Real Estate Rookie: High-ROI “Value-Add” Renovations for Any Budget ($5K – $50K+)

Episode Release Date: May 21, 2025
Hosts: Ashley Kehr and Tony J Robinson
Guests: Dave Meyer and Henry Washington

Introduction

In this episode of Real Estate Rookie, hosted by BiggerPockets, Dave Meyer and Henry Washington delve deep into the world of value-add renovations. Focused on strategies that span budgets from $5,000 to over $50,000, the discussion provides actionable insights for investors looking to enhance property value and maximize returns.

Understanding Value-Add Strategies

Dave Meyer introduces the concept of value-add investments, emphasizing the importance of enhancing a property's worth through strategic renovations.

"Value add actions you can take as an investor to make your property more valuable... from adding an accent wall to full gut renovations."
[00:45] - Dave Meyer

Henry Washington shares his extensive experience, highlighting the difference between direct and perceived value-adds.

a. Low-Cost Renovations (<$5,000)

Direct Value-Add:

• Adding Bedrooms/Bathrooms: Converting spaces like sunrooms or garages into additional bedrooms can significantly increase the property's rental value.

  "We moved the laundry into the sunroom, added insulation, drywalled the ceiling, and installed a mini-split AC unit, spending about $5,000 to add 200 square feet and create a third bedroom."
  [08:50] - Henry Washington

Perceived Value:

• Feature Walls: Utilizing different paint colors and trims to create geometric designs enhances the property's aesthetic appeal without directly increasing its value.

  "One of the most inexpensive things that we do that helps us get better tenants at higher rents is doing feature walls."
  [06:31] - Henry Washington

• Kitchen Enhancements: Upgrading countertops and adding backsplashes can make kitchens more attractive to potential renters.

  "For under five grand, we do countertops, backsplashes, tile tub surrounds, and feature walls."
  [07:16] - Henry Washington

b. Mid-Cost Renovations ($5,000 – $10,000)

Kitchen Renovations:

• Cabinet Upgrades: Instead of full replacements, painting or staining existing cabinets and adding modern hardware can refresh the kitchen's look cost-effectively.

  "We are going to renovate the kitchen nine times out of ten now. The level of renovation will depend on the neighborhood and the comps... Painting or staining the cabinets and adding new hardware can make them look brand new for a fraction of the cost."
  [27:00] - Henry Washington

Bathroom Additions:

• Converting Laundry Rooms: Adding a bathroom by repurposing spaces like laundry rooms leverages existing plumbing, reducing renovation costs.

  "We've converted laundry rooms into bathrooms multiple times because the plumbing is already in place, making it an economical upgrade."
  [21:37] - Henry Washington

c. Higher-Cost Renovations ($25,000 – $50,000)

Extensive Kitchen and Bathroom Remodels:

• Comprehensive Upgrades: Fully renovating kitchens and bathrooms to include high-end finishes and layouts can substantially boost property value and rental income.

  "Between new cabinets, backsplashes, and countertops, you can completely overhaul a kitchen and blow your competition out of the water."
  [29:53] - Henry Washington

Adding Multiple Units:

• Converting Single-Family Homes to Multi-Family: Transforming properties to include additional units, such as duplexes, can significantly increase rental income.

  "Converting a single-family home into a duplex can raise its value from $350K to $450K, making it a lucrative investment."
  [33:31] - Dave Meyer

d. Pro-Level Renovations ($50,000+)

Gut Rehabs:

• Complete Overhauls: Undertaking full-scale renovations requires substantial investment and experience but can yield significant returns if executed correctly.

  "Gut rehabs are not for beginners. You need experience or a trusted contractor to avoid costly mistakes."
  [31:22] - Henry Washington

Commercial Conversions:

• Rezoning and Repurposing: Converting single-family homes into commercial properties, such as offices or law firms, can dramatically increase their market value.

  "An investor renovated a single-family home into a commercial property and sold it for a million dollars, transforming a $175K investment into a substantial profit."
  [36:01] - Henry Washington

Identifying Suitable Properties

Henry Washington outlines key criteria for selecting properties ripe for value-add renovations:

• Excess Square Footage: Homes with more square footage than needed for their current bedroom and bathroom count, e.g., a 2,400 sq. ft. house with two bedrooms.

  "If you've got over 2,000 square feet in a two-bedroom house, there is room to convert and add value."
  [14:39] - Henry Washington

• Sunrooms and Garages: These areas often offer untapped potential for adding living spaces.

  "Convert single-car garages into bedrooms to increase rental income by $300-$500 per month."
  [10:23] - Henry Washington

• Basements and Attics: Ensuring adequate ceiling height and proper egress can make these spaces viable for additional units.

  "Check ceiling heights and egress window sizes when considering basement conversions."
  [14:51] - Henry Washington

Common Pitfalls and Lessons Learned

Supplied Appliances:

• Cost vs. Benefit: Supplying washers and dryers often incurs more maintenance costs than the additional rental income they generate.

  "Supplying appliances cost more in maintenance and replacements than the rental income they generate."
  [19:53] - Henry Washington

Conclusion

Dave Meyer and Henry Washington emphasize that value-add renovations, when executed thoughtfully, can significantly enhance property value and rental income. From low-cost aesthetic upgrades to high-investment commercial conversions, the key lies in identifying the right opportunities and managing renovations efficiently.

"If you can identify and execute these value-add strategies, even as a novice, you can transform decent deals into highly profitable investments."
[38:22] - Dave Meyer

For aspiring real estate investors, this episode serves as a comprehensive guide to navigating the diverse landscape of property renovations, offering strategies to suit various budgets and investment goals.

Thank you for tuning into Real Estate Rookie by BiggerPockets. Subscribe for more insights and actionable advice to kickstart your real estate investing journey.