Renovating properties is a popular strategy among investors looking to maximize the value of their real estate. However, not all property types yield the same returns after a renovation. In this article, we will explore which property types typically provide the highest gains and what factors play a role in this process.
When it comes to renovation, some property types are more advantageous than others. Here are some of the most profitable property types that investors should consider:
These property types often have high demand, making them attractive for renovation and resale.
Apartments in central urban areas are among the most sought-after properties. With the increasing urbanization and demand for housing in cities, renovated apartments can achieve higher prices on the market.
Investors should focus on modernizing amenities and improving energy efficiency, as this can significantly increase value. This approach aligns with our renovation strategy at TXM, where we combine modern conveniences with structural integrity.
Industry data shows that renovated apartments in prime urban locations can deliver return on investment (ROI) ranging from 15% to 25% within 18-24 months, depending on market conditions and renovation scope. In Copenhagen's most desirable neighborhoods, properties like those in our Classensgaard project demonstrate how strategic renovations targeting modern amenities—such as open-plan kitchens, updated bathrooms, and smart home technology—can substantially increase property values.
The key to maximizing returns in urban apartments lies in understanding tenant preferences and market dynamics. Properties that offer convenient access to public transportation, proximity to employment centers, and modern living spaces command premium prices. Additionally, investors who incorporate sustainable materials and energy-efficient systems into their renovations often see accelerated appreciation, particularly as environmental consciousness drives buyer preferences.
Family homes in suburbs are also a good investment. Many families are looking for homes with ample space and access to schools and green areas.
Renovating these homes can include updating kitchens and bathrooms, which often yields a high return when the property is sold. Understanding location dynamics and neighborhood potential is crucial for identifying suburban properties with strong appreciation prospects.
Older properties that have retained their character can be very attractive to buyers. Renovating such properties often requires a sensitive approach, preserving original elements.
Investors who can combine modern conveniences with historical charm may see significant gains. Our experience with transforming older apartments into modern homes demonstrates how careful restoration can unlock substantial value.
Historical properties, particularly those constructed in the late 19th and early 20th centuries, often command 10-20% price premiums compared to newer constructions when renovated thoughtfully. This is especially true in established neighborhoods where authentic period features—original hardwood floors, ornate ceiling details, and architectural moldings—are highly valued by discerning buyers.
The renovation approach for heritage properties requires balancing preservation with modernization. Properties that successfully integrate contemporary comfort (updated electrical systems, modern kitchen appliances, efficient heating and cooling) while maintaining distinctive architectural elements consistently outperform those with generic, stripped-down interiors. This dual-value proposition appeals to both owner-occupiers seeking unique character and investors targeting properties with strong resale potential. The cost of careful restoration typically ranges from 25-40% higher than standard renovations, but the value uplift can justify this premium investment when executed correctly.
Properties that have the potential for expansion are also worth considering. Investors can increase value by adding extra rooms or even building entirely new units.
However, this requires a thorough investigation of local building regulations and market demand.
Properties offering expansion potential represent some of the highest-yield renovation opportunities, with potential value increases of 30-50% or more through thoughtful additions. This might include converting basements into rentable units, adding upper-story extensions, or subdividing larger properties into multiple residential units. In the Danish market, strict zoning laws and building codes require meticulous planning, but projects that successfully navigate these requirements can yield exceptional returns.
The most successful expansion projects incorporate realistic feasibility assessments and market demand analysis from the outset. An investment property with the potential to add a second dwelling unit, for example, can see its value increase by the full value of that new unit—effectively doubling returns if the expansion is executed efficiently. At TXM, we employ data-driven analysis to identify properties with documented expansion potential, ensuring that renovation and development strategies align with both regulatory frameworks and market demand.
Several factors influence how much a renovation can increase property value. These include:
Investors should carefully consider these aspects before embarking on a renovation, as they can greatly impact the final return. Understanding common renovation mistakes can help you avoid costly pitfalls and maximize your investment returns.
Renovation can be a lucrative strategy for property owners and investors, but it is essential to choose the right property types. Apartments in urban areas, family homes in suburbs, older properties with character, and properties with expansion potential are all strong candidates that can yield high returns after renovation.
By taking the relevant factors into account, investors can maximize their returns and ensure that their renovation projects are a success.
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