What improvements are profitable for rentals?

Member since 2020 · 89 posts · 45 votes

How do you evaluate what improvements are profitable for rental units?

Assuming everything is repainted & clean, what is a good framework to understand the impact of:

-new kitchen countertops

-bathroom updates

-landscaping

-etc

What are some renovations you’ve done that have paid off?

What was a waste of $$?

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Anthony Vicino

Investor · Minneapolis, MN · Member since 2017 · 95 posts · 130 votes

A lot of the value you can charge for will be dictated by your local market.

For us, with Class B and C assets, we see the most bang for our buck with flooring, appliances, cabinets/countertops, fixtures, and paint. The areas in particular to pay attention to are kitchens and bathrooms.

Avoid the renovations that are invisible to the tenant or that make the unit "too" nice (no need for granite countertops if none of the nearby competitors have the same).

A great way to determine market baseline is to go visit comparable properties renting at market rate to see what the generally accepted standard is in your area.

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Account Closed
Realtor · Portland, OR · Member since 2020 · 87 posts · 43 votes
6y
@Gary L Wallman #1 congrats on the success! Many ways to win in RE. Opportunity cost wise 3-5k for granite, 8k-10k in carpet, that could be for many in this group a DP for another deal. Just another way of looking at things. Both ways work IMO.
My thought on linoleum has changed in the last yr when I discovered what it is made from in China and the toxins etc. Maybe something to look into.
0 Reply
Account Closed
Realtor · Portland, OR · Member since 2020 · 87 posts · 43 votes
6y
@Benjamin Maciel *apologies I meant linoleum not carpet
0 Reply
Joe Cassandra
Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6y
Nice appliances I've found usually win the day (especially a nice fridge).
Depends on your market, but if your bathroom is functioning and clean, I wouldn't spend the money and time getting nice sleak vanities and tiled showers unless other rentals are doing that.
From the rental pool I work from ($1,400/month +), they just want a nice enough place to stay that's clean and they don't have to worry about a lot of repairs.
Overdoing a rental usually doesn't make sense unless you're trying to push rents (and confident you can get it)
1 Reply
Isaac S.
Member since 2018 · 563 posts · 562 votes
6y
1. wood floors or wood "type" floors(aka Laminate, LVP,)
2. new nicer fixtures(not the most cheapest basic ones, but, not over the top) and new switch and outlet plate covers
3. clean fresh paint....behr swiss coffee, from home depot factory mixed so, very consistent between batches, and that makes doing spot touch ups and blend ins between tenants, very easy
4. CLEAN!!!! most people don't clean good...I mean move the refrigerator and stove out and clean under and behind them, clean on top of the ceiling fan blades, windows inside and out....clean to the level of OCD super particular up tight tenant standards
5. then if you still have budget... kitchen and bathroom remodels, granite counters, new tub, tiles, and fixtures,etc
1 Reply
Account Closed
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
6y
@Charlie Anne
Honestly, I've seen that most cosmetic UPGRADES at their going costs in even low priced markets (I live in CA, invest in the midwest and south so I see both extremes) are rarely worth the increased rents you'll get than if you had relatively outdated, but clean and well maintained components. Unless something is so extremely dated. Clean flooring, paint, and trim with clean and close to like-new condition bathroom and kitchen materials seem to get market rents.
Just to give you an insight into biases I may have- I invest in C and B class neighborhoods in the midwest and south where two bedroom units tend to have market values of 50-55k and rent for 700-750/month.
As far as mechanicals? Replace it if its broken. Windows should be in good shape, but I wouldn't swap well maintained single pane for dual, ever.

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Satyam Mistry
Investor · Omaha, NE · Member since 2019 · 130 posts · 139 votes
6y
@Charlie Anne Lot's of great replies here so will not mention many of things already said, but another point to consider is what your plans for the property are. If it is a long term buy & hold it is important to also think about items that can last a long time without constant maintenance & replacement. Trying to get your rental to be as tenant proof as you can while still being a desirable property that will attract a pool of qualified applicants is key!
1 Reply
Jonathan W.
Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
6y
@Charlie Anne https://youtu.be/cNkHcjfDhqQ
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Stephen Bianes
Rental Property Investor · Austin, TX · Member since 2015 · 45 posts · 27 votes
6y
@Michael Tempel love that matterport👌🏽
0 Reply
Kanwar Sodhi
Real Estate Agent · Chantilly, VA · Member since 2016 · 245 posts · 61 votes
6y
Just look at comps. It helps to see what people are excited to pay more for.
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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
6y
In real estate there's a saying "Kitchen and bathrooms sell houses" they are what are most important to people. However; good flooring is important too.
1 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
Agree with all of the above but one of the best upgrades lately have been new entry doors. Especially when I can bump them out to a 36" rather than the old 30-32" .The tenants love them & we get them at Lowes Special Order Return for <$150. Some do not even need painting as they come pre-colored.
My maintenance guy can completely remove the old '60 era door & install a new door in a couple of hours.
2 Reply
Dawn P.
Rental Property Investor · Sumter, SC · Member since 2015 · 334 posts · 531 votes
6y
Originally posted by @Account Closed:
@Charlie Anne “always Carpet and Paint. Never granite counters...” say that 10 x in a rown and that should lead you in the right direction.
One person I was working with said she “updated” the roofing shingles to get more in rent lol.. dont do that.
Clean. Simple. Safe = perfect rental.

Funny that you mention shingles - I remember at least three potential renters asking me how old the roofs were on the houses they were looking at. There must be some janky, leaky places people are renting out around here! lol
0 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
I would also add to the cheap list (for units)- Closet organizer, we put in the Rubbermaid ones- Tenants love them.
0 Reply
Lauren C.Pro Member
Rental Property Investor · Hamilton Township, NJ · Member since 2012 · 211 posts · 149 votes
6y
Everyone mentioned the big stuff, SS appliances, dishwasher, and washer dryer in unit. We invest in an area where homes are over 100+ years old so we find a huge return on updating plumbing and providing new toilets. While we can't increase rent, this cuts down BIG on maintenance calls and capex headaches in the future. We're big on front loading cap ex items to limit the amount of work needed while the unit is occupied.
2 Reply
Kelcey Dudley
Rental Property Investor · Sunrise, FL · Member since 2020 · 1 post · 0 votes
6y
@Charlie Anne cabinets worked!
0 Reply
Michael Lenahan
Rental Property Investor · Philadelphia, PA · Member since 2015 · 95 posts · 53 votes
6y
Originally posted by @Charlie Anne:
How do you evaluate what improvements are profitable for rental units?

Assuming everything is repainted & clean, what is a good framework to understand the impact of:
-new kitchen countertops
-bathroom updates
-landscaping
-etc

What are some renovations you’ve done that have paid off?
What was a waste of $$?

I've been adding recessed lighting downstairs and opening up the floor plan.
FYI I invest in class C+/B- neighborhoods in Philadelphia.
I'm going ROI from charging higher rents and getting higher appraisals on the refinance stage of the BRRRR process.
Here is recent example of a rehab in progress:
https://photos.app.goo.gl/sW64...

0 Reply
Kendal Lamb
Real Estate Agent · Kalispell, MT · Member since 2020 · 129 posts · 80 votes
6y
I agree that it depends on your market. We bought a super run down duplex and are now fixing it up.
We did all new paint throughout, just an off white color. New flooring in the living room, dining room and kitchen. Painted the cabinets, added a back splash and epoxied the counter tops. We also bought new stainless steel appliances.
Our next move is new siding and new roof.
As of right now we are the ugliest house on the street (on the outside), but once we get the siding and roof done we will definitely fit right in with the neighborhood. The other Multi-Family properties near us won't be quite as nice as ours when it is finished, but we will be able to charge a slightly higher rent due to the updates. Our current tenants are loving the updates and understand that their rent will go up slightly due to the updates. We let them know what our plan was with renovating the property prior to them moving in.
Photos Below. Before and After
4 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
6y
I like new appliances to start with. Besides it being a great selling point, it also saves on future maintenance. Next, you get a big bang for your buck with new and full interior paint.
0 Reply
Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
Originally posted by @Pat L.:
Agree with all of the above but one of the best upgrades lately have been new entry doors. Especially when I can bump them out to a 36" rather than the old 30-32" .The tenants love them & we get them at Lowes Special Order Return for <$150. Some do not even need painting as they come pre-colored.
My maintenance guy can completely remove the old '60 era door & install a new door in a couple of hours.

Beautiful.
0 Reply
Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
Originally posted by @Kendal Lamb:
I agree that it depends on your market. We bought a super run down duplex and are now fixing it up.
We did all new paint throughout, just an off white color. New flooring in the living room, dining room and kitchen. Painted the cabinets, added a back splash and epoxied the counter tops. We also bought new stainless steel appliances.
Our next move is new siding and new roof.
As of right now we are the ugliest house on the street (on the outside), but once we get the siding and roof done we will definitely fit right in with the neighborhood. The other Multi-Family properties near us won't be quite as nice as ours when it is finished, but we will be able to charge a slightly higher rent due to the updates. Our current tenants are loving the updates and understand that their rent will go up slightly due to the updates. We let them know what our plan was with renovating the property prior to them moving in.
Photos Below. Before and After

The window is in the wrong place for your before and after. Also, placement of the door doesn't match. Different property?
0 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
@Kendal Lamb nice work & we did the same ....
$475/month apartment with a 60's era kitchen with the cabinets held together with 3inch nails. Rehabbed & now $800/month. Had to recess the stove into the mud room but it worked.
0 Reply
Kendal Lamb
Real Estate Agent · Kalispell, MT · Member since 2020 · 129 posts · 80 votes
6y
@Pat L. That looks amazing!! Great Work!
0 Reply
Kendal Lamb
Real Estate Agent · Kalispell, MT · Member since 2020 · 129 posts · 80 votes
6y
@Account Closed
The before is the other side of the Duplex. I didn't have a before picture of the side we just completed. It's the exact same layout just flipped. Nice catch by the way! :)

0 Reply
Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
Originally posted by @Pat L.:
@Kendal Lamb nice work & we did the same ....
$475/month apartment with a 60's era kitchen with the cabinets held together with 3inch nails. Rehabbed & now $800/month. Had to recess the stove into the mud room but it worked.

Absolutely brilliant on moving the wall into the mud room. Just amazing! Well done!
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