Windows - Refurbish or Replace?

Question

Hi,

I recently closed on a SFH in northwest Denver that was built in 1898.

In general the home is in good condition with the most notable exception being the windows. All the windows are wood, single pane and original to the house (typical, and even desirable for the area).  The are is not designated as a historic district, but has many homes with historic character.

The street facing picture window is in good shape and it is important to the character of the house. Every other window has some issue, one needs to be restrung, one has a cracked pane, a few show signs of rot, all but one is missing a screen and, because they are single pane, they are definitely not energy efficient.

The house will be used as a rental - in fact we qualified a great tenant the day after we closed and they have already moved in.

I would welcome thoughts on whether you would be more likely to refurbish, or replace the windows, and would be grateful for any recommendations on companies/contractors.

Thank you!

Jen

Bill S. · Answer

@Jennifer Lulofs from an economic standpoint it never pays to replace windows. The cracked single pane window can be repaired fairly cheaply. In reality, you won't get any more in rent for one with new windows over old ones. Restrung? Just put a stick in it to hold it up.

Sure new windows make a place look and feel nice but it's hardly worth it from a financial perspective. In most houses, the window areas do allow for heat loss but most heat is lost upwards so new windows don't really reduce heating costs that much. They do provide for greater comfort.

Account Closed · Answer

@Jennifer Lulofs Congratulations on closing such a great sounding deal. Historic 1898 SFH, sounds beautiful and I haven't even seen it!

I'm just curious, as I'm new to the Colorado Market (although native to CO), was this your first investment? I only ask because I noticed that this is your first post. Would love to know more about what type of investments you're interested as my goal in Colorado is to provide quality wholesale deals to investors in CO.

Also, how did you find this home. (i.e an agent, personal marketing, zillow etc...)

Real Estate is just so exciting! I want to know it all!

Let's connect,

Diedrick Z.

Kyle Hipp · Answer

I replace all the old single pane windows in my properties. It costs me roughly $260 per window installed for an energy efficient double pane window with a full aluminum wrap on the outside. I have to disagree with Bill in that it is a wise investment. The property looks way better from the outside with new windows and wrap and is maintenance free for years if done right. The energy efficient improvement is quite noticeable. My properties save roughly 20 - 25% in heating costs with new energy efficient windows. This makes my mechanicals work less also extending their life. This makes my tenants more comfortable and allows me to have a higher rent as they can use all their windows with ease and control costs better and be more secure. There is also the benefit on the sale end of having energy efficient windows.

Jennifer Lulofs · Answer

Thanks to everyone for the thoughtful comments.  I really appreciate your time and expertise.

Our primary residence is a historic home and we chose to refurbish the windows and add storms where necessary for energy efficiency. I definitely believe in restoration/preservation whenever possible; but as a new investor/landlord I wasn't sure how more seasoned landlords would approach the problem.  Thanks again to everyone for chiming in.

I think I will restore the windows to ensure function and prevent additional deterioration, but won't worry too much about energy efficiency.  I feel like it is a trade off most understand/accept when wanting to live in an old house in Highlands.  I can always consider upgrades later if market demands it, but currently renting was easy.

Bill, I always appreciate your no-nonsense approach.

Diedrick and Tasha I am happy to share more information (I am sorry I can't figure out how to link your names).   This ended up being long.....maybe to make up for not posting when I started.

I am a new investor.  Went to my first BP meet-up in October or November of last year.  I now have 5 SFH rentals.  Four that were already rented and were being professionally managed  (ie, it was a low barrier to entry and got me started), plus this one.   All 5 came together within a week of each other. It was a little crazy.

As for this property, it was on the MLS.  I used a realtor.  If I were to follow the BP rules of thumb, I should never even admit to making this deal.  It doesn't meet the 1% rule, or any other rule.  That said, it made enough sense to pull the trigger and I needed to get the ball rolling on my landlord education.

BP has been wonderful, but IMO there can be so much focus on buying at less than market, making big margins, making lots of deals etc., that it can feel a little daunting; especially if you are in a competitive area like Denver with a full time job (ie no major rehab projects for me right now) and no network (yet).

The house is in a good, established, desirable section of Denver (Highlands), on a good street that will attract A/B renters.  It is small, easy to maintain (ie not damage) inside and out, with a flexible floor plan for a couple or for roommates.  It has great curb appeal, great character, needed almost nothing cosmetically and was priced below most duplexes and total scrapes in the same area.  I tried to win the deal on the terms I could offer (versus bidding up) and it worked. I offered cash but ended up having enough time to finance it.  My appraisal indicates a value 30K (about 8%) more than purchase price-which is comforting-but I believe I got it for exactly market value - the price the seller was willing to accept in a highly competitive market.  (No bargain here).

I got a cheap 30 year mortgage at 4.0% with 25% down (a little less after some concessions from the owners which will cover the few necessary repairs).  Nothing fancy about any of it.

Still, when all is said and done, the rent covers the mortgage, all expenses, plus assumptions for vacancy and CapEx and still provides a small $400ish/month cash flow.

It is also providing me (in addition to mortgage pay down, depreciation/tax advantages and hopefully appreciation) is experience.  Which for my first deal top to bottom is huge.  I have already learned so much and I am creating systems and processes I should be able to scale.

For future goals, I know I need to work on my network.  (I would love to meet up with both of you at the next BP meeting!)  I have also been going to ICOR meetings, courses etc., and meeting and talking to anyone and everyone I can.

I also want to work on generating more income for more deals (spend less and keep investing), gain comfort around taking on more rehab-worthy projects (the whole BRRRR strategy) and to increase my network for opportunities outside of MLS.

I have to say, so far I have loved the process.

Any comments, feedback and criticisms are welcome.

Jen

Account Closed · Answer

400/month! Thats great @Jennifer Lulofs.

I believe the average is only about 150/month! By that standard you are doing +100% better than the average cash flow. Glad you replied as it is quite inspiring to hear how quickly and from the sound of it, unexpectedly you were able to acquire 5 units. Would love to say the same for myself soon:)

Primary focus for me is still wholesaling, though.

Kyle Hipp · Answer

I have not heard of blue top resort, I'll have to look into that. I have a couple sfh, duplexes, manage a couple 3 plexus and have a 6 unit in the Appleton and surrounding area. I prefer Appleton specifically the most and live there as well. I feel we are in a pretty great area. Affordable properties and the community has a lot to offer.

Matt M. · Answer

I'm in the process of putting window world windows in 2 flip projects and my own personal home. I got triple pane for $500 a window installed at my place(They are installing today;)). They all have lifetime warranty, etc. Let me know if you want my guys info.

You probably will have to replace them at some point, but with all the $$ outflow you've had lately, maybe just sit back for a bit and see how being a LL treats you. Something more important might come up, and you'll need some cash for it.

Jennifer Lulofs · Answer

Thank you @Bill S.!  Never would have figured that out on my own.

Hi @Kyle Hipp, I see you are from Appleton.  My Aunt and Uncle have an awesome little place called Blue Top Resort in Fremont, not too far from you.  We will actually be there for Labor Day. Thank you for your advice.  You make some good points.  Are your SFH in Appleton?  I was curious what the market looked like there, we always love visiting.

Bill S. · Answer

@Jennifer Lulofs to "mention" someone, you type the @ symbol followed by the first three letters of the person you want to "mention".  They system will automatically generate a drop down menu of people matching your typing (the list is generated from the people in the thread and all of your colleagues). You pick the person you want and their name appears highlighted in blue. BTW it took me a quite a while to figure this out so I know your pain.

Colleen F. · Answer

My preference is to refurb and put in storms for this kind of house. There is a negligible difference in energy efficiency if this is done right and with good storms. Good storms are custom sized and not terribly expensive.  Some have the look of the old wood storms. For a picture window you can use what they call an interior storm.

I am not seeing anybody bring up the lead regulations in your state. Whether the windows are painted and the lead regulations for rentals may influence your decision since you indicated you would rent the property. For sale I would not replace the windows.

Windows - Refurbish or Replace?

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