As I've been thinking about how much to set aside for CapEx/maintenance expenses, I keep coming back to the questions of: "How much should I really be spending on X?"
It isn't a matter of questioning the percentage of gross rent that I should be saving for those expenditures, nor the raw amount - rather, it's about what upgrades, appliances, physical modifications, etc., truly end up being worth throwing down extra money for in the beginning.
To give a few examples (but definitely not to limit it to these) - is there value in purchasing a $500 dishwasher rather than a $300 one? $100 or $35 for a faucet? Top-of-the-line water heater or a mid-range unit?
To a certain extent, I recognize that this can be a function of the environment of the rental and the market for which you're aiming - obviously a luxury unit will not have a $350 refrigerator. For this though, try to take that out of the equation. In your experience with rentals, what purchases truly show value over time from a higher price tag (longevity, fewer repairs, power in impressing tenants, or something else)?
try this for further reading:
They say that the things that the tenants touch on a daily basis should look/feel really nice. That will contribute to pride of tenancy and justify maximum rents.
If you get used equipment you replace it more often.
If you get luxurious equipment you have to clean and service it more often.
Durability and consistency. (e.g. nice fridge, but no water/ice dispenser) Try to get the same equipment (not necessarily brand) for all of your rentals, helps on costs with replacements, parts and maintenance info.
Shop your competition. Don't over-improve too far beyond what is customary for your area.
Quartz countertops are worth the upgrade from granite. Especially in a rental; they are as close to bulletproof and maintenance free as you will find.
Higher quality shingles are well worth it when doing a roof.
Good light fixtures can be pretty timeless.
Hardwood, not laminate.
Originally posted by @Steve Babiak :
try this for further reading:
Thanks for the term of "hardening" a rental - it's not something I've seen before, so I wasn't searching on that. I did try to use BP's search engine for terms similar to what I used in this post, but was unable to find anything. The first link in that search query looks to be a treasure trove of information, so I'll be digging in. That being said, I'm not sure of your intention in using LMGTFY - I apologize if my question aggravated you; I'm still learning the jargon and my way around the site.
Originally posted by @Michael Walker :
... That being said, I'm not sure of your intention in using LMGTFY - I apologize if my question aggravated you; I'm still learning the jargon and my way around the site.
I'm posting from a phone, and google inserts all sorts of odd characters into a search link; lmgtfy doesn't, so the copy and paste is simpler, especially when it even shortens the link.
And at times the BP editor has mangled using site modifier on google search, so I also avoided that by not just explicitly giving the query terms.
So no intents or offense should be taken.
We usually go for durable, easy to clean, easy to maintain. Not the most expensive and the not the cheapest. We value safety and so do tenants, so we will focus first on aspects of safely, then function, then appearance.
Talk to the experts/trades people for their recommendations. We will ask the plumbers, electricians, appliance repairman, locksmiths, painters, landscapers, floor covering installers, etc. what works best and why. What is the best bang for the buck. This has proved most helpful. We do not take kindly to people who recommend something cheap as "good enough for a rental". In fact we don't use the services of people who have the attitude of "It's just a rental." We prefer to promote "This is someone's home and something to take pride in."
We often use mini blinds on windows. In addition, we put decorative curtain rods in the living/dining rooms. We put the basic double curtain rods in the bedrooms (allows both a sheer and a decorative curtain). If you don't provide a curtain rod, it is likely a tenant will install their own and perhaps make a mess of it, using the wrong hardware or drilling it into the wrong place. Some tenants tack blankets over the windows quite unattractively, but are more likely to use a curtain when the curtain rods are there. Over time, I notice the decorative curtain rods, which can be 10 times more expensive, cost less in the long run because they hold up well.
One of the things tenants touch most often are door knobs. It is worth putting in quality door hardware. We use Schlage or Kwikset brands. We asked our local locksmith for their recommendation. They told us, for exterior door hardware get the silver color finish as it holds up better to weather. Our standard now is Satin Nickel.
Also, take some time while selecting any product to see it from a health and safety perspective. Pay special attention to smoke detectors and carbon monoxide detectors and their placement. We now install the ones that have 10 year lithium batteries. The test button and hush button on Kidde products seem to work better than First Alert, so we switched to that brand. Ask a fire fighter or fire marshal what they recommend.
Ripping out carpet and refinishing wood floors underneath. No more carpet cleaning, looks nicer, and no more carpet cleaning, Did i say no more carpet cleaning???
I have started buying nicer fridge and stoves for my nicer rentals. The low grade ones we used to always find a used one at a garage sale. I find that nicer tenants seem to appreciate nicer appliances. I never buy cheap water heaters, you get what you pay for in those. I had stated buying cheaper faucets, but now am going back to higher priced ones due to durability.
I rented out small, bare-bones apartments that were in a great location, but in an old, though well-maintained building, and rented them just below market rate (by about $100). Tenants would overlook the old appliances because of the price and the location.
The one thing they lamented was no hardwood floors. None mentioned the appliances. We could have rented these out at full market rate, despite their other down-sides, if there were hardwood floors in the unit.
Many tenants are really grossed out by the idea of living on top of someone else's dirt, no matter if you've cleaned the carpets.
So, if it was me, I'd spend money on hardwood floors, or a nice laminate. Any other choices would be for my benefit - durability, etc.
Originally posted by @Richard C. :
Hardwood, not laminate.
Why hardwood and not laminate?
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