Luxury updates to your unit?

Question

Hi everyone, I've been toying with the idea of putting some nice amenities in my rental units to increase rents and reduce vacancies. I recently did an overhaul in my kitchen in my primary and it was fairly cheap, I painted the cabinets white, got a nice laminate countertop (granite lookalike) and just installed a glass mosiac tile, all in I am $650, and it looks amazing. I think this would go over very well with tenants in the area as almost every rental I see being advertised, the LL uses bland materials in the kitchen and baths, I would think I could do each unit in upgrades for around $1500 ( doing bathrooms in upgrades as well) and get $700 instead of $600. I've asked a couple of prospective tenants on facebook if they liked upgrades and if they'd pay extra for them and they said yes that it would be worth it to have a nice rental instead of something plain. I would think that this would reduce vacancies as well, thoughts? All answers are appreciated.

Samantha Klein · Answer

I feel like if even doing 2k in upgrades helps keep the place rented faster and longer, it's worth it regardless if the rents increased which I strongly think they will, and if not, I wouldn't be concerned.

Carolina E. · Answer

@Samantha Klein If you can keep the cost low and use materials that will hold up, I would try it on one unit. Try it on the unit that may need it more.  See how it works out for you.

Michael Lam · Answer

Hi @Samantha Klein

Your walking a fine line between putting in something that market may not necessary need.  Be real objective about this and look at the rents in your area.  Can you find any comparable homes with better amenities that justify a higher rent?  How much more are you caring beyond the FMR in your area.

A luxury update, should only be considered in area of neighborhoods that expects this.  If you put these updates in a for example, 'ghetto' area.  All that will do will incur damage pretty quick because of the general pool of quality tenants are low in those area.  So even if you have made updates to justify the rent increase.  Where are you going to get the tenants?

So these updates you make needs to also consider the location of your area, the demographic pool of tenants in this area.

My general rule when renting out units and doing any rehab is to use decent material that last long.  A nice clean look and feel will show great during showings.