Where should I start my renovations on my first property?
Hey all!
My wife and I just bought our first investment property. Yay! Its a 3-2 to which I am hoping to add one additional bedroom and an ADU in the garage. We just closed and I am starting the process of planning our renovations and additions and I'm finding myself unsure of where to start first. We have limited capital, about 30k all-in, to use for renovations.
However, here's my dilemma. The kitchen is...well lets say "outdated" to be kind. The oven is more than a decade old and the kitchen design is unsightly. I want to start adding rooms and dwelling units so that I can maximize my rent-by-the-room revenue (we don't cash flow until all 4 rooms are rented); however, I'm worried that the kitchen will be an eye sore such that I won't be able to fill those rooms with my desired tenant (working, clean, respectful, professional adult).
I'm sure the answer is a, "well it depends on X", so I'll provide as much information as possible below in case there's anyone willing to give me a detailed answer, but I'm wondering if the kitchen is worth spending money on to renovate BEFORE I begin adding rooms and dwelling units. Remember, capital is limited so depending on the cost of the kitchen it would push out the rooms and garage quite a while. Same goes for the kitchen if I choose to start on the rooms first.
To sum it all up: I'm asking if anyone with experience has found that it's better to add rooms first to a property or update and improve the current layout to help attract renters.
Thank you in advance!!!
Details:
Rent per room: $600-750
Monthly Cash Flow (respectively) at 2 rooms, 3, 4, 4 rooms + ADU: -$933, -$303, $326, $1,166 (we don't cash flow until we have all 4 rooms rented and are living in the garage)
Immediately Available Capital: $30,000, if needed I also have access to nearly 28k in credit, however that would put me at almost 100% credit utilization and I really...really don't want to do that :)
FOLLOW UP QUESTION: I've also wondered if this 30k would be better used as a down payment for a second investment property instead of on renovations for the current property given it is livable as-is (just doesn't cash flow). THANK YOU!!!