We are under contract with a duplex where we will house hack one side and rent out the other. Our monthly mortgage/tax payment/etc will be about $1500. Based on the market, we should be able to rent out the other side for $1200 (as is). The duplex is in great condition but is extremely outdated (wood paneling, pink/green tile, etc). It screams 1950s. The rental market in our area is very favorable area where there aren't a lot of places for rent. My question is, should we fix up the units as time goes on or before we have renters (in hopes for a higher monthly rent)? Is there a good rehab/rent calculation that you all recommend? Also, this is our first rental property so this is all very new to us!
@Katherine Young Welcome to real estate! House hacking is a great way to go. How much will the rehab cost? How much more rent will you get if the unit is updated? It is hard to fix up over time since there will be tenants living in the space.
@Katherine Young welcome to BP and the adventure of real estate investing. There is a lot to consider with rehabbing the unit before renting or just renting it out as is. @Julie Marquez hit the nail on the head with both of her questions. You need to consider both of them to figure out if a rehab is worth it. Another question to ask yourself is how long will your rehab project going to take. If the project will take you 2 months and increases your rental income by $200 a month it will take you 2 years to recover the 2 months the unit was vacant if you would have rented it at $1200 as is, and that does not even take into account the amount of money spent to do the rehab itself. Unless the rehabbed rental will bring in a significant amount more then what the unit will get now it is probably better to start getting the rent coming in. Something to consider that I am doing with some of my older rental units, make a list of things you want to update, rent the unit out and after your first tenant moves out update one of the things on your list that you can do in a short time then rent it out again and repeat. it may take you years to do all the updates but if you have steady rent coming in you are doing well.
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