Rental Property Investor · Syracuse, NY · Member since 2019 · 90 posts · 34 votes
I had this thought as I am house hacking (Syracuse NY) and want to make my unit nice with some upgrades. I am curious on people's thoughts on this topic.
Should you or should you not make your apartment that much different/nicer than the comps in the area (ie. appliances, counter tops, flooring, etc.) Is their a point where you don't "get your money back" ?
Hey Bryan this is a good question. The simple answer is yes you can make a rental too nice and you will at that point where there is no money back. The more complicated answer is that sometimes if you have a C type house in a borderline B/A location you can go and spend a little bit more money to make it more on the A side property. Spending a little bit more to match or surpass comps might work for you especially if there is demand for it. This requires some in depth study of the market and I would even look at trends to see if there is demand for more. In conclusion, keep it on the safe side and try to match comps but if you see the opportunity to make it a little bit better because of demand do it. On another note even if you make the house close to the comps try to add something unique to you and your style, remember branding is extremely important inn this world.
Hey Bryan this is a good question. The simple answer is yes you can make a rental too nice and you will at that point where there is no money back. The more complicated answer is that sometimes if you have a C type house in a borderline B/A location you can go and spend a little bit more money to make it more on the A side property. Spending a little bit more to match or surpass comps might work for you especially if there is demand for it. This requires some in depth study of the market and I would even look at trends to see if there is demand for more. In conclusion, keep it on the safe side and try to match comps but if you see the opportunity to make it a little bit better because of demand do it. On another note even if you make the house close to the comps try to add something unique to you and your style, remember branding is extremely important inn this world.
Rental Property Investor · Wrentham, MA · Member since 2019 · 137 posts · 104 votes
7y
That decision should be driven by the market. If you upgrade can you get your money back via a higher rent. Is the market hot enough that you could find a renter at the higher price? Are you renting to students?
Contractor · Syracuse, NY · Member since 2019 · 54 posts · 58 votes
7y
@Bryan Cavellier I think it just depends on the street you’re on and if the area supports it. If your apartment is on south Salina st. then you're pretty much going to get the same quality of tenant and rent price no matter how you renovate. Having a Luxury apt in a bad area isn’t going to get you a high class tenant paying higher rents. Sometimes i'll spend extra on materials if I know it will better tenant proof the unit. Flooring for example i'll pay a dollar more per sq. foot if I know the material will last twice as long and require less maintenance. For appliances sometimes i'll buy stainless steal if it's a unit I think will be harder to rent. The reason being that it's a relatively cheap upgrade (you can get most appliances in stainless steal finish for $100 more) and it can make a kitchen look a lot more attractive to tenants. Countertops on the other hand I always go with the stock, pre-cut laminate countertops you see at Home Depot for like $200. Upgrading to hard surface isn't worth the cost difference to me. Something else I've learned is that a good contractor can make cheap materials look like a million bucks.
Investor · Utica, NY · Member since 2016 · 24 posts · 26 votes
7y
Here is a good story, maybe you will like it, i one time put a high end stove and fridge in a rental. This rental would normal get c plus type tenants. When the tenant accidentally broke the glass on the stove, it was more then their security deposit and i knew they could not offered to pay for it and still function properly financially. To evict them would only worsen the blow for both me and them. Lesson learned: buy clean working product that looks good, but also that can be repaid if something happpens by the client you seek!
Rental Property Investor · Syracuse, NY · Member since 2019 · 90 posts · 34 votes
7y
@Jose Batista Abikarram Thanks! I really like the idea of looking into the possibility of the rental moving up in classes (ie. B to A). Unfortunately I am in a C and believe I am not in the best place to make it into a B class, so thanks for that thought!
Rental Property Investor · Syracuse, NY · Member since 2019 · 90 posts · 34 votes
7y
@Ralph Poirier no to students, and I believe my rent could slightly be increased but according to my location and market I am pretty close to my "ceiling"
Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
7y
I have this problem majorly. I am a contractor so when I ignore things in a rental or don't spend as much time or money on it; it doesn't look as good and makes me angry or something. Gives me a guilty feeling. We've been remodeling our properties like we're flipping them but they're just rentals. I just put up a house I did a major reno on for $1,300 a month and there's a run down house the same size 15 minutes away for $1,500 a month.
I'm not going to raise my rent though, the area doesn't support it but we probably over did it on the remodel on that one but at the same time we are BRRRRing so the better the remodel, the better the refi.
Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
7y
I've also had the problem where we do remodels for other investors and try to stick to their budget and the guidelines of what should be done for the rental and they're never happy. I won't remodel anything in Syracuse for anyone. It makes me look bad. It doesn't make since to spend $60k on a remodel for a $20k house but if you don't you end up with some cut corners and it looks terrible.
Worst jobs I've ever done were inside Syracuse trying to stick to budgets. We ended up spending just as much if not more than what we were charging. My guys cost me too much to do little jobs like that. Might work better for a solo guy or small crew.
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
7y
Don't make improvement unless you can get more rent. I have tenants that want to put granite countertops in one of my units. I am near the ceiling on the rents received, so spending 3K for new countertops is a waste of money.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
7y
@Bryan Cavellier
I just bought a beat up house in a B- class neighborhood. I went all out in expenses in the kitchen, living room and bathrooms. My main reason was for the appraisal when I do a cash out refi in the near future. I want top dollar back and hope it appraises high. Also, it attracts tenants who want to stay longer. Their rent ($1,675/month) is way cheaper than getting a mortgage and buying a home of this quality in the future. My hope is to keep them for years and give them a place they’re proud of and won’t want to move. We’ll see how that works out...
Rental Property Investor · Syracuse, NY · Member since 2019 · 90 posts · 34 votes
7y
@Ronald Starusnak never say never! Id love to work together in the future, but maybe in a small multi-family in one of the syracuse suburbs! Great advice all around though, thanks.
Real Estate Agent · Philadelphia, PA · Member since 2018 · 416 posts · 396 votes
7y
@Bryan Cavellier it totally is. You don’t wanna throw in marble floors if you can only charge 900/month in rent ya know? You also want to make sure you aren’t pricing yourself out of the market. Almost every market has a cap. If a neighborhood had mostly 1k/month rents, you can’t just go around charging 2k/month because you went all out in your property. I understand you want the unit you’re actually living in to be a little nicer than the units you’re renting, but you have to look and see if you can actually get a return for the extra money you’ll be spending in that unit.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
7y
@Bryan Cavellier over-renovating might be the #1 beginner mistake (I made it on my first unit turn). Generally the most prudent approach is to put just enough $ into a rental to maximize the rent, not a penny more. At the end of the day location dictates max rent more-so than any other factor, and tenants will just destroy high-end stuff anyway so I’d stick with materials that are as low-cost and as durable as possible (luxury vinyl plank flooring, laminate counter tops, contractor-grade fixtures, simple appliances, etc.).
Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
7y
That totally depends on the area you are in. If your rental is 50 dollars a month cheaper than the guy down the street with a brand new kitchen, granite countertops etc. It may not be worth it. However if your competition is a functional, but a little outdated and gets more rent than you it could work in your favor to make it a little nicer. Even something as simple as newer appliances and decent paint could set you apart. But don't go broke trying to get another 50 to 100 bucks in rent. The average bathroom remodel hired out in my area is 10-15k. 100x12=1200 10k/1.2k. In that situation it would take anywhere from 8- 12 years just to break even.
Now ask yourself could that 10k have been used somewhere else such as toward a downpayment on another property or to put in value add to a property?
I don't see any point in putting in super luxurious things like granite counters, new cabinets, hardwood floors, new bathroom, etc for someone that will probably not take care of it. Now if your end game is to sell in 5 years or less it might make sense to do those things now, cash flow a little more to offset those costs. Everyone's situation is going to be different.
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
@Bryan Cavellier keep in mind that even if you can't get more per month it can still be more desirable and therefore lead to less turnover and vacancy. There is a limit to that but a little extra helps if there is a lot of competition in the area
Investor · Simsbury, CT · Member since 2015 · 46 posts · 31 votes
7y
@Bryan Cavellier
Yes of course, depending upon the extent. However
In a former life I was a highend contractor, it’s been my experience that a little artistic/ not necessarily more expensive effort goes along way in attracting
And maintaining the best tenants your area can produce.
This can be done by getting a little creative
With tile flooring patterns. Herringbone
Is a classy touch that no other rental unit will offer that should not cost you significantly more in labor to produce
I always recommend tile and hardwood vs carpet and vinyl. They just last longer and look much nicer. The upfront cost is higher. But eventually you will replace the carpet enough times that it would of been the right choice
I am not necessarily saying
Spend without limitations I am merely suggesting
Know your market. Who is your end client, what’s
The likely demographic. What stereotypical needs will that age group look for ? How can you best provide that. Note how I said best provide that, not how cheaply you can.
Also factor in Maintenance. If you buy something that’s a little cheaper that won’t last as long it’s more expensive.
Property Manager · Nashville, TN · Member since 2018 · 12 posts · 9 votes
7y
Upgrading is always a plus. Start with the small things like light fixtures and ceiling fans. Back splashes in the kitchen are always popular. As far as appliances go, always avoid anything expensive/fancy. Most likely the tenant won't either know how to take care of them or just won't. Especially glass top ranges. Adding upgraded baseboards/crown molding is always a plus. This, of course if it's already painted.
Rental Property Investor · Syracuse, NY · Member since 2019 · 90 posts · 34 votes
7y
@Adam Fiore love the thought and similar to others in this thread about, you may not make as much in terms of money... But maintenance and turnover may be less...which is better in the long run possibly. Thanks for the advice👍