Bought 100+ yr duplex - how much to fix up before renting?

12 Replies

We have just purchased a 110 year old duplex in Oak Park, IL to house hack. There are obvious repairs, like brick work and rotted siding, that will make the investment last.

But what about more cosmetic repairs? To what extent should you put money into an old house to make it more appealing to renters? Obviously the more money you sink, although rents might be slightly higher, your cash on cash ROI goes down. We also want to repeat this in 1 year, so spending our cash delays when we can repeat this!

Any thoughts and insights to share here?

@Robert Simpson

Welcome to BP...

The best way to judge that would be to look at rentals on the market and see what price they are pushing based on their condition. When rents are hot, especially in areas with a lot of professionals, you can push the finishings and get max rents. In other areas, you are limited to how much you can charge for rent, so you don't want to over rehab the finishings.

I invest in older homes.  I do 'extra' nice, but not required updates as I do an associated update.  For example a 1910 house I bought needs a new electrical panel.  The 3 upstairs bedrooms do not have electrical to meet current standards.  Each room has exactly one overhead light bulb OR an electrical outlet.  Since I am replacing the near failing electrical box, it makes sense to put in an outlet on each wall, on overhead light and fan, and I want to add a mini split for the upstairs.  Currently there is not direct heat or air.  Prior to my purchase there were electrical cords running under the carpet up the stairs to run window air conditioners. (Yeah unsafe.)

I also took out the 1950 pink plastic tiles in the kitchen and am putting in drywall, new flooring, so will add a dishwasher, new water heater, etc. as I have the kitchen down to what should have been studs (another story, plastic covered historic fire damage, no studs).

I might not get more money, but hope to get better quality renters to choose from.

@Robert Simpson   if you did an inspection you would know what should be repaired up front.

as for to add value, talk to your property manager, ask them what would be best. 

Look what the competition is offering and try to provide better service, within reason. 

Usually we do minimum of the following:

Paint throughout. including kitchens cabinets 

Flooring, 

Light fittings 

countertops and sinks, faucets  

Basic Landscaping 

It is had to advise of these without seeing the units and knowing the current condition! 

One things is for sure, don't over capitalize. 

Definitely do any safety repairs. Other than that it just depends on what your market calls for. If the other units in the area are high end then you'll have to keep up to get the same rents. If they aren't, then maybe do just a little better so that you can get the renters in faster. I did many updates on my 8-plex when I bought it and have reaped the benefits of having some of the nicer units in the area. I do my own work for the most part, so it didn't cost me a lot. I get lots of comments about not having white paint. I use a light gray. People who have lived in apartments their whole lives get sick of all the white. Good luck!

@Lynnette E. , thanks for this! You mentioned no HVAC, same in our building. Have you ever decided to add it to your older buildings? Any problems with finding renters because of it?

I’ll try to follow your advice on associated repairs, and also see what I can do myself. But it seems like these associated repairs could easily get carried away and spend more than you planned. Do you usually set a budget on repairs going in, and do what you can until you hit that number?

Thanks so much!!

@Jennifer Rysdam thanks for this! I like the idea of decreasing vacancy and have happier tenants. Just seems a hard line to walk to make them a little nicer than comps without going overboard. But I’m sure that’ll get easier with time!

Thanks everyone else!

Sound like I need to:

1) definitely take care of safety related items

2) do some comps research in area to determine quality/finishing around me

3) then try to meet the comps or be a little bit better to capitalize on best rent and less vacancy

Thanks guys as always!! :):)

I like to spend a little extra time and money to make sure it looks like you Paid attention to the details.  small stuff like replacing all the switches and electrical outlets with new ones.  Putting in outdoor motion lights for safety, etc. This usually gets me the more qualified  renters in the neighborhood, so I have fewer problems with them, and it rents much quicker.   

@Robert Simpson

For comps rates I use centimeter. They have very fair market rates and adjust for month to

Month fluctuations.

www.rentometer.com

Hope that helps.

Originally posted by @Robert Simpson :

@Lynnette E., thanks for this! You mentioned no HVAC, same in our building. Have you ever decided to add it to your older buildings? Any problems with finding renters because of it?

I’ll try to follow your advice on associated repairs, and also see what I can do myself. But it seems like these associated repairs could easily get carried away and spend more than you planned. Do you usually set a budget on repairs going in, and do what you can until you hit that number?

Thanks so much!!

 In the market I am in window air units are common.  Id rather have the mini splits to save the window sills and in some cases the ceiling  damage when they put in swamp coolers.  So no HVAC dose not slow down the rental market here.

I keep track of repairs when i buy houses, but buy under market with room for extras and issues because there always are some.  As i get closer to done with a property I do more or less extras depending on issues found.

@Robert Simpson

If you plan to hold this long term you may want to look further than just the immediate ROI.

I upgrade things for other reasons:

To keep up with my newer construction competition.

To make renting easier (decrease vacancy time, reduce man hours required to screen new tenants, reduce number of showings).

House hacking is nice because you're living there, can fix it up over time and you probably have the time to do most or all of the work yourself.  I have a 1875 duplex I house hack with some older touches, but putting in new countertops, subway tile backsplash, new cabinet hinges & handles has added a nice touch.

The age of the home is not as important in my opinion especially in Illinois Brick house. There are beautiful and as long as you take care of them and do preventative maintenance then you should be fine. You can have it ready without sinking a lot of money. Some repairs, you can learn from youtube and do it yourself without spending a lot of money such as painting, carpet removal, floors and tiling. 

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