How much $ and what to change in the rental house I just bought

Question

I purchased a 3 bedroom 1 bath house I’m Winder Georgia. My first rental property. It was built in 1959 .  Linoleum floors, original cabinets in kitchen, outdated bathroom.  I’ve got some people telling just rent as is. Or should I invest some money and update. And what should I update.  Add a bathroom to make it a 2 bath home , change the floors. I would like to make it nicer looking to attract a better renter but not sure I can increase the rent much for this area. Any advice for my first rental property?

Account Closed · Answer

Do you have any photos?  That would be helpful.

In my experience renting bare-bones small units in a really old, but really well-maintained and clean building -- the only thing applicants or tenants every mentioned or begged for - was hardwood flooring instead of carpet.  The one thing that I think would make your units easier to rent and would get you more money would be hardwood (or a decent laminate-type) flooring.

The problem with updates in a popular style, is that the day will come shortly when they are also outdated.  I'm a firm believer in classic white appliances.  I hated stainless steel from the get-go and they're already outdated.  And please don't paint everything gray.  Just go with a nice light neutral color, with at most a touch of gold or yellow in it.  I painted my place with Behr papaya sorbet and it's got just a hint of gold so it gives an otherwise beige just a hint of sunshine about it.  Not trendy, just light and fresh and warm.

But, if otherwise everything is functional and clean and not god-awful, you should be fine - assuming you're not in a really rich trendy area that absolutely demands granite countertops.  But, if you change just the flooring to a hardwood type flooring, you'll be able to be pickier about your new tenant because there will be a greater demand.

Mike McCarthy · Answer

@Lora Helfer it all depends on your local market and competition. There’s a max rent in all areas that regardless how nice your house is, people won’t pay it. I have a great property that I’d love to put central AC in, but I know it’s already near the top of the rental proce for that type of house... so I could maybe get $50, maybe $100 more. Unfortunately, not worth it for me or perspective tenants.

If you renovate the kitchen, bath, etc.  can you get $500/mo more? Or $100? Makes a big difference.

John Teachout · Answer

If the property is truly late 50's early 60's decor, I probably wouldn't replace anything that wasn't messed up. Some of the same colors and styles used back then are popular again now. Keep in mind for a rental that it needs to be clean, functional (everything working) and not ugly. We usually don't change/replace anything just for cosmetic reasons. Some things that may need upgrading are sink faucets (and perhaps the sinks), electrical sometimes needs some help. You may want to add some gfci outlets in the bath and kitchen even if not required. Plumbing drains may be cast iron. Not a reason to change it but more prone to clogging.

Congrats on getting started.

Sylvia B. · Answer

Outdated but clean and functional, or outdated, broken, worn out? If the former, the consider just making it sparkling clean and give it a fresh coat of paint.

New knobs on the kitchen cabinets will often make a bigger difference than you'd think and not much expense. Shop Amazon or eBay for good prices.

Adding a second bath is likely to be more expensive than you think. Updating the existing bath will probably give you more bang for the buck.

Who are the "some people" giving you advice? Do they have experience with rental homes? If so, is it with the quality of tenants you desire? If the answer is yes, then you should probably listen to them.

Robert Yarnell · Answer

@Robert Biggerstaff it was interesting what you said regarding an update that pays for itself in less than three years. Is that a general rule of thumb you use...I haven't heard that before, but makes sense for larger updates that new investors could apply. Say adding the bathroom folks mentioned might be $5k, that would at least need to increase monthly rent by $150 to equal out in 3 yrs...interesting.

Theresa Harris · Answer

I'd also add that in addition to changing hardware on cabinets, a fresh coat of paint can do wonders.

Brett Baginski · Answer

Go on Zillow, Facebook marketplace, craigslist, etc and look to see what the other homes in your town are renting for and what kind of condition they are in.  A new bathroom will probably cost a lot more than new floors, painting the interior, maybe painting the kitchen cabinets, adding new hardware, and updating the old bath.  There are a lot of smaller things that can be done to improve the overall quality of the rental and make it more appealing.

Now it also depends what your goals are with this property.  Are you trying to add a lot of value to the property and refinance some cash out down the road?  Are you looking to flip the house in a couple years?  If so, adding that extra bath might make more sense.  You would have to get quotes from contractors and also get comps on the nearby houses with an extra bath.

Theresa Harris · Answer

@Lora Helfer  It is a balance. Are things not to your taste, but are good or do you have bright orange floors?  You want to make sure the house is clean and in good shape to attract a good tenant.

Robert Biggerstaff · Answer

Make it is bulletproof as possible. And any improvement that you do make sure that you can get all your money back within three years