Update unit now or after COVID?

[Maria Teo]

Hi folks,

I find myself with a vacancy in a dated San Francisco unit. 4BD/1BA no in unit amenities. I  intended to update, but I didn't expect the vacancy to come during a pandemic. I doubt I'll get top dollar while still in COVID, and the reno process will take longer (more rental income loss) because permitting is going slower. Plus with rent control, I'll be left with a lower base rent than in 'normal' circumstances. Worse case, I'm looking at a 10 year cap.

My question - update the unit, my priority being to add a bathroom (the biggest bang for buck) which may or may not require moving a wall or just give it a fresh coat of paint and see who bites.

The first option will be the most money with a potential rental upside, though not what I would have gotten a in Jan or Feb.  The second option minimal cash outlay, but it would be a less desirable unit, therefore harder to rent and little to no rent income change (possibly discounted).

I have a feeling I should do the reno and accept that the current rental market is what it is. This is the new normal and whatever it rents for is "top dollar" now, no point comparing to the past. But maybe I'm overlooking a different strategy.

Appreciate hearing your thoughts.

[Brian Garlington]

Your heart is clearly telling you to do the renovation. Do it now while contractors are more flexible. Then you can "set" your own market rent when you get the new tenant in there.