Bathroom remodel - prior to rent or prior to sale?

Question

Hi all,

Very new to BP. Just beginning my real estate investing journey and trying to learn as much as I can as quickly as I can.

Quick question for the group. In the next year or so, my fiancee and I will move into a new place and rent out the current apartment that we own and live in (a 2 bedroom / 1 bathroom in San Francisco).

We want to remodel the bathroom either before we rent it out or before we sell it (no date when we would sell, but could be 5 or 10 years in the future). Bathroom works fine now, although just looks outdated and ugly.

What should I be thinking about when deciding to remodel now vs. prior to selling? Is there an intermediate decision/step I should take to make the bathroom slightly better but not do a full remodel?

Thanks in advance for your thoughts.

Tyler

Todd Dexheimer · Answer

It depends on what the market allows. Typically you can get a really nice looking bathroom for a fairly affordable price. I like tiling the floor and shower walls. Putting in a new vanity, mirror, light fixtures can make a huge difference.

Lynn McGeein · Answer

Remember that tenants do not care for things like homeowners do.  So whatever you're doing for rentals, consider tenant-proof materials versus sale where upgraded finishes matter more. Personally, I'd wait to remodel until right before sale so you can advertise it as newly done and also potentially save yourself the headache of repairing when tenant ruins the cabinet drawers (makeup stains, hot curling iron burns, even had spilled cleaners that sat and damaged inside cabinets).  I now provide pre-cut thick plastic washable shelf liners and actually have a clause in my lease about damage to cabinets -- no nails, push pins, other sharp objects (I've had tenants hang pictures with pushpins on side kitchen cabinets, screwed in hooks to hang things) and that stains and damage to cabinetry will not be considered normal wear and tear.

Bill Goodland · Answer

@Tyler Zanini I would remodel it while you still live there because you’re not going to want to do it once you move out. Some simple updates like painting the cabinets, flooring and fixtures could go a long way to boost the value of your place

Joshua Rice · Answer

@Tyler Zanini

You can always get away with painting the cabinets, to add artificial character paint the Cabinets, wait for paint to dry. Take sandpaper to the edges of the front of the doors exposing the wood grain. Apply clear topcoat. You would be surprised on how much that changes a cabinet.

Aigo Pyles · Answer

The bathroom looks okay. I think there's no need for renovation on that one. But since you are already renovating the kitchen you can do just some touch ups for the bathroom.

Colleen F. · Answer

I would update the vanity/countertop particularly if the tile countertop by the sink has any breakdown in grout lines etc. For me it would be more about maintenance. I would also go with a light colored vanity. You can eliminate tile on the walls or I have also been successful with using glass mosaic to tie together old and new tile (e.g. as an accent strip). I would not do a major reno on a white bathroom you are going to rent and sell in a couple of years.

Amit M. · Answer

Yes new vanity, paint, accessories (towel rack, mirror, toilet seat if needed, etc) will give you the biggest bang for the buck. Re-tiling and new tub = expensive + hassle. Check out East Star in SF. Many vanity options at good prices. *key* is to pick a more modern vanity, BUT make sure the style goes with what you already have. Nothing worse than a new vanity that clashes horribly with the existing style...no bueno!

Mike McCarthy · Answer

@Tyler Zanini I think the bathroom looks fine. Chances are, no one is going to pay higher rent for a nicer bathroom.

If it were me I’d paint the cabinets (semigloss dark gray or color of your choice). I’d also paint the walls something other than white. While white is ‘standard rental color’, some color can really make it look much nicer.

Maybe a new faucet, maybe.

For $50-200, I think you can give it new life.

I considered recommending a granite countertop and new sink, but I’m not sure the $500+ would really be worthwhile. Maybe.

Lawrence Leung · Answer

@Tyler Zanini Congrats on scaling up and making the decision to keep your existing property and turn it in to a rental for investment purposes. To coin a phrase by Matt Theriault, get rich by buying Real Estate, but become wealthy buy holding it.

@JD Martin hit the nail on the head and it really "depends" on how the "outdated and ugly" look compares to your competition. If all other 2BR/1BA in your neighborhood are all remodeled, then you may want to remodel unless you are satisfied with a slightly lower market rate rent and a higher vacancy rate. Conversely, if all other comparable properties have dated bathrooms like yours, you can make yours stand out and attract top dollar with a nice remodel and a lower vacancy rate. We will always recommend the bathroom remodel telling our clients that a below average property will attract a below average tenant while an above average property (i.e. updated bathroom, kitchen and finishes) will attract not only an above average tenant, but a tenant who will take care of your place.

Btw, you mention selling in the future. I would recommend seeing if you can align your exit strategy with that special 3 year window where you can take advantage of both IRC 121 and 1031. This assumes that your capital gains would exceed the 121 $500k exemption.

JD Martin · Answer

Depends on what it looks like now and what is common for your rental price range. You can do partial remodels with materials you won't have to waste if you want to do a full next time. Shower heads, sinks, vanities, toilets, towel bars can usually be reused.

Bathroom remodel - prior to rent or prior to sale?

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