Renovating a Townhouse: Builder's Grade?

Question

We are looking at buying a bank sale property. Here in Canada they don't sell at the amazing discounts you see in the US but you can potentially get something for $10k less than market on a $133k basic townhouse, which is what we are looking at. Kitchen cabinets, counters and sink need to be replaced in this unit as does the bath tub and vanity. I estimate the total cost of renovations as $12,000.

I have a disagreement with my wife on the level of investment required in the kitchen. She is in favour of basic, builders grade cabinets that I believe we can get for $2,000 or so plus installation. Home Depot have higher grade in stock cabinets that run about 2.5x to 3x this price and I built this into my $12k total estimate of renovations above. My thinking was that putting a higher quality cabinet in would look better and would save labour on replacing the builders grade stuff early when it reached the end of its shorter useful life. My wife thinks the up front cash savings are worth putting in builders grade, and doing whatever we have to later when rents are higher and we have more money. There is the question of whether renters would pay more for a place with better cabinets or would not. Although you might not think the average renter could pick out which cabinets are builders grade and which are better, I think these kinds of things add cumulatively and give the overall impression of the place.

So the quick question is this: builders grade cabinets for a rental unit kitchen, or something above? It is a townhouse, it is in a reasonable area near a hospital, which is a major employer, but it is more of a working area than a ritzy area. What would you do: put in builders grade cabinets or something better? Thanks in advance.

Eric Y. · Answer

@Stephen E.  As a professional cabinet builder--don't waste the money on the "better" cabinets. Even the slight upgrade you get will still be rather low quality in the big picture and absolutely not worth the money. Unless they're building them with solid wood 3/4" boxes and full pocket screwed face frames with soft close undermount drawers, it doesn't matter. For a rental, it doubly doesn't matter. I did a small test where I build what I would consider a "high" end kitchen and a very "low" end kitchen for two different rentals I own. Seeing as I do it all in-house, my only real out of pocket cost is lumber. The high end units were all solid natural American cherry wood with beautiful figuring and top notch construction. They had the undermount soft close slides, nicer knobs, whole shebang. The all-in cost for materials on these were ~$975 (hint: buying them from any other contractor would have been $6000-$8000 installed) . I also built a set out of some run of the mill poplar and painted them (yuck) HGTV "country white" or whatever with the basic contractor knob set and regular corner mount non-soft close slides. Total cost on these were about ~$790.

Guess which one got more compliments? The cheaper "no frills" white set like every person has seen on HGTV or whatever. In the end, the point is theres a limit to the amount of $$ you'll get for a rental which is more dictated by size and location. Finishes can DEFINITELY help, but only to a certain extent. Eventually all you're doing is possibly speeding up your DOM/having more applications and having more expensive items for a tenant to screw up. So long as your unit is fresh, new, and clean you'll be fine. Check out other rentals in the area, I was absolutely shocked when I finished my first property and then saw what my "competition" was.

Stephen E. · Answer

John, in essence, you are telling me what I think I already knew but did not wish to acknowledge. Sometimes it does not make that much sense to put in better stuff. Good enough can be, well, good enough. If Builders Grade get me through ten years then maybe we can revisit this and see if better is warranted. I am interested to hear if anyone does think it makes sense to put in better stuff though.

Stephen E. · Answer

Thanks Guys I can see that this is excellent advice. I will go for basic cabinets  and do countertops with better Formica, and use better knobs, light fixtures, etc. It makes great sense.

John Moore · Answer

You have received good advice.  I would put in inexpensive cabinets but doll the place up with attractive light fixtures, cabinet (pulls) handles.  Attractive counter top. Look for discontinued fixtures.  I recently put in some discontinued brush nickel fixtures and everyone wanted them and I could not get anymore (at the price).  Shop, shop, shop.  save money on everything.  Food for thought.

Josh L. · Answer

Personally, I'd save money on the cabinets and take that money to upgrade the countertop and knobs.

Its not like tenants are really go to know the difference between particleboard vs plywood cabinets so it won't increase your rent or rent it out faster.

But, with nicer countertop, you won't get more money either for rent but you would rent it out faster and might get better applicants for your tenants. And, nicer countertop and new hardware will trick tenants into thinking your cabinets are better than they actually are.

Stephen E. · Answer

Thanks Felipe I will check out Rona cabinets. The ones I was looking at were from Copps (local London chain). They are made in Quebec and seem pretty good. The frames are fine, the doors worry me a bit. If the finish is the really cheap kind, and I think it is, then it will absorb dirt and oils, etc and look worn pretty soon.

John Miller · Answer

Steven,

It is simple. Sounds like you are paying $133k for a $143k property that you are going to rent.

What difference in rent does it make if it has $12,000 kitchen cabinets compared to $2,000 cabinets. Then how long does it take to recoup the difference. Something tells me when you run the numbers your wife is right.

Filipe Matos · Answer

I can only talk from my experience.

I am a kind of person that looks for style, I don't care if it is cheap or custom made. Sometimes you can build a custom made kitchen that costs more than 10K and it looks cheap or cheezy or old fashioned.

Most of the times I use  white Ikea kitchens , they can look quite expensive.

HomeDeport White builders grade at $99 look too cheap, the brown ones not so much. Rona sometimes has brown maple doors cabinets for $99 a piece.

I find paying 2.5 times more for better quality is too much, does that mean, if the builders grade cabinet costs $99, the bigger quality would cost $300?

Home Depot has better quality cabinets for 10/20% more in raw oak, but you have to stain and varnish or paint them. Rona sells them already stained for the same price in Maple. Yeah, kind cheap quality but it looks nice.

My tenants pay more for looks, it does not matter if it's expensive or not.

I do not know about HD or Rona quality yet because i only have them for 1 year. IKEA ones I have them for 7 years with no problems as long your kitchen sink does not have leaks.

If you were to flip and sell, that would be another story. There is a thread on this forum about it, and it talks about IKEA and HD.

I am thinking about starting to flip houses for Rent to Own and I might continue to use IKEA kitchens unless HD or Lowes has cabinets for the same price and as good looking.

Filipe

Renovating a Townhouse: Builder's Grade?

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