winter is coming .. renovate now or rent later?

[Albert L.]

Hey folks - I may be closing on a property soon in the westpark/jefferson area. 

I'm in a bit of a pickle deciding whether to ..

1 - vacate the currently occupied unit and take the next 1-2 months to do some minor upgrades (new roof, new exterior paint, new appliances, touch ups to bathroom/kitchen) then try re-renting it in the new year under a new property manager with higher rental prices (new: $750, old: $700). 

or..

2 - do renovations later after weather conditions improve and stick with the current tenants who the owner chose themselves. (i dont think they're using a PM) but rent for a bit lower ($700). The tenants are currently on a month to month lease. 

with option 1 -- upside: can finish renovating since it's a slow season anyways and potentially rent it out for higher rates and increase cash flow/returns. theres also potential to screen for better tenants and secure a longer term lease

downside: i'll have 2ish months of vacancy...

i think option 1 makes more sense but maybe there's another option / perspective i'm missing here. 

thoughts? 

thanks BP Community! 

[Bob Collett]

@Albert L. I would recommend that you keep the existing tenants for now if they are paying the rent and not causing too much drama. The Cleveland real estate market begins to slow down from Halloween until Super Bowl Sunday.  Think about rentals... what kind of tenant wants to move between Thanksgiving and New Year's day.  Of course there are a few exceptions such as job transfers, or insurance claims... but most often people moving during the holidays are getting kicked out of their current place.  

Moreover... keep a paying tenant during the winter if only to keep the utilities on.  A burst pipe can cost 10s of thousands of dollars.  

Cleveland is a great place... but people do not stand in line for rentals here with 700 credit scores in the B minus to C type neighborhoods. Its a challenge to find a good tenant, especially in the winter.

As Victor said... make repairs that prevent additional damage to the property or are essential to safety... leaky roof, broken windows, storm windows, furnace filters, smoke alarm batteries, furnaces & hot water tanks well beyond their useful life, repair holes in foundation or walls to prevent easy critter egress, repair gas leaks, repair dripping faucets, etc.

Bob Collett, PM