When to Replace Appliances - Before First Tenant or Later?

Question

So I was having a conversation with my wife last night about a potential rental property and we came to a fork in the road: If you were going to purchase a unit to rent, and the property needed some light cosmetic work, how far would you go in remodeling the property?

Would you fix up some drywall, maybe replace a corner of carpet or a few floor tiles and repaint, etc. or would you go above and beyond and go as far as replacing the existing appliances and washer/dryer too?

On the one hand you could replace the appliances that are a little old yet still function so that if it breaks while you have a tenant, you won't be rushed to buy one and miss out on the opportunity to shop around for the best deal.

On the other hand, all of the analysis you put into evaluating the property may already include saving up for things like repairs or cap ex (I know cap ex is meant for big ticket items, but just saying).

What would you do?

David Hedges · Answer

I'm with Ryan Dossey on this, unless the appliances don't work or are dangerous, don't replace them until they break. the only real exception I can think of is if your renting a higher end property, though from the way you describe it, it's probably not.

If they are very old, I'd still work into my budget the possible chance that they may fail, that way if you end up needing to replace them, its not a surprise, but you should really have some cash set aside just in case something happens anyhow.

Michell P. · Answer

@Ernie Cruz

I would think that the neighborhood and demand dictates whether you want newer appliances. A hot neighborhood may need updated SS appliances regardless of the size but a market that is capped to lower - middle income doesn't care, those should just be clean and functioning.  Or if you want to "lure" a better quality tenant you might want to upgrade even though you may not be able to raise the rent.  You'll get more applicants and may be able to be more picky.

Colleen F. · Answer

Depends on the property, sometimes if an appliance is low efficiency, dated, or an older appliance that needs a small repair/parts it warrants replacing early if it will get it rented faster or get you more rent.  Good examples include, a fridge with broken door shelves (sometimes just worth replacing fridge), harvest gold,  dated dishwashers! (20 gallons water vs 5). Also worth replacing are fridges that are so obviously too small for the size of the property.  If I was paying for water I would definitely replace the washer with High efficiency and if a washer dryer is in the main living area it should look decent or all they will remember is the dated appliance. That being said it depends on the area.

Ryan Dossey · Answer

Don't over rehab. Go with what's typical in your area. Fix appliances as they break. I have a 20 year old lawn mower that most folks would have discarded years ago. It still runs like a top. Appliance don't really have a predictable life expectancy. You may replace things twice as often as needed trying to be pro active. Things like a roof or major systems I completely understand factoring into the initial investment.

Account Closed · Answer

I like including a clause about how appliances are included but not maintained...that means if the fridge breaks, its not your problem.

Ernie Cruz · Answer

Thank you all for your responses! I agree with not over rehabbing and also with not letting appliances get too dated (for efficiency more than cosmetic reasons).

Would you say that the size of the unit has an impact on the need for newer/efficient appliances? (1/1 apartment vs. 3/1 duplex)

In what cases could replacing the appliances warrant higher rent?

When to Replace Appliances - Before First Tenant or Later?

Most Popular Reply