Level of rehabbing for rental property

[John Ma]

Hey guys, I'm currently at the point where I have a remodeling decision to make, and I'd like to hear what others who have been in my shoes have done and where it has taken them. I understand everyone has a different situation and is their own decision maker, but perhaps hearing other's opinions may drive my decision in a certain path.

I recently purchased a small (1000sqft) house as a rental. It is for the most part move-in ready as it just needs paint new carpet, and few small trivial repairs to be acceptable to move in.

I had my father and one of his workers come take a look for the first time last weekend, and they recommended I completely gut the plaster walls, install drywall on the outside walls- I was not originally planning to spend an additional few thousand for this.

I was aware the house was not insulated however it did not seem much of big deal to me as I was going to have the tennants pay for all utilities.

At this point, i am trying to re-evalulate what it means to be a real estate investor / land lord. The two extreme ends are the type that collects as much as he/she can while spending the least amount, vs the type that will invest in a few luxeries (insulated walls) in hopes to maintain tennants for a little bit longer (does it pay off?).

From your experience, is something like slightly lower utility bills something tennants would stay at a place a few years longer for? As a land lord, it seems like the thousands I'd be paying for this work will not add up at all, unless i were to cover utilities, and even then it would be a much longer term.

Any thoughts on my thought-process?