What to Renovate (and What to Skip) for Maximum ROI

Wondering which renovations could actually make a difference to your bottom line? For real estate investors, every dollar you spend upgrading a property should increase your return on investment (ROI). Whether you’re flipping houses or renting them out, focusing on strategic renovations ensures you’re squeezing every bit of value from your budget.

This guide explores the home improvements that often yield the best ROI, and the ones that might not be worth the expense. You’ll learn which upgrades could attract buyers or long-term renters, how to evaluate the cost versus the benefit, and how to approach renovations with ROI in mind.

Keep reading for tips to help make your next real estate investment a success!

A room inside a new fix-and-flip property under renovation with exposed brick wall, ladder, and wooden floor planks in place.

Understanding the Role of ROI in Renovations

When planning investment property upgrades, it’s important to understand which renovations are likely to give you the most value for your money.

What is Renovation ROI?

Renovation ROI measures the financial return you gain from the money you invest in property upgrades. It’s typically expressed as a percentage. For example, if you spend $10,000 on a kitchen remodel to add $15,000 in value to your fix-and-flip property, that’s a 150% ROI. ROI matters most for real estate investors (REIs) who want to maximize profits for a flip or attract quality long-term tenants and garner premium rent.

Different projects could provide varying levels of ROI. By understanding what buyers or renters prioritize, you can make informed decisions about where to focus your DIY efforts (and dollars).

High vs. Low ROI Projects

High-ROI upgrades are cost-effective property improvements that increase the perceived value or functionality. These usually include kitchen and bathroom updates, new flooring, or boosting curb appeal.

Low-ROI projects tend to be expensive or overly customized, like luxury remodels or super-niche additions that appeal only to a small audience.

A kitchen under renovation with dark cabinets and wooden floors, sunlight streaming in through windows.

Kitchen Renovations with Strong ROI

Kitchens are often called the "heart of the home" for a reason. They’re one of the first areas buyers scrutinize; even modest upgrades could deliver exceptional returns.

Budget-Friendly Upgrades to Consider

Countertops: Consider upgrading to an affordable, high-quality option like quartz or granite for a polished look.
Cabinets: Refinishing or repainting cabinets is a cost-effective way to modernize the space.
Appliances: Energy-efficient appliances not only appeal to eco-conscious buyers but also help boost property value.

With a midrange kitchen remodel, you could potentially see an ROI of around 70%–80%. However, be cautious with luxury custom kitchens, as they often cost more than they return.

A modern bathroom under construction with a white bathtub, partially tiled walls, and exposed plumbing.

Bathroom Updates That Attract Buyers

Refreshing investment property bathrooms is another potentially high-ROI move. Buyers and renters value modern, clean bathrooms, but you don’t need to go all out.

Small Changes, Big Impact

Fixtures and Faucets: Replacing dated fixtures with sleek, modern designs could freshen up the space instantly.
Re-grouting and Re-tiling: These updates can revive worn-out surfaces for a cleaner appearance.
Vanities with Extra Storage: Practical storage solutions sometimes add needed functionality and charm.

Bathroom updates could deliver an ROI of 60%–70%. However, full-scale luxury upgrades, such as installing a home theater, adding a wine cellar, or outfitting a kitchen with top-of-the-line professional-grade appliances, might not deliver proportional returns. In contrast, investors that focus on functionality and affordability may see the largest ROI.

A room split in half: one side shows bare walls and a ladder, while the other is bright and clean with a polished new floor installation.

Flooring Improvements for Maximum Appeal

Floors can significantly impact how a property feels. Old or unattractive flooring can often be a deal breaker, while fresh, durable options often make a world of difference.

Best Choices for ROI

Hardwood Refinishing: Refinishing original hardwood floors can provide a premium, polished look.
Luxury Vinyl Plank (LVP) or Laminate: These are durable, trendy, and cost-effective flooring options for high-traffic areas.

Avoid overly trendy or bold flooring choices that may not work for all buyers. Remember, neutrals appeal to the broadest audience.

Fresh landscaping on a fix-and-flip property, featuring a colorful garden with vibrant flowers and shrubs next to the house, complemented by a neatly manicured green lawn in the foreground.

Boosting Curb Appeal with Exterior Touch-Ups

First impressions matter, and curb appeal often sets the tone for potential buyers and renters. Small changes to your investment property’s exterior could dramatically impact perceived value.

Smart Exterior Updates

Landscaping: Fresh mulch, trimmed hedges, and native plants go a long way.
Painting: A fresh coat on the front door or façade refreshes the property’s look.
Roof or Siding Repairs: If your roof or siding shows wear, replacing it can be worth the investment.

While significant landscaping projects generally don’t offer the highest ROI, basic upgrades and maintenance pack a lot of visual appeal for a modest cost.

A sleek digital thermostat on a light gray wall, showcasing smart technology upgrades. Adding modern features like this to a fix-and-flip property boosts efficiency and can significantly increase ROI.

Adding Smart Home Features for Tech-Savvy Buyers

You don’t need to turn your property into a high-tech fortress, but modest smart home additions can sometimes make it more appealing to potential buyers.

Potential Smart Features for Increasing ROI

Thermostats (e.g., Nest or Ecobee): Energy-conscious buyers love the efficiency.
Smart Security (cameras or doorbells): Adds convenience and peace of mind.
Lighting Systems with App Control: Modern, tech-savvy touches can be a differentiator.

The key is affordability. Avoid overly complex or expensive systems, like fully automated smart home setups, high-end soundproofing in every room, or luxury appliances that many buyers or renters might not value and could potentially be costly to repair.

A wooden ladder stands on a dusty floor in a room with large windows, renovation debris scattered around.

DIY vs. Professional Help

When deciding whether to tackle a project yourself or hire specialists, weighing several factors is important. Consider the time you have to dedicate to the task, your own skill level and expertise in handling such projects, and how the quality of the final outcome could impact your return on investment (ROI).

DIY Projects

Painting walls or cabinets
Landscaping
Minor fixture replacements

Leave to the Pros

Electrical wiring
Major plumbing repairs
Structural changes

Poorly executed renovations can waste time and resources, potentially hurting your ROI by leading to subpar results or costly mistakes. To ensure the best outcomes and protect your investment, don’t hesitate to bring in an expert when needed—they can provide the professional touch and expertise required to get the job done right the first time.

A building permit document showing a floor plan with bedrooms, set against a cozy interior for a fix-and-flip property.

Don’t Skip Permits and Regulations

Permits are essential for protecting you from costly violations and fines that could significantly impact your profits. Beyond avoiding penalties, unpermitted work could also reduce your investment property’s value, making it more challenging to sell or refinance in the future. Skipping permits might seem like a shortcut, but it can often lead to bigger headaches down the road.

Best Practices

Take the time to thoroughly research your local regulations before starting any major project. Each area has its own rules, and knowing them in advance can save you from setbacks.
Always work with licensed professionals who are familiar with compliance requirements and can help guide you through the proper permitting process.

By following these steps, you can help maximize the potential value of your investment property through strategic renovations.

Financing Your Renovations with a Hard Money Loan

Transforming a distressed property into a profitable investment takes more than great rehab ideas—you need the right financing to make it happen. That’s where hard money loans come in.

Also known as bridge loans, hard money loans offer fast, asset-based funding specifically designed for real estate investors tackling renovation projects. Unlike traditional loans that require lengthy approvals and rigid criteria, bridge loans are based on the property’s after-repair value (ARV). Want to get an accurate estimate of your property’s ARV? Use Kiavi’s ARV calculator.

Things to Keep in Mind:

Budget carefully to account for interest rates and associated fees.
Plan to sell or refinance before the loan term ends.
Work with a lender that specializes in real estate investment financing, like Kiavi.

When used wisely, hard money loans can provide real estate investors the speed and liquidity to turn ambitious fix-and-flip ideas into a profitable venture.

Final Thoughts

Your renovation strategy can make or break your next property flip. Focus on high-ROI upgrades like kitchens, bathrooms, flooring, and curb appeal, while avoiding overly expensive or niche changes. Choose smart renovations that fit your budget and resonate with the majority of buyers or renters in your market.

Before starting any project, develop a renovation budget and ROI plan to guide your decisions. If your cash is tight, consider working with a lender for a hard money loan to cover the property acquisition costs (up to 95%) and the renovation costs (up to 100%).

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