Are Renovations Still Worth It in 2025? How to Prioritize Upgrades That Pay Off
Rethinking Renovations in a Shifting Market
In the past, value-add renovations were the go-to strategy for boosting rent and property value. But in 2025’s high-interest, high-expense environment, the question savvy owners are asking is: Are renovations still worth it?
The answer is yes—but not across the board. The era of blanket upgrades is over. Today’s market demands selective, ROI-focused improvements that align with renter demand, leasing velocity, and long-term asset strategy.
Here’s how to prioritize the projects that still deliver—and avoid sinking capital into upgrades that won’t move the needle.
What’s Changed Since the Last Value-Add Cycle?
- Rising Construction and Labor Costs: Post-pandemic supply chain issues haven’t fully normalized, and labor remains tight—making even modest projects more expensive.
- Flattening Rent Growth: In many markets, rent increases have slowed, meaning renovations must be sharper and more strategic to generate ROI.
- Changing Renter Preferences: Amenities and features that mattered five years ago may no longer influence leasing decisions in 2025.
Bottom line: The value-add playbook needs a rewrite.
High-Impact Renovations That Still Deliver ROI
1. In-Unit Washer/Dryer Installations
Demand for in-unit laundry remains sky-high. If your units don’t offer it, this upgrade often delivers the most consistent rent bump across demographics.
2. Energy-Efficient Windows & Appliances
With renters paying closer attention to utility bills and sustainability, energy-efficient upgrades can command premium rent and reduce turnover from utility cost frustration.
3. Smart Thermostats & Keyless Entry
Renters love convenience and security. Smart home tech, especially thermostats and locks, is a low-cost upgrade with high renter appeal and a competitive edge in listings.
4. Modernized Kitchens and Baths (But Avoid Overbuilding)
Granite is out, but clean, modern finishes still matter. Keep materials durable and neutral—no need to overspend on luxury features unless you’re in a Class A market.
Upgrades That May No Longer Justify the Cost
1. Extensive Common Area Remodels
Unless your leasing data shows demand for lounges or clubrooms, many renters prioritize unit quality over community extras—especially if these spaces go unused.
2. Luxury Appliance Packages
High-end ranges and smart fridges rarely deliver meaningful rent premiums. Unless you’re in a luxury market, stick with reliable, mid-tier brands.
3. Hardwood Flooring Everywhere
LVP (luxury vinyl plank) offers a similar look at a fraction of the cost—and renters typically can’t tell the difference. Save your budget and your NOI.
4. Full Gut Renovations of Low-Turn Units
If your unit turns slowly and you’re not seeing significant rent lifts, a full remodel may not pencil out. Focus instead on light refreshes (paint, fixtures, appliances).
How to Prioritize Upgrades in 2025
Step 1: Analyze Your Leasing Data
- Which units lease fastest—and why?
- What do exit surveys and prospect feedback say about unit or amenity priorities?
Step 2: Benchmark Rent Lift vs. Upgrade Cost
- Don’t just estimate—track average rent increases on upgraded vs. non-upgraded units.
- Use this to calculate payback periods and ROI.
Step 3: Align with Your Hold Strategy
- Holding short-term? Focus on curb appeal and low-cost interior updates that lease fast.
- Holding long-term? Energy efficiency, systems upgrades, and durable materials will lower maintenance costs over time.
Conclusion: Spend Smart, Not Big
In 2025, renovation strategies must be surgical, not sweeping. The best upgrades are those that match renter expectations, support leasing velocity, and protect your bottom line.
Before swinging the hammer, run the numbers. Because in today’s market, ROI—not just aesthetics—is what makes an upgrade worth it.