Hello BP, new investor here. I bought a duplex Florida in August. I live on one side and rent the other out to inherited tenants. Currently their rent is under market (by about $225) and the lease is up the end of January. The tenants have expressed to me they would like to stay but I am debating not renewing with them because their unit is completely carpet and I would like to change it to all tile like my side as well as do some other renovations to add value so I can refinance, get some cash and buy another rental. Is this enough time for a bank to let me refinance? About how much value will I add from switching to tile floors? Does anyone have any other suggestions on how I can increase the value of the property? Should I wait another year to do this? Will increasing the rent also be favorable to me when I go to refi? . Please excuse the title not making sense I ran out of space haha. Any help would be greatly appreciated
I would not count on minor upgrades to improve any substantial value. If you got a good buy at purchase and owe substantially less than what the property is worth that will be your best benefit to obtaining favorable refinancing
@John Thedford well I went FHA 3.5% so that's not going to be my story. So your saying if I redid the flooring on one unit and both kitchens that wouldn't be enough to pull out what I put into the renovations and a little more>?
Upgrades don't add as much value as they cost 99% of the time.
We do them when it's required to stay competitive in the local market.
Ask Chris Mason. I think you're going to have to rely on an appraisal. The appraisal will be done on comprable sales. Has the market moved up enough to help you in any respect
Unfortunately not much of an increase since the time I purchased it, however I'm no expert.
Are the tenants on the other side good tenants, ie do they pay on time, keep the unit clean, quiet, etc. That has a lot of value, in and of itself, particularly since you are living in the duplex yourself. If they are otherwise good tenants paying undermarket rent, I would try to negotiate a gradual increase in rent (like maybe $100 with this renewal, and smaller amount next year if they stay).
You will save the costs of renovation, and the vacancy, and that is significant. Also, you have the "known" entity of a good tenant rather than the crapshoot of a new tenant, who may or may not have lied to get into your unit.
With < 6monhts since you bought it, esp with no initial equity in the house, I also very much doubt that you will be able to pull any money out by renovating a kitchen and floor, unless your market is crazy with appreciation. I don't know much about Stuart, but I doubt it.
So, in a nutshell, my advice is to try to hold on to your tenants if they are good. Itif they are not then yes, don't renew, renovate, and try to get market rent.
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