When should you remodel an occupied unit?

Question

Hi all,

I currently own a duplex where both leases are nearing their end. The upper unit in particular has been living there for many years and the place is a mess. 6 cats, 2 dogs. I know once they leave I will need at least 7k to remodel and get the place rent ready again. However once I do that the unit would roughly rent for 200$ more per month.

I don't have a problem per se with the uppers as they pay rent on time and I know they likely won't leave for a long time. Knowing that the place is in bad shape though and could rent higher if remodeled and re-rented at what point would you push to go that route?

Thanks!

Account Closed · Answer

You don't get much for $7,000. Maybe carpets, or some other flooring, painting and cleaning.

Owning rental properties is like every other business where you want to earn as much profit as possible.

You should stretch every investment decision and calculations over a 10-year period.A $200 rent increase does not seem like a lot of money, but in 10 years that is $48,000. Raise both units in 10 years you earn an additional $48,000.

But, those numbers are not true, because if you are doing what you are supposed to do to get the most profit you raise the rent 10 more times in 10 years and maybe you make more than $80,000 or $100,000.

Now!!! What can you do with another $100,000 every 10 years???

When do you remodel your units. Today!!! Because you already wrote in your post that you can raise the rent. Maybe you can even raise the rent by $300.

Don't look at today when making investment decisions. Do your math calculations 10, 20, 30 and 40 years out.