Would YOU Renovate?

12 Replies

Hi all, this is my first posting in Deal Analysis....please be gentle. I would love your opinion on 1.) would you renovate? 2.) What would you renovate? 3.) guesstimate on renovation cost

Location: Far north Fort Worth, Texas. Literally across from the street from a decent middle school, half mile from a high school. 

Property: 3 bd, 1.5 bath, 2 car garage, 1,400 sf, built 1987, 2-story

Value: Bought for $125k. Was listed for $130k; Zestimate is $127k. Nearby rents for comparable properties 1,100 -1,400k. I'd like to list for 1,350k. I have another property not far from here that rents for 1,350. Cash flow about $450/mn.

Renovation? Pictures look better than it actually is. In person you can tell everything has had several layers of paint so that it has a built-up "gummy" look. Kitchen has white laminate in okay condition, kitchen and bathrooms have wallpaper in bad condition, one bathroom has slightly rusted light fixtures, the grey wall paint is either gloomy or chic (you choose), backyard has patches from the dog, master bedroom has a weird wood inset, garage has a big dent in the dry wall where someone's car hit it, 

Where would you invest to make it feel more clean and modern? I like having things "done right", but if I put in too much at once, my returns take a hit. Budget: about $5,000.

Philip

PS. Sorry for the long post. Also let me know if there is any honest and skilled contractor in DFW area!

I would take out wallpaper, retexture and paint (entire house if needed). Fix dry wall in garage.  I wouldn't worry about the inset in the master.  Replace any rusty fixtures.  If you have left over in your budget, maybe throw down some granite in the kitchen.

The house looks pretty good! Personally I would:

  • Get rid of the wallpaper
  • Paint the kitchen cabinets and buy hardware for them (It will look more modern)
  • Update the faucets in kitchen and bathroom. 
  • Update kitchen countertop
Originally posted by @Eric Brandt :

The house looks pretty good! Personally I would:

  • Get rid of the wallpaper
  • Paint the kitchen cabinets and buy hardware for them (It will look more modern)
  • Update the faucets in kitchen and bathroom. 
  • Update kitchen countertop

 Completely agree. Kitchens and bathroom remodels are usually where your going to get the best return on your money. Also appliances make a huge difference if you have matching units. Also depending on how much remodel your willing to do, I notice that wall where the dinning room table is. If your able to open in that up, that would create a much wider open look and more appealing to any prospect tenant. 

Hi Philip,

Congrats on another investment property.

Here are a few suggestions below:

Top priority: 

1. Paint the entire house in a soft grey. It's trending now. (if you need specific color suggestions, let me know)

2. New laminate (medium quality) flooring thru out ( exclude kitchen and bathroom)

Medium priority:

Kitchen: new light fixture, change door knobs, paint cabinet

Dining Room: remove two walls (verify first, to find out if they are wall supporting beams:)

Entrance: Change light fixtures.

Hope this helps.

Cheers!

Hi @Philip Hy ,

You did not mention the quality of what I call the "big five": roof, AC, plumbing, electrical, and foundation. If you have a problem with any one of these you will consume your $5,000 budget. If these are OK, I agree with the discussion above that the focus should be on the kitchen and bathrooms.

You might want to consider replacing the toilets along with the plumbing fixtures. These are the things most likely to get you the middle of the night phone call from a tenant.

Since you are in Plano and the property is north of Fort Worth you could be more than an hour away from it. Are you going to manage the property or have a property manager? If you are having it managed, don't forget to include this cost in your analysis.

Good luck!

Thanks! May I ask why you suggest granite? I'd be worried it'd be hard to get the investment back. I've always been told granite requires maintenance, so my concern is that careless tenants damage it. I was thinking a nice looking laminate or Quartz.

@Milan Blooms I would love to know your specific grey recommendation. Are you worried it might seem gloomy? Or perhaps not as trendy in a few years?

Also, any guesses on what laminate plus labor might cost for a kitchen this size? Do you ever use Quartz?

Thanks again

Some things to remember about rental renovations:

  • Rental renovations are different from retail renovations.  
    Things that raise the value of a property for sale, might not raise the value of a property for rent.  
  • Protect the property from the people.
    There are certain things you should to do to "protect" your property from your renters.  This is an entire can of worms that I'm sure has been discussed at length in another thread, but just think of the ways people can break things if they don't care or are clumsy; then try to mitigate that risk.
  • Renovations are location and audience specific.
    You need to look at the neighborhood to see what is popular and what is not.  Base your renovations on that instead of what is on HGTV or in the IKEA catalog.
  • Over renovating for rentals is very easy to do.
    Renters like nice houses, but don't put as much stock in it as buyers do.  Renters are looking for location, low cost, functionality, amenities, and efficiency.  Focusing your efforts on making the house clean, functional, efficient, and inviting will probably go further than worrying about what color paint or design style.  When in doubt, neutral.
  • The higher the rent, the higher class of renter (most likely).
    Upper class rentals bring in upper class people, but you have to have a property that attracts them. The higher class of renter is more likely to take care of the property and communicate when issues arise instead of sitting quietly by, watch things get worse, and then just moving out.  Renovate for the class of renter you want, but make sure they are available in your area.  If they are not in your area, renovate for the class that is.
  • If you are going to allow kids and pets, prepare!
    Certain paints resist staining and scratching.  If you expect kids and pets, these might be a good investment.
    Carpet doesn't agree with kids and pets.  You might want to consider stain resistant carpet, or no carpet where not required (bedrooms).
    Vertical window blinds are more kid and pet resistant than horizontal blinds.  Blinds.com has a good selection of blinds, solid guarantees, and great customer service.
  • Tile can be slippery.
    Renters can hurt themselves on almost anything.  I have seen a few court cases where renters sued owners over tile floors that they said were "too slippery when wet".  In a few cases, the renters won.
  • Protect your foundation.
    If your foundation needs to be watered, put out soaker hoses connected to timers and tell renters not to touch them. Inspect regularly.
  • Exhaust fumes go somewhere.
    Inspect the garage to make sure it is properly ventilated to the outside and not inside the house or to the attic.
    Make sure the door to the house closes correctly and seals.  This will help to prevent fumes and gasses from the garage getting into the house when the door is closed.

These are just some thoughts off the top of my head.  Hope it helps.

Hi Philip,

Benjamin Moore paint colors: Revere Pewter, Edgecomb Gray, Ballet White or Swiss Coffee. Benjamin Moore is more pricey, to save money you can mention these color to the rep at Home Depot, Lowes or wherever you go and they can recommend something that looks similar at a fraction on the price. Also ask  the rep to check for opened cans of paint. They sometimes have top brands as returns under the counter at rock bottom clearance prices (inside secret:)) Yes, go with a soft grey as it's more neutral, opens  up the space and it's not the regular boring beige.

Quartz is harder than granite,  however Quartz can burn if a  hot pot is left on it too long:)

Countertops: request quotes on granite, quartz and laminate, before making a final decision.

If you have more questions, let me know.

MB

Lots of good suggestions from @Chris Reed .

Do you have comparable information on the other rentals in the neighborhood? [Your real estate agent should be able to provide this to you.] This information will keep you from over-improving the property. Perhaps Formica is standard in the area rentals. Then you do not want to go to the expense of putting in granite or quartz. FYI, there are some companies in DFW that will resurface Formica.

First off, never depend on the Zestimate - it's notoriously wrong in TX, b/c we're a non-disclosure state. Let's just make a wild assumption that the Zestimate is indicative of the ARV - if that's the case, you have no real equity (prob. neg.) in the property after closing costs.

That said, your purchase price is a  sunk cost.   Look at pics/descriptions of local rent comps, and renovate to prevailing standards.   You want it to be clean, function, and safe at minimum, anything above that you want to ensure you'll get a decent return on your investment.