ROI on landscaping: a good investment for my investment?

Question

Here is something that may get some debate going...

I am house-hacking a SFH in Tucson, AZ, purchased with a seller-paid downpayment on an FHA loan. My roommate and AirBNB comers-by pay my mortgage for me, so it just leaves me living for free and laying the foundation for my business. I am a buy and hold guy and want to get into small multifamily next.

I see the property as an asset, and one I don't want to put any money into unless I get a return on that money. Since I have an FHA loan, I will need to one day look into a refinance, but since interest rates are so low right now I don't think I will do this any time soon. Running the numbers leads me to believe that spending the money on the refi would be a lower CoC than saving that money towards the downpayment of another property next winter.

But let's say I wanted to do the refi: what does anybody and everybody think of doing some landscaping work to force appreciation? The home was recently flipped, and has a fully updated kitchen, flooring, covered porch; in many ways the house appears brand new. The yard, however, is not. It is the classic Arizona "low maintenance" lawn style: patches of grass, mostly weeds, and lots of very dry dirt.

The house is on a corner lot; the road it is technically on has generally well taken care of lawns with good curb appeal. The other street is a pretty lousy one; I wouldn't want to buy on this second street unless I planned to buy the whole block and rehab it...

Some pot-stirring questions:

- Does landscaping bring sufficient value to homes in Tucson? It is technically central, but more south than north. It's off of Alvernon, around 29th St.

- Should I care about leverage and/or forcing appreciation to the property, or just on the rents? I understand wanting to be a good neighbor and appearing to be a functional adult and all that, but this isn't my home. It's my asset, and I don't plan on living here more than a year.

- If I should spend the money: what kind of landscaping gets a solid ROI? Grass? Desert-scape? Gravel?

- How much should I look to pay for it, and how would I estimate ARV?

- Any pitfalls to definitely avoid (e.g. over-developing for the market)?

Thanks in advance!

Michael Leung · Answer

No Caliche is like bedrock.  Its the native ground and under the top layer of soil

Justin R. · Answer

If it's a rental, do enough so it doesn't stand out when looking at all the houses on the street.  It shouldn't look like a rental, in other words - that's the principle I go with.

Kevin Fox · Answer

Hey Patrick,

While I can't speak specifically to the Tuscon market, there are a few things I've observed on the topic that will likely hold true in most areas.

First, perhaps the best (and easiest) way to gauge your landscaping situation is by just looking around the immediate neighborhood.  Regardless of whether you are selling the unit or renting it out, it tends to behoove you to have your yard not stray TOO far from those of the neighbors.

Since your post makes it seem that your intention for at least the foreseeable future is to hold the property, I'll focus more on landscaping for that purpose.

First, if the tenant is responsible for paying the water bill, I'd be willing to wager that those sprinklers get shut off within days of their move in unless you are careful to specify the required level of upkeep to landscaping in your lease.  Properties in more affluent neighborhoods are often an exception to this, but I can't tell you how many times I have seen this happen across the board here in San Diego.

Second, the benefits of investing in landscaping for your rental is not necessarily 'quantifiable,' in the sense that you often can't easily correlate the work done to an increased dollar-amount for market rent.

Where it can benefit you, though, is from a market-time standpoint. Again, this is hard to quantify, but making sure your property's landscaping is at least up to what appears as the 'minimum' standard for the neighborhood will tend to help minimize vacancy.  The more competitive the rental market you are in is, the more likely you will be able to get away with doing less.

Neil G. · Answer

i see alot of socal and az landscapes put in where they cover the dry hard clay with a layer of very SANDY YELLOW gravel that sort of forms a stucco-like shell over the earth that chokes out weeds aside from the areas its applied very scantily like around existing specimens. wonder what's that stuff called, is it different from caliche?

Neil G. · Answer

whats caliche?

Josh Nicolson · Answer

I think it depends on your idea of landscaping.

I would lean towards what Michael Leung is talking about.  Get it clean, maybe a couple plants and add gravel, but don't go overboard.

You can get great deals on plants wholesale at desert trees nursery on the northwest side.  I think most people in Tucson use Pioneer landscaping materials for the gravel.

My last triplex I did I spent $200 on plants about $400 on gravel and $300 on labor.  I planted 6 trees and 15 bushes/succulents and spread the gravel (+$20 tip to the gravel dump truck driver to spread the rocks nice and good).

I have a jackhammer that I got off amazon for $150 that my guys use and the plants go in in no time (especialy when dealing with caliche).

It totally changes the curb appeal of the property without breaking the bank account.

Neil G. · Answer

Check with the city/county - many are offering owners a sort of rebate for replacing the area that is currently lawn (or lawn overriden with weeds) with drought tolerant succulents and other xeric flora.

If they don't offer any sort of rebate at all for doing it, I would still think GREEN:

how does this property contribute to the neighborhood, is it easy on the eyes?

does it use up resources like lawns do water, herbicides, pesticides, etc?

does it provide any microhabitats/resources for wildlife?

and yes i would do some weeding, plop in a few $6/gallon succulents from lowes/homedepot, and throw down some mulch ($3/bag) for a fresh finished look (or even better, gravel if my wallet affords it)

does landscape pay off? nope, cuz 99% buyers/tenants are NOT interested in stopping to smell the roses or whatever. they're more into video games, place to shoot hoops, park cars, etc these days, only.

does it add upscale class character and chi though? absolutely.

with ya may the force be!

Cesar Mendoza · Answer

First, if you are currently living in the property just keep a clean yard, it doesn't matter whether it has grass, gravel, etc. as long as it looks clean and nice.

Second, landscaping almost never add value to the property. An appraiser will give your property the same value with dead grass, no grass, or sod. The curb appeal of a nice looking yard only brings in more offers, so it makes sense to invest on it if you're planning to sell the house.

To close, always think "safe and affordable" for your rentals, so you can save money.

Michael Leung · Answer

Landscaping in Tucson, unless it is a high end home with extensive landscape, does nothing to the value.  That is unless you dont maintain it and it becomes a tangled weed mess.  With all of our flips, we do the bare minunum and just make it look clean.  Trim the trees, add deco rock where needed and dont spend too much money.

Your money is better spent properly maintaining your house and keeping it clean

ROI on landscaping: a good investment for my investment?

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