Maximizing Return on Investment with Interior Design Strategy
Introduction
While interior design can sometimes be considered as extra or frivolous, that notion couldn't be further from the truth! Interior design can be used strategically to maximize revenue and return on investment. ROI, or return of investment, is a financial concept that measures the likelihood of gaining a profit from an investment. It's a ratio of the net profit to the cost of investment, and it's used widely in business decisions, including real estate and interior design. In these fields, ROI can be a powerful tool to ensure that the money spent on designing or renovating a property will increase its value and attract potential buyers or renters.
For those of you who don't know, my background before starting my own business and getting into real estate, was working as an interior designer for a national short-term rental property management company. One of the coolest parts of that job was having access to actual data analytics about what aspects of the interior design most impact KPIs (Key performance indicators) like revenue, bookings, and annual earnings.
In this episode we'll delve into the importance of ROI in interior design and provide design tips to maximize your ROI. Stay tuned as we explore this intriguing intersection of finance and design!
Understanding the Connection between Interior Design and ROI
Interior design plays a significant role in the return on investment (ROI) for property owners. It's not just about making a space look appealing, but also about enhancing its functionality and comfort. A well-designed interior can increase a property's value by attracting more potential buyers or renters, who are willing to pay a premium for a place that feels like home.
For instance, consider a real estate investor who decided to revamp their rental property's interior design. They invested in high-quality fixtures, modern appliances, fresh paint, and stylish home furniture and decor. The result was an increase in the property's annual rental income by 20%. This is a clear example of how strategic interior design can lead to successful ROI.
Another example is a homeowner who decided to sell their house. Before putting it on the market, they (wisely) hired an interior designer to update the living room and kitchen.
The designer used neutral colors, improved the lighting fixtures, and staged the property with stylish furniture and decor to appeal to the most prospective buyers. These investments made the house more attractive to buyers, and it sold for 15% more and 20% faster than similar houses in the neighborhood.
These are examples of how investing in interior design can significantly boost a property's value and yield a higher ROI. Whether you're a homeowner looking to sell or a landlord seeking to attract long-term tenants or an investor hoping to maximize short-term rental earnings, thoughtful interior design should be a key part of your strategy.
Key Interior Design Strategies to Boost ROI
Optimizing Space Utilization
Optimizing space utilization is a crucial aspect of interior design. It's not just about making a room look good or bigger, but also ensuring that it functions well. Effective space planning can make a small room feel spacious and a large room feel cozy. It's all about creating a balance between aesthetics and functionality.
Here are some tips for effective space utilization:
Use Multi-Functional Furniture: Furniture that serves multiple purposes can save a lot of space. For example, a bed with built-in storage or a coffee table that can be converted into a dining table.
Utilize Vertical Space: Often, the vertical space in a room is overlooked. Shelves, wall-mounted racks, and hanging baskets can provide extra storage without taking up floor space.
Plan Ahead: Before buying furniture or deciding on a layout, measure your room and plan where everything will go. This can prevent you from buying items that are too big or small for your space.
Keep It Clutter-Free: A cluttered room can feel cramped and uncomfortable. Regularly decluttering and organizing your things can help maintain a sense of spaciousness.
Remember, the goal of space optimization isn't just to fit as much as possible into a room. It's about creating a space that feels comfortable, functional, and aesthetically pleasing.
2. Investing in Quality Materials
Investing in quality materials for interior design is a smart move that can yield significant returns on investment (ROI). When you choose high-quality materials, you're not just enhancing the aesthetic appeal of your space, but also ensuring its longevity.
Over time, these materials tend to withstand wear and tear better than their cheaper counterparts, reducing the need for frequent replacements or repairs. This means they can save you money in the long run, even if the initial cost is higher. This is especially important for short-term rentals where replacing items can actually cost you bookings while you wait for the unit to be guest ready. I urge my STR investor clients to invest in quality home furnishings and bedding. The decor, rugs, and pillows can be purchased more economically.
There are several budget-friendly yet durable materials that you can consider. For instance, engineered hardwood flooring is a great alternative to solid hardwood flooring. It offers the same elegant look but at a fraction of the cost.
Similarly, quartz countertops are less expensive than granite but equally durable and attractive. Luxury laminate plank flooring is another cost-effective option that's easy to install and maintain. I wen this route for my tiny house and the durability and look of it. Remember, investing wisely in quality materials today can lead to substantial savings and increased property value in the future.
3. Creating a Universal Appeal
Creating a universal appeal is a powerful interior design strategy for maximizing return on investment (ROI) especially in residential real estate staging. This approach involves designing spaces that resonate with a broad audience, rather than catering to specific tastes. The importance of this strategy lies in its potential to attract a wider range of clients or buyers, increasing the likelihood of success in the market.
Here are some tips for creating a universally appealing real estate staging design:
Neutral Colors:
Stick to neutral colors like whites, grays, and beiges. These shades appeal to most people and provide a blank canvas for personal touches.
Functional Layouts:
Prioritize functionality in your layout. Spaces should flow naturally and serve their intended purpose effectively.
Quality Materials:
Invest in high-quality materials. They not only last longer but also give the space a more polished look.
Minimalist Approach:
Keep it simple. A minimalist design can help the space feel larger and more open, which is generally appealing.
Incorporate Natural Elements:
Use elements like plants or natural light to create a warm and inviting atmosphere.
For tips to design a successful short-term vacation rental checkout this blog post.
Remember, the goal is to create a space that anyone and everyone could see themselves living in. By focusing on universal appeal, you increase the chances of achieving a higher ROI.
4. Focusing on High-Impact Areas
When it comes to interior design, focusing on high-impact areas is a smart strategy for increasing return on investment (ROI). These are the areas in a property that significantly affect its value. Identifying these spaces is the first step towards maximizing ROI. Common high-impact areas include the kitchen, bathrooms, and living room.
Updating a kitchen can significantly impact the return on investment (ROI) when selling a property. A modern, well-equipped kitchen often attracts potential buyers and increases the home's overall value. This is because many people consider the kitchen to be the heart of the home, where they spend a lot of their time. Therefore, investing in high-quality appliances, durable countertops, and efficient storage solutions can lead to a higher selling price. However, it's important to keep the updates in line with the style and quality of the rest of the house. Over-improving just the kitchen might not yield the expected ROI if the rest of the house doesn't match up.
So, while updating a kitchen can boost ROI, it should be done thoughtfully and in balance with the rest of the property. An experienced design professional will be able to help you make a design that honors your personal tastes and style while ensuring the majority of the budget is allocated in places you'll make a solid return.
Once these areas have been identified, effective design strategies can be implemented. For instance, in the kitchen, investing in modern appliances, durable countertops, and efficient storage solutions can greatly enhance the space's appeal. In bathrooms, updating fixtures, adding good lighting, and ensuring the space feels clean and spacious can boost its impact. As for the living room, creating a comfortable and inviting atmosphere with well-chosen furniture, color schemes, and decor can make a big difference. By focusing on these high-impact areas, one can significantly increase the value of their property and thus, their ROI.
Conclusion
We've explored several key interior design strategies for enhancing the return on investment (ROI). These strategies are not just theories; they have been proven to increase ROI significantly.
So, why not apply these tactics to your own projects? By doing so, you could see a substantial improvement in your returns and ensure you are investing in updates that will make you more money in turn.
Remember, interior design isn't just about making a space look good—it's a powerful tool that can maximize your ROI. Never underestimate its potential!
If you are looking to transform your space or just want to say hi, I'd love to connect! You can reach out through the link below or reach me directly at sarah@sukkhainteriordesign.com.
BY SARAH BRONSTEIN
