Over / Under Rehabbed Properties Impact to Rental Rates?

[Zoran M.]

Hi all,

I wanted to get the communities take on how rehab spend has trended over the years in your markets. In CLE, I've noticed a trend where in C+ to B- markets, landlords are doing cosmetic rehab beyond just paint & carpet. I often see "large" investors (>4 properties) putting in new cabinets, granite, new tile floor in the kitchen and updating bathrooms with either new tub surrounds or wall tile. In the same neighborhoods, other investors are simply buying the property, replacing carpet / paint and renting out the unit.

There is a material delta in the rental rates between the two strategies. A fully rehabbed property in one particular suburb can generate $1,250/mo, whereas the minimum-rehabbed property may only trade at $1,050/mo. These homes are blocks away from one another...

What are you guys seeing in your markets?