siding or investment?

Question

I am currently house hacking my house and it is a duplex. My house is not 100 years old and has wood siding on it.

I replaced a couple of pieces from dry rot 6 months ago and now I have a couple more pieces. Easy fix. I just got an estimate for $14k to side the whole house but the guy said I should do windows first if I was thinking about siding the house.

I plan to move out and rent this house in about a year. My questions is should I invest the $14k in the house for worry free maintaince when I move out or should I use the 14k on my next property? Also the windows are old but how much does a tenant really care about the outside and windows? They wont pay $100-200 more in rent cause I got new siding and new windows will they?

What would you guys think would be the best move?

Thanks for all your input.

Greg Scott · Answer

Mitchell:

If you plan to hold this property for a long time, it sounds like putting on new siding would be a good idea.

You are correct that most tenants aren't that picky about new windows, but there are benefits.   A comfier house might keep a tenant longer.  Also, if bad windows result in high heating bills, it will affect your tenants and impact your ability to retain tenants and drive rents higher.   If you can save the tenant $25/mo on heating, you might be able to raise the rents a portion of that.

You may want to talk to an appraiser and see if new siding / windows would help with your valuation.  If you can raise the valuation, you might be able to get a portion of that back in cash-out refi.

In the next property you buy, ideally you want to consider these repairs up-front.  If you are buying it right you can get a hard money loan, do all the rehab, then move it to a conventional loan.  In essence it allows you to finance all the rehab up front.

Good luck

Ryan Evans · Answer

You're right in that it's tough to justify an expense like that with an increase in rent alone. You might get a few extra bucks in rent, but it's not going to pay for the siding/windows. Though, it can help with ARV and a potential refi/heloc down the road, which could help you get into the next deal. And it will give you some peace of mind having a more solid property.

Windows should come before siding as you'll be working backward otherwise.

And I haven't managed a full siding project, but 14k sounds a bit steep. Might want to shop around a bit.

Chris Szepessy · Answer

I had windows and siding done for around $13k. My house is only a 1200 sq. ft ranch, but that price still seems high for just siding. I would replace the windows and then just replace the rotten boards and scrape and paint the rest of the house. Vinyl siding is definitely lower maintenance, but a good paint job will last many years as well.

I have a rental with older windows and they cause a lot of heat loss. Windows won't get you more rent, but it may help keep tenants longer.

Dennis M. · Answer

In my experience I didn’t notice windows lowering the  energy costs much, certainly not to the point that they were a good investment by energy standards related to heat bills . It’s a good improvement but the last thing I’d do

Mitchell Litam · Answer

@Dennis M. The windows are the double string windows and the frames are a bit gross but are about 95% functional. Thats why I just wanted to do siding but then if I did decide to ever do windows it would be backwards. I have three more appraisals for siding in the next week.

Ryan Evans · Answer

Oh dang, that's a big one. That does sound more reasonable then. And just so you know, you should probably expect to pay around $300-325 per installed double hung window, assuming standard sizing and good quality.

I'm not sure it would hurt to refi twice, but I think you'll pay more in fees/closing costs. A heloc could get your rehab done, push your value up, then if you refinanced at the higher value you could pull out more cash and pay off the heloc. But I've done cash/private money deals so I'm not the best person to ask about conventional financing.

Justin Robert · Answer

@Mitchell Litam Small world indeed! If its a 4/10, and its a 3 story 3105 sq ft that bid seems more reasonable, but maybe still high? Either way, I might try and recoat to get another few years.

Mitchell Litam · Answer

@Ryan Evans Its a bigger 3 story 3105 sq ft property. I do have 3 other estimates coming but now it seems like I should get window estimates before the siding. The ARV would be great but would only matter in terms of if I sell the house correct? Maybe I will just suck it up and live in the house for a couple more years and do the work.

If it helps I would calculate the ARV at around $225k and I am in it for $140k. With that being said maybe I just suck it up and refinance it? Does it hurt if I refinance my property twice? What would be better in this case. A HELOC or a cash out refinance?

@Justin Robert A lot of the boards are starting to dry rot and peel off. And the paint looks terrible. It is in pretty rough shape I would say maybe 4/10. Also I grew up in Temple! Small world!

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