How Much To Spend Fixing Up House in between Tenants

Question

Hello Everyone,

How do you figure out a budget for fixing up a house in-between tenants?

Long term tenants are moving out end of the month, July 2020.

Single-family home (3 bedroom/1 bath) with a detach in-law (1 bedroom/1bath).

Due to COVID not sure how long it will take to rent, and should this time be used to do some improvements that could affect the overall property value?

Is there a "formal" to use figuring out the dollar amount to spend for the return to gain?

Thank you.

Account Closed · Answer

In my experience, during this Covid pandemic I have had no problem getting properties rented.  The process is different, showings, etc., trying to keep social distancing and proper safety and sanitation, but I'm still getting multiple applications on each property available.  I'm in the Las Vegas area so your area may be different.

Standard improvements/repairs are necessary to maintain the property.  Paint helps protect both the interior and exterior walls, chipped or flaking paint can allow elements into the wall to cause damage.  Badly stained floor coverings can keep potential tenants from applying, resulting in longer vacancies.

What are you wanting to improve?  Will the improvement increase the rent rate?  If so, by how much and how long before you get the full turn on cost of the improvements?  If your goal is to increase the property value, what good does that do you now, unless your going to sell it or plan to utilize the higher equity value for another investment.  Keep in mind, any improvements made today will depreciate over time and may not bring the expected higher home value later.

Real estate typically appreciates over time on its own, unless it isn't properly maintained.  I would make any necessary repairs and upgrades to maintain the property.  Personally I wouldn't worry about making improvements to the property, for the benefit of increasing its value, until you decide to sell the house. When you decide, talk to a REALTOR® in your area that can help you understand what improvements will increase your property value and which areas you'll be wasting your money.

Ray King · Answer

Thank you for the insight, it is much appreciated.