higher annual rental income is a great ROI booster for real estate investors.


New appliances and amenity upgrades lead to lower maintenance costs. Real estate renovations ranging from new sinks, toilets, electricity and plumbing to kitchen, bathroom and amenity upgrades could save you significant financial resources on maintenance and will accelerate the rate of your ROI.

Inflation hedge and potential attractive capital gains

Smart investments like property renovations could not only increase the overall property value and create future potential attractive capital gains for real estate investors, but it will could serve as an excellent hedge against rising prices by outpacing the potential rising inflation.


Important factor to consider – strategic partner selection

Making a selection of the right strategic partner with a proven track record that can execute the entire process without any delays, higher construction costs and loss to lease provides an incredible value and excellent ROI for future real estate investors.

Seeing the final product of your investment project and getting what you want, on time and without any stress in the process is simply priceless.


Ready to start your next investment project?

Please contact us to learn how we can best help you to turn your next investment project into a success.

Email: [email protected]

Telephone: (954) 570-0300

Address: 850 SE 7th Street, Deerfield Beach FL 33441

About Adivo Construction

We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.

Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.

We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.


Post a comment