Need Advice: Should I Have Remodeling Done During Tenancy

3 Replies

Hey BiggerPockets Community!

Hoping I can lean on some working experience for a current situation.  I currently own a duplex and plan to renovate the kitchen and bathroom in one of the units as they are lagging behind the current market as well as my newly renovated downstairs unit.  I currently have occupancy through next May (2019) for this unit and was wondering if I should renovate now or wait until they vacate.

I am a little tore because realistically I would not be able to raise rent to offset some of the improvement costs until this lease was terminated and the current monthly rent is already a tad below market without the improvements.  On the other hand, these tenants have been fantastic (my best so far) and renovating with them present would help generate more goodwill and perhaps lead to extended tenancy and other network benefits (They are both nurses and may have co-workers who are looking for apartments).  There is of course the other benefit of quick turnover if necessary as vacancy costs for these improvements would not be incurred.

I was going to split the difference and perhaps target the bathroom for now and the kitchenette later.

Any suggestions or other things to consider?  Feel free to be blunt as well as I understand being "kind" does not always translate to success or reciprocity.  Thanks!

If you feel there is going to be a return on it and it wont prevent you from other deals then do it. The current tenants will appreciate it unless its a long drawn out rehab, and it will be done already for when they leave and lessen the future turnover. Or maybe complete a few aspects of the rehab now so that when they leave you tackle the rest more quickly. You also might be able to take your time and shop around for discounted materials, rather than settling for whatever you can get when there is turnover. Starting now also might allow you to classify things more as repairs than capital improvements.

Never a good idea to renovate with tenants. First since you already have tenants there is no upside unless you can raise the rents accordingly, secondly your tenants will hate living in a construction zone.

Raise your tenants rents annually, there is no excuse to be under market, and when they decide to move out that is when you renovate and then raise the rent to your new market for the new tenants.

There is no financial upside to renovating when you already have paying tenants. It's only business. Save your kindness for charity work.

Thanks for the input and advice John W. & Thomas S.

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