To Renovate or Not To Renovate

9 Replies

So we just picked up a solid investment SFH. We are planning to BRRRR it. We know it needs new electrical, AC, fans and lights, paint, flooring, and miscellaneous. The bathrooms are actually in overall good condition and don't seem to be in need of a remodel to make them more functional. They could simply be updated a little bit. The area we invested in will drive the rent rates more than our remodel because it is VERY desirable.

Just wanted to get some input about whether you think its worth remodeling the restrooms for a long-term buy and hold or let it ride a few years

Congrats on your new acquisition.  It sounds like your rehab investment could be better used in some other areas and that the bathrooms won't be holding any tenant back from renting, right?  I would recommend making the existing bathroom sparkling clean (newly caulked, bright light, maybe paint, shower curtain) - and leave it there.  The area is the driver so don't over-improve; there's a tenant waiting to move-in!

Don't forget the new, slow-close toilet seats!  Best seat in the house.

Since joining this site I've never seen the term "restrooms" to describe a SFH. If you're going to BRRRR the property and comps have updated restrooms... I would budget to remodel them.

@Boone Tyson it all depends on what your goal is with the BRRRR.... if you are planning to pull as much as possible on the refinance, you'll want the property to have the same finish as the comps in your desired appraisal range. If you're more interested in higher cashflow, and not so much the cash out, keep everything functional and working properly.

Unfortunately, electrical and HVAC are big ticket items that dont affect appraisals very much, from my experience.

@Jaron Walling , the neighborhood as a whole is being renovated right now. The best comps will have remodeled baths so this is an awesome point. Thank you.

@Patricia Steiner , the neighborhood is the driver for sure. I don't know that it will make much difference on the rent we can ask for, but it might make a big difference on the refi. Probably best to get another opinion from some other local colleagues on it. Luckily I live in a really cheap labor market in South Texas, so the rehab will not be too costly


@Jason D. , not too concerned with maximizing what we can pull out of the refi. Would love for it to be at $0 left in the deal out of pocket, but have enough set aside if we have to leave a little money in it. More interested in the cashflow, which we have projected around $400-$500 per month right now.

bathroom is a good cheap cosmetic improvement worth doing. 

renters are irrational, so even a good condition dated bathroom will deter a good number of them.  

I like to believe that the best tenants are also the most picky tenants about superficial stuff like this.

I monitor my competition on zillow, the amenities they have, and observe how long it takes them to rent out. Zillow has a pricing history for each house.

For example, this home i found took 6.5 weeks to rent out. I suppose this bathroom is in "good condition" if you wipe up the cabinets. But it still took 6.5 weeks.

I found a qualified renter within 2 days of listing mine in the same area, mainly because I updated it with new flooring.

Of course, price the rent appropriately. But if you can recoup your remodel investment in a few months and make it much easier to rent out, it's worth renovating.

if your demand outstrips supply in your area greatly, then maybe you can get by without updating.

@Mike Franco thanks for the insight. I think that is a really solid point. We are leaning towards remodeling since we are doing almost everything else anyway. I'm a firm believer in not being married to any property so if the opportunity came up to sell it for a premium, I know that would require remodeled baths. Plus, where we are aiming to hold a while, I'd say its worth the peace of mind knowing my plumbing is all in good shape as well and that shouldn't cost us much where we live to update it all.