Under Contract - Need Rehab Advice

[Jay Miller]

I'm currently under contract (my first ever purchase) on a 2 unit + garden in Irving Park, hoping to close next week and would like to get the ball rolling on work ASAP to get the vacant units on the market by 10/1 ideally. The two legal units vacated 8/1 and I plan to do some work to both. Units 1 & 2, which are both 2br/1ba, previously rented for $1,450 and $1,300, respectively and I'm hoping with some TLC I can achieve $1,600+ for both - my broker thinks I can reach $1,800 - 1,900 but that seems a bit far fetched in this area, especially since I'll likely be listing them in October.  I'd like to know your thoughts on material/pricing/labor etc...

Unit 1: Needs minor work and has much better existing conditions compared to 2nd unit. Kitchen has granite counter tops and SS appliances already in-place. Cabinets are slightly banged up and would like to sand and repaint them white. The kitchen floor is currently a cheaper laminate tile and would like to swap out with luxury vinyl plank. Remainder of unit is in solid shape and just needs a fresh coat of paint. I'd like to know:

- New paint to entire unit: what colors are currently best suited to appease renters? Assuming any form of white or light grey paint would be safest but would like to confirm this. Also, what can I expect in labor costs for this type of work? Space is roughly 900 sf.

- New kitchen floor: seems like the consensus pick on this are luxury vinyl planks (due to durability and design) and I've seen several mention that Lumber Liquidators offers good selection/pricing. Does anyone here think otherwise in regard to material? Also, what can I expect in labor costs for this? Kitchen is 11' x 11'.

- Repaint kitchen cabinets. I'm considering doing this myself, however, cabinets seem to be a tricky subject. I have minimal experience with house work (minor paint and have installed LVT before but that's it...and it took forever) and would imagine it might just be worth it for a professional to take care of this quickly and correctly the first time. Thoughts?

Unit 2: Unit two will take up the bulk of my budget. The entire kitchen will be ripped out aside from potentially keeping the SS fridge, depending on whether or not I can find a solid appliance package. The kitchen measures 11' x 11', but there is a radiator along one wall which takes roughly 1' off, so let's assume 11' x 10'. I'd like to know:

- New paint: Same as above

- Kitchen Floor: Same as above

- Cabinets: What should my estimated costs be for material and labor? For white shaker, soft-close cabinets, I've been quoted anywhere from $2,300 - $3,300 for more or less the same products. Does this sound right? Want to make sure I'm not getting hosed since I'm new to this. Also, what costs can I expect to incur for cabinet install? I'm currently budgeting $1,500 for that alone (including the demo of existing kitchen).

- Counter tops: I have been quoted, in total, for design, material and install, just under $1,600 for white quartz counter tops which seems like a fair price to me. Thoughts? Also, any pros and cons when comparing granite to quartz? I hear quartz may be a bit more heat sensitive but granite can lose its seal quickly if not cleaned properly. What is recommended for a rental?

- Appliance: My first thought was to go to Craiglists and find a used appliance package, but I don't want to run the risk of buying faulty appliances that my tenant's will be calling be about after 2 days of living in the space. I'd much rather play it safe and fork up a little more to ensure my tenants are happy. Where are some places you recommend I look for reliable, SS appliances? Abt has some packages for ~$2.4k but I'd like to be under $2k for oven, fridge, dishwasher and microwave. Does that sound feasible?

Labor: This pertains to both units and is by far my biggest concern. I've reached out to my immediate network and all workers I know, or that my friends know, are currently swamped. Do you have anyone in your network that could take care of the mentioned at a reasonable price and complete it quickly?

Etc.. : As a first time investor, I'm sure there are things that I have left out here that I have not even considered. Do you have any "words of wisdom" or things I should also consider during the rehab process or simply the first couple weeks/months of becoming a landlord?

Thank you for reading this exhausting post - any feedback is appreciated!

[John Clark]

1. Don't do kitchen cabinets by yourself unless you have plenty of experience. You will do a bad job, it will stick out like a sore thumb, and you will have to redo them, thereby blowing your October move in. Pay the money and get them done right by someone who specializes in painting kitchen cabinets.

2. Scratch the microwave from your appliance package unless you're doing built in. Spend extra on your stove vent -- you do not want grease and smells building up.

3. $1,600 for white quartz countertops? No. Something's wrong there. Too cheap. Also, Quartz WILL get burned/melted. The tenants won't care. Do granite and on your six-month walk through inspection re-seal the counter top then.

4. Floor -- What are your competitors doing? If they are doing select grade red oak, then you are doing select grade red oak. If they are doing less then you can get away with less. Personally, I go to the top of the line on fixtures like that, on the grounds that I can get higher rents, it's easier to raise rents, it's easier to sell when you want to sell, and the tenants will stay longer. They grow accustomed to nice oak floors and when they shop around rather than pay your rent increase, they will notice that the floors in your competition aren't as good, bite the bullet, and re-sign with you.

5. I skimp on the stove and splurge on the fridge and dishwasher. Usually the husband isn't cooking, so he's neutral on the stove. He does use the fridge, though, and he does use the dishwasher, so both spouses pay attention to those. Also, you can upgrade the stove after a few years if the tenants renew (an enticement). Again, they bite the bullet and re-sign.

It's not your expenses that kill you, it's you loss of income from vacancies.