I'm in the middle of a rehab project for a small rental property in which I'm using the BRRRR method. Foundation, plumbing, and electric are in good condition, I've replaced the roof, repainted, installed laminate, and done other minor repairs around the property. I have some room within my budget that I'm trying to determine what would give the best return both during the bank appraisal and from rental income. Which of the following would you replace:
1. The current wood picket fence is in very poor condition with sections so rotted that I'm having difficulty screwing in replacement pickets. Most properties in the surrounding area have similar quality fences; however, the houses I'm seeing for sale/rent on the market have been fully rehabbed including new fences.
2. The windows are in visually poor condition and allow moisture between the panes. One window has a rather large crack down the middle of the inside pane.
3. The air condenser is in visually poor condition and my assumption is that it will need to be replaced in the coming years; however, it is currently working great.
I'm currently leaning towards replacing the fence as it would create the most curb-appeal for potential renters. Additionally, it seems to be the biggest hassle to have replaced once a renter is in the property. For additional information, the property is in the DFW area with expected ARV between $95-100,000 and rents between $950-1000. What are your thoughts?
I agree that the fence would create curb appeal and often times when people are looking for a house to rent they are more emotional than practical. I would at least replace the window pane that is broken though, as the windows add to curb appeal and efficiency. Around here it's less than $200.00 to replace a pane and it makes a big difference. Windows are easier for renters to gloss over though, especially if there are shades covering them.
Does anyone know how each of these would potentially affect the bank appraisal?
I would say replace the windows if needed first.
The fence is a nice to have and can be touched up eventually.
The A/C will die one day, but don't invest in it right away, but do have a plan for replacing it in your hip pocket for when it does go down. I knew my A/C was on its last leg when I bought my current house and I knew I would have to replace it. It also lasted 6 years longer than I thought it would, so that gave me 6 years to save up for it.
@Matthew Hite From an appraisal perspective, replacing the HVAC won't help you. But as mentioned above, make sure you have a plan in place and money saved up to replace it. All mine seem to go out at the most inopportune time, and in many cases it is so hot here in Texas it really is an emergency to get it working again.
I would lean toward replacing the windows over the fence, but honestly I'd probably try to find the money to do both. Much easier to do work before you move a tenant in, and high quality properties attract high quality tenants.
"1. The current wood picket fence is in very poor condition with sections so rotted that I'm having difficulty screwing in replacement pickets. "
Have you given any thought to running a new 2X4 under the existing rotted backing and then screw in your new pickets into that?
"Most properties in the surrounding area have similar quality fences; however, the houses I'm seeing for sale/rent on the market have been fully rehabbed including new fences."
As to weather it's noticed it will all depend on the tenants. IE; do they have kids or pets, etc.
"2. The windows are in visually poor condition and allow moisture between the panes. One window has a rather large crack down the middle of the inside pane."
Your "allow moisture between the pains" comment leads me to assume that these are dual pane windows.
If so it is very easy to remove the broken pane while leaving the other pane. You will find that using a heat
gun will loosen up the seating around the pane which will make this a much easier job. Be sure to wear gloves.
"3. The air condenser is in visually poor condition and my assumption is that it will need to be replaced in the coming years; however, it is currently working great."
If it's working just leave it 'till it goes out. If the covering looks that bad try going over it with car wax to remove oxidation. If it's scratched or rusted paint it. I find that a high quality spray paint looks great.
Hope this helps, Ken
Thanks, everyone! This was all fantastic information. I spoke with my property manager and decided to go ahead and replace both the fence and all windows in the house. Should be able to do both for around $3,800 and it'll increase the appraisal, rent income, quality of tenant, and resell value. It'll take a few years to recapture the ROI but think that it is worth it.