Must haves (and must nots) in a rental renovation?

Question

I am about to purchase my first single-family rental property, and it will need some work to be rent-ready. I am planning the reno now to be ready for when it's time to get to work, and I keep flip flopping on what to do and what NOT to do.

I've read about "over-rehabing" and I don't want to get trapped in it. In your experience, what are the must-haves for a rental reno, and more importantly, what should be left off the table?

Greg M. · Answer

I recommend looking at the competition and then making yours a little nicer. It doesn't cost much to make things nicer.

Obviously it is based on area, but if the area can support it, unlike what others have said, I say put in a garbage disposal. Put a washer/dryer in. Get a fridge with ice in the door. Install a Nest-style thermostat or Ring-style doorbell. Install an elongated toilet with soft close lid. Install soft close rollers on drawers and cabinets. Add a few power outlets with USB ports. Replace light/electrical faceplates with the ones that don't show the screws. Use nicer faucets and shower heads. Use nicer quality door and cabinet knobs.

In the end you maybe spend an extra $1K-$3K. Some people on this forum will tell you that's a waste and you'll never get it back in higher rent. What they fail to consider in how much faster you will rent your unit. When your unit goes on the market and is priced the same as a dozen others, but is nicer than all of them, yours is going to rent first. When the average unit in your area is taking 25 days to rent and you rent yours in 10 days, how much extra did you make by getting it rented earlier? You will also get more applicants for a nicer unit, so you can pick from a pool of likely better quality tenants.

Scott M. · Answer

Look at as many comps as you can.  Find homes for rent and look at photos, go to open houses etc....do this in the area your home is in.  You will start to see what is expected and this will help you not over due it.  Will also tell you what flooring, paint colors etc....is used on average locally.  Again, you will find a theme.

Colleen F. · Answer

@Andreea Chidu  things not to do  like @Joe Splitrock are things that are big on maintenance like garbage disposals and ice makers and  they usually aren't expected.   Ceiling fans are something market dependent, some places it is expected and some it isn't and they can break so if it isn't standard don't install them or just do one in the common area. Some even reccommend to remove if they aren't common in your area.  Unless you are high end anything with alot of controls, skip it.  The stove or washer with lots of complicated settings more to break or they will call you and tell you it is not working because they don't know how to work it (stoves more so). Pressboard cabinets from the big box.

Things to do. Make it light and neutral but not white walls.  Durable finishes. Solid vanity cabinets. Blinds not curtain rods. refinish hardwood if you have it. Remove carpet where ever possible but if it isn't possible or very expensive due to the subfloor (e.g. uneven concrete) do low nap high durability carpet in a forgiving color. If you have a really bad kitchen layout fix it now, there will never be a better time.

Anthony Dooley · Answer

Make it clean, safe, and functional. Fresh paint throughout, LED lights brighten up the place and update the look, remove carpet and replace with LVP. This removes old smells, updates the look, and is easier to maintain. Make sure water heater, heat/Air, and plumbing work well without leaks. Doors should open and close, stuff like that. Don't cut corners, but don't turn it into your dream home.

Robbie Young · Answer

I agree with many of the above comments about it depends on your market and class of property but I do think it helps to be a slight notch above your competition and I personally would rather spend a little more if it’s more durable.

Common upgrades I like to do:

1.  The lowest grade of quartz countertops.  Very durable and looks better than formica.

2. A commercial restaurant style kitchen faucet.  I like the look and there is no pull out sprayer which I find causes the most problems.  I usually go for the smaller $150 ones for a rental.

3 a tile backsplash in the kitchen.

4 tile above the shower shell.  It looks nicer and protects the top 18”-24” of wall from water damage.

5 nice light fixtures.  I do agree that ceiling fans are high on damaged items list.  I’m in the south and used to put them in all bedrooms but now I usually just put one in the living room and one in the master bedroom.  If you use the modern fan where the blade comes out of the housing I’ve had fewer floppy blades to replace.  And no pull chains.  Either a wall controller or a remote.

6. Mini blinds are cheap but damage extremely easily.  I’ve had decent luck with 2” plantation blinds but just go with white because when you do have to replace one you don’t have to match color.

7. Use Quikset smart key locks.  These are easy to rekey between tenants and not as expensive or temperamental as electronic locks.

8 avoid carpet

9 don’t be afraid to add a little extra touch as long as you keep budget in line.  Overspending by a $1000 here or there will not hurt you when you go to sell.  Overspending by $10,000 or more will.  I have a house with a smaller living room that I added a built in electric fireplace and cedar mantle.  Women walk in and ooh and ahh over it rather than focusing on the size of the room and it sets a great tone for the whole viewing.  I spent about a $750-$1000 on it.  This was an over Improvement but reasonable amount.

10 replace bathroom mirror with a mirror that has a frame

11 replace hood with a microwave hood

Don’t feel you have to do everything at once

Dan Maciejewski · Answer

Besides the mechanicals (whether for not they need to be replaced), the "pretty" part of a rehab is dependent on your customers/clients/tenants.  What are they looking for?

1.  What rent are you able to charge /What is max market rent for your place?

2.  What are the people that can afford that making a year?  What is the demographic you are trying to apparel to?

3.  What is that demographic expecting?  What is your competition in that price point doing?  FOr example, my tenants household income is minimum $55k/year.  What do they get for what they pay?

4.  For me:  What is the cost do do it a level better?  My ideal tenant has a household income of over $100k.  The cost to appeal to them instead was minimal, so I did granite, new cabinetry, stainless appliances, etc.  All of my tenants have since been six-figure households.  When they move out, it's to buy a house.  They are way easier on the places, too!

5.  Think sturdy and easy to fix/replace.  Every time I have cheeped out on something, it breaks.  I got standard toilets, and they have been giving me grief.  I am going to go with one-piece toilets from now on on the advice of my plumbers.  (I'll obviously do more research before buying).

Bryce Robertson · Answer

@Andreea Chidu

Oh and installing new bathroom vanities is cheap and really easy to do to update a bathroom!

Doing these things should get you quality tenants in just about any market. I’m based in New Orleans!

Bryce Robertson · Answer

@Andreea Chidu

Good question! I usually roll with the mindset of do the renovations that would allow me to feel good about renting to another human being. Also, I know that nicer places usually attract better tenants. In general, I usually focus on paint (if not repainting make sure current paint is clean without the “dengy” look), flooring (clean and simple) I usually do the lowest cost engineered hardwood from Home Depot clearance that looks the best since it’s durable, easy to install and adds value, I look to paint kitchen cabinets that are real wood as that is the easiest way to make them like new when updating and saves a ton of money, and I look to update bathroom fixtures, kitchen fixtures and door handles!

Joe Splitrock · Answer

The biggest mistake people make is choosing upgrades and styling to meet their personal likes. You are not rehabbing the property for yourself, you are rehabbing it for a tenant and the property is a business. That means choosing neutral decorum. It means selecting durable fixtures (not cheap necessarily). You also want to reduce maintenance and the best way to do that is reduce complexity. For example a garbage disposal will never need repair if you never install one. You will also get less food waste down the drain, so less chance of plumbing damage. A whole property humidifier requires maintenance, is prone to repairs and increases risk of mold through higher levels of moisture. These are just two examples of amenities that can cost you money. Even considering things like the front steps. Wood lasts 7 years, composite lasts 20 years and cement lasts 50 years. Each option gets more expensive, so it is a cost benefit analysis. It is not a matter of what you prefer, but what makes sense for the business.

Scott Mac · Answer

Hi Andreea,

What would it rent for in present condition--spending zero.

Would a lower rent (as is) draw more potential renters in that area.

Are you wanting to fix-up to borrow against the increased value (???) If you are you will need to be more strategic than just whats needed to attract and keep good renters. Get with a good local Realtor as a start on that.

Just my 2 cents.

Must haves (and must nots) in a rental renovation?

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