In order to maximize your returns, every dollar you spend on your investment property has to have a purpose. Whether you’re updating essential mechanicals, correcting code violations, or improving aesthetics, each expenditure needs to make an impact. And while the property itself is almost certainly the largest expense you’ll incur, the cost of updates can add up.
As you plot your investment property improvement plan, be smart about how you spend. Every discount, rebate, and well-sourced upgrade means higher profits. And as a new investor, the way you spend on your first project can greatly impact how you handle future ones. Familiarize yourself with these time-tested savings strategies before you launch your first renovation. When you take a strategic and thoughtful approach, you can save big every step of the way.
1. Go Direct for High-Cost Mechanicals and Materials
For years, access to direct pricing for high-cost mechanicals was reserved for industry professionals and tradespeople. However, companies that offer wholesale pricing for expensive systems and materials make it easy for investors to save.
With access to direct pricing, you can easily say yes to upgrades that otherwise would be cost-prohibitive. For example, a split AC system installed into an otherwise unusable space like a sunroom or garage increases livable square footage and your potential sales or rental price. These systems can also reduce the need for whole-house replacement, instead boosting the efficiency of your property’s current unit. Not having to pay an HVAC contractor’s marked-up price could put this advantageous update within your reach.
Direct pricing isn’t limited to mechanicals, either. Major savings can be had on flooring materials, including wood, laminate, carpet, tile, and more. Plus, many suppliers offer suggestions for reputable installers, making buying direct both affordable and efficient.
2. Strategically Source Secondhand Finds
Shopping at secondhand stores has long been a way to save money and find unique items. But many people forget to look for building materials at their favorite secondhand store. That’s an oversight budding property magnates would do well to correct. Local thrift stores can be an excellent source of smaller items like mirrors, knobs, lighting, and bathroom fixtures.
For larger pieces, visit your local Habitat for Humanity ReStore, which specializes in secondhand building materials. Frequently, builders and homeowners donate excess supplies, from raw materials like wood to mismatched cabinetry. At times, there may be slight imperfections, but well-applied wood filler and paint can ensure they do the job.
Another secondhand source that can provide major savings is liquidation outlets. Usually full of a wide variety of goods, these warehouses offer bargains that are worth digging through. Include these stores in your weekly errands route to have the best chance of finding a treasure. Keep a list of needed items and buy-worthy deals to ensure your bargain hunting is effective instead of budget-draining.
3. Sync Your Purchases With Seasonal Sales
Federal holidays provide marketers with reasons to promote their biggest sales to their customers on their days off work. Generally, there’s a reliable cadence to the retail sales calendar, so syncing your investment property purchases with it makes sense. You can plan to upgrade the laundry room dryers in September or install video doorbells in December.
Set aside a portion of your property improvement budget to be ready to snag major deals. Ensure your projects have enough lead time to accommodate delivery delays, which are more common than ever. Consider your ability to safely store shipments onsite or in an offsite location to protect your investment.
Seasonal sales can also uncover opportunities to build up a stash of staging materials. If you’re selling a rehabbed home, staging it for your listing photos and tours can spark buyer interest. Showing buyers how their furniture could fit in a space bridges the gap between imagination and reality. Invest in core pieces that easily mesh with your projects to ensure your staging yields the best results.
4. Use Payment Methods That Pay You Back
Chances are, you already know how you’ll fund your latest investment project. However, have you thought about overall cash flow and payment methods? If you haven’t, you may be missing a major opportunity to save cash.
One easy way to improve your profit margin is to use a cash-back card for your purchases. With each swipe, your credit card company will issue cash back that you can roll into new purchases. Review today’s best card offerings to determine which could be a great fit. Depending on your spending habits, you may need to open more than one account, as many have annual limits for cash back.
And don’t neglect store-specific cards, which can do more than just reward you for your patronage. Consider a card offered through a warehouse store like Costco. These cards require you to buy a membership, which in turn gives you access to member pricing. And depending on your membership type, you can get annual rewards along with major savings on renovation materials every day.
Smart Spending Means Bigger Profits
The prospect of buffing your first investment property to a shine is exciting. However, keep a close eye on your budget reality before you finalize any purchases. Commit to buying only what you need for your project, resisting the urge to buy simply for a discount’s sake.
Analyze your project improvement list, categorizing each item as essential or optional. Review market sales performance to determine what your target buyer or renter is looking for. Based on market conditions, project type, and price point, you should be able to tell what is or isn’t a worthwhile investment. Spend smart and source direct deals, and soon you’ll be enjoying bigger payoffs on your investment property.
