Houston rental property improvements - Roof replacement and minor upgrades

[Eric T.]

Dear BP experienced Buy-and-Hold gurus,

First of all, thank you BP for creating such an awesome community to help starting investor like myself. I do have some newbie questions.

I am in the process of acquiring a SFR in Houston and considering the following based on visual inspection and from a Home Inspector.

1) Roof Replacement. No leakage but inspector noted that the roof has aged with only a year left. Inspection have shown there is no leak but it does have signs of deterioration. Two bids so far with cost ranging form $6K to $8K. Should I leave the roof alone for now?

2) Minor upgrades like.......replacing vinyl and carpet floor with tile (areas except bedrooms), Kitchen countertops from pretty roughed shape to newer laminate one, cabinets (kitchen and restrooms) refinish/paint over, etc....... Budgeting $5k for interior improvements/repairs but it is now way over based on bidding estimates. Any recommendation on much improvement I should put in?

I am budgeting 10K for the upgrades/repairs (including roof) but I can't seem to make up my mind as to how much upgrades and repairs I should put in. Current upgrades/repairs estimates is well past my 10k budget based on bids that I am getting from GCs. 

SFRs around this area rent comps at around $1,300/per month. Property built year is 1982 and around 1.87k sqft. 

Eric

[John Chapman]

Here are my thoughts based on what you are describing.  (I realize I'm in Dallas, as opposed to Houston, but I'm pretty sure the advise will hold.)

(1) In order to give you better advice, we probably need more information including more specific information about what you want to get done.  Also is a $1300/month a nicer rental in your area, i.e. not low income?  (In my area, it is and I suspect our markets are similar)  This will dictate the finish out you have to do to get decent tenants.

(2) For an 1800 square foot, your $5k budget strikes me as insanely low.  You are talking about paint, flooring, and upgrades at a price of $3.6/foot.  It's just not possible to do that on that budget. 

(3) Do not refinish the counter.  I've done this before and it never works.  Tenants will use knives on it and will get ruined very quickly. 

(4) Anything you kick down the road in terms of deferred maintenance will come back and blow up in your face when you least want it to.  (I say this from first-hand experience.)  Fix it right the first time and make it durable.