Hey everyone!

I recently got my  first rental property fully occupied as of March 1st! This is great news but hold the applause...just 2 days after the tenants moved in, I got a call from my property manager that the fridge is completely shot (Just my luck!) I decided to go with a used fridge from a referred used appliance company that my property manager uses often. I did this as a short term fix because I do plan on renovating the kitchen and replacing the appliances with new ones. My question for you all is, do you think I made the right choice by cheaping out on the front end with hopes that I won’t have to replace the appliances again anytime soon? Or should I have bit the bullet and done the kitchen gut and appliance replacement already? Keep in mind, I am short on funds to do a complete redo but I am looking to make those changes by year end or next year. I am also cash flowing approximately $400/month on this duplex after all expenses, so money will be made at a decent rate.

Let me know your thoughts! Thanks in advance!

-Joseph

How much more are you going to cash flow after the kitchen redo? Unless you need a high end new fridge to compete for tenants in your market, there is nothing wrong with a functional used one. With $400 cash flow on a long term sfr, assuming you’ve correctly factored in all costs including setting aside capex, I don’t think most here would change a thing. Put your kitchen remodel savings towards your next rental

Hi @Bruce C.

After the kitchen reno, I should be able to increase by $100-$200 as I am on the low end of market rates right now. Even including a 5% vacancy (very conservative as turnover is pretty good) and all other costs, I can shave down cash flow by $150 and still see good enough returns. The kitchen is pretty outdated, as I’ve just painted the cabinets and changed the hardware. Seems to work for the tenants so far, so I will definitely consider your recommendation on saving it for the next rental. One thing to add is that I don’t touch those funds AT ALL. Pretty much an account that I know is there with money accumulating and hopefully not dropping til I’m in need for that property.

@Joseph Careri used appliances can be hit or miss. Many used appliance stores get their inventory from new appliance haul always. They buy a semi load of haul away appliances, then clean and repair them. Depending on the quality of the rental, used appliances can be just fine. I used to do used appliances in my C or D rentals because the tenants beat the crap out of them. For my B and A class properties, I only do new appliances.

@Joseph Careri

It depends on the level of rental you have. The finishes should fit the neighborhood comparables for financial reasons.

That being said, I pride myself in having nice rentals and all my friends tell me I go overboard with the level of finishes that I put in.  

When I show my property I like for it to be nice a place that someone would be proud to live in.  This is a personal choice and I feel like my property is a reflection of me.  So a quality product is what I choose to go with.

Bottom line is you need to use your criteria. The one that makes the most sense for you.  There are a million different answer and there is no one size fits all.

Keep going!

Thank you both for your solid advice! I can definitely use what you’ve said to my advantage and be able to move forward with confidence in my decision! @Damaso Bautista @Joe Splitrock

@Joseph Careri

I always buy appliances new because it comes with free delivery/haul away. The piece of mind is nice too. I’m just last my days of lugging fridges up stairs to save $100.

@Joseph Careri . I have bought probably 50+ used appliances since I started as an investor property manager 10+ years ago.

I used to think I was saving myself and my clients money. After having enough data to compile after years of purchases used appliances are not with it.

They take more time to source and deliver. You get them for about 1/2 the price normally or 40% of market for a new one at best in my experiences. They come with a 30 day warranty and almost never last beyond a year or two. At that point you are either repairing an old crappy appliance or you are buying new. Finding appliance repair people is not easy, you will pay 125$ for an hour of repairs that may fix it for a short time period.

Now add up your time to coordinate, the tenant getting upset, and how much you actually saved.

It’s not worth it.

We have purchased many refurbished appliances, they typically come with a 6 month warranty and rarely do we have a problem.

Thanks all for your input! I will use all of your recommendations towards future situations that will most definitely arise!

@Max T. @Matthew Irish-Jones @Dick Rosen

If you planned on updating the whole kitchen next year, there is no reason you cant buy a nice, new fridge now and do the rest later. That's what I would have done. 

I think that you have tenants in place, let them be.  If I had just rented a place and then immediately had to go through a kitchen remodel (minimum of 1 week), I wouldn't be happy.  Not to mention, you may have to put them up in a hotel or other similar situation in order to allow them access to a kitchen or a clean place while you redo it.  So, wait until they leave to do the remodel if that's what you are looking to accomplish at some point.

Also, only do the kitchen remodel if the house really needs it.  If you spend $10k on a kitchen and only make an extra $100 in rent, it would take you over 8 years to pay that off.  Unless you also plan to sell the house soon and you can get that equity gain out of it.

For the fridge, I agree with some other responses on here.  I used to buy used appliances - no more!  I learned that lesson for one specific home when I bought a used appliance, 9 months later bought another used appliance, then another year later it was dead.  Now, in less than 2 years I had paid for basically a new fridge but didn't have a fridge at all.  Get the new one the first time!  Unfortunately, appliances are disposable now and aren't meant to last more than 10 years.  Yes, a used one may be fixed, but there is another part in there that is waiting to fail.

Thanks for the advice @Justin Hoggatt !!

The plan is to refi this property in the near future. The kitchen currently has some chipped wood and the edges on the cabinets are not in the greatest shape, that is why a reno may be needed soon. If I can increase the value with a new kitchen (B Class type) I think it would do perfectly fine as it is an older home so a basic remodel would be done. Nothing crazy on the high end. I definitely don’t want to go out and spend more money on a used appliance that will add up to buying a new one anyways. Next time around I may have to go new! Appreciate your help!

@Joseph Careri I would have done the kitchen rehab before the tenants moved in. It will be difficult to do the rehab while the tenants are living there and are they even willing to pay more after the kitchen is done.

You are correct though, rehabbing the kitchen will add to the appraisal value for your refinance.

Thanks for the feedback @Tim Delaney !

My intentions are to do the reno when I turn over the tenants either the first or second time around so there will have to be a little bit of downtime. Right now it seems to be working for them so I won’t rush it but it definitely needs a face lift. Especially when it comes time for the refi, I’d like to get as much as I can.