Over Improving a Rental

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Educate me on this please.

I’m newish to investing (3 properties over 3 years), and I live in one of my units. It’s going to be a perfect rental someday. It’s a 1/1 and about 650sqft. I can tell that whoever built it, did it on a budget. Cheap vinyl tile floors, cheap counter tops, cabinets, window unit a/c’s built into the wall, near zero storage, nice, just finished out on the cheap.

I put a metal roof on it recently and my plan is to own it for life and rent it in the next 1-2 years.

Based on my estimation, it would probably rent for 900-1000 as is. Are there any upgrades I could do, that I’d enjoy while living here, that would help if rent for more to justify making the upgrades?

Things I’d like to do: minisplit (5k), LVT flooring throughout (2-3k), shed (1.5k), carport (2k), countertops (?), and I could go deeper down the rabbit hole with porches, etc, but this is a good baseline.

I think the max rent for a 1/1 in my area would be 1100-1150.

How do you improve a property and see a return for the money spent, but not over improve and waste your money?

[Karl B.]

Hi. I would scour CraigsList and other rental websites to see what places are renting for and note their 'amenities'. You'll get an idea as to what justifies higher rents (although just because an ad is for X$ amount doesn't mean the landlord will get it). 

You can check this out before considering a minisplit. In a nicer market like Austin keeping people hot/cool could pay for itself VIA higher rents in only a few years. 

Nice flooring is worth it (just make certain it's really durable and super scratch-resistant). You don't need a shed unless you plan on keeping things in there after moving out (like a lawn mower if you plan on mowing the lawn after moving out, tools, supplies etc.).

A carport seems excessive (I know it gets hot in Texas but a tenant is more likely to drive into it and knock it over - I wouldn't put anything past tenants).

As far as countertops go it depends on what the current counters look like. If you want to replace them know that you can get some nice, durable countertops for cheap. 

As far as what I do in my lower-end market - I've started replacing toilets when I buy a property (you could replace the guts of the toilet but I simply install a new one as it costs me around $200 all in toilet and labor). I learned this after having old toilets run and cost me hundreds of dollars.