When do you really update?

Question

The house I'm looking at has outdated floors,kitchen,siding,etc. But I want to rent it out for a couple years and sell it somewhere down the line. So the question is, would it make sense to update the house and then rent it out or leave it rent it out and update when i want to sell.

Will Barnard · Answer

I agree with Steve. As a rental, you want to spend the least as possible while remaining responsible (not negligent in repairing items that should be fixed or replaced, especially those that could have a potential for injury)

When you liquidate, then do teh major rehab to get top dollar from an end buyer. Tenants can be harsh on rental properties so it does not make sense to put in a lot of money until you are ready to sell.

Steve Babiak · Answer

Outdated is one thing, worn out and broken is another.  For the former, that usually will work just fine for a rental.  For the latter, you might need to have things not worn and not broken so that tenants will want to live there.

Matt T. · Answer

I fall somewhere in between.  I do install vinyl siding on most of my rentals but do not make major upgrades if I plan to rent them.  They get new carpet, linoleum flooring in the kitchen/bathrooms, fresh paint and mid grade counter tops.  Unless I was renting to a family member, I wouldn't make any investments in the property that I counted on being in good shape when it was time to sell.

Ralph S. · Answer

Depends.  If you update now, will there be a difference in the rent?  In the short number of years you plan on holding, how much of the cost will be repaid by the increase in rent?  I would think, not much.  So, the question relies more on the cost of the updates and the expected ARV.  Wouldn't spend $10k for a $5k increase in value, and don't think just cuz you spend it, the price will go up more.

When do you really update?

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