Am I over thinking a kitchen upgrade?

Rehabbing & House Flipping
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Am I over thinking a kitchen upgrade?

Benjamin Leung
St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
So I purchased a house last month for the sole purpose of updating it into a rental property. It had been a rental property before and I got a great deal on it since it was very outdated and the owners were retiring. I have a list of things I want to do to make it rental ready but my roommate and a few other people have said that if it doesn't need it then I shouldn't worry about it. What I don't want to happen is for it to be below rental market value or not rental ready. I also don't want to spend too much money on improvements that won't add rental value. Here is the description of the property: 4 bed (5th bedroom possible) 3 full baths 2400 square feet .6 acre estate lot Right now the kitchen seems too small for a large family and I feel that it is also pretty dank. The sink is scuffed up and looks to have some significant staining, the countertops are a weird yellow color and a lot of the wood on the cabinets are scratched deeply or just kind of grimy. The lighting is less than desired as well. My plan was to add a kitchen island where the boxes are to increase counter space, shift the fridge to the right and build a pantry between the fridge and the counters, replace the sink and add a backsplash for easy cleaning. As far as cabinets, I don't know whether a full replace, just changing doors, or just replacing the counter top is the best choice. Running the numbers for me using the prefab HD/Lowes cabinets/stains ranges between $1k-$3k based on how far I should go. I originally settled on just taking off the door and the outside facing wood since it is scratched and building new face pieces since the inside is fine. Then my pantry would match the finish. My roommate who has been doing a lot of real estate and was an agent in another state said that I shouldn't worry about it since it's a rental. Here is a picture. http://imgur.com/a/oULFX Am I over improving a property? I also plan on doing some other improvements but I don't want to do a lot of it will add nothing. (Ceiling fans, sloping ground away from the house, bricking under porch area, etc) Also ignore the cardboard box island. My dad suggested putting it up to see if an island would help or get in the way.
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John Chapman
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
9y

Okay, I'm going to offer some opinions and rebut a couple of arguments that I constantly hear.  First, I cannot stand the argument that you should upgrade a unit only to what the competition is doing.  That is misguided, at least for SFRs.  A rental market  is like any other other market and you need to compete in it.  Just doing an average finish out and charging market rent is not competing.  You'll get average tenants, average vacancies, average everything. You need to compete in either finish out and/or price or both.  I like to have a slightly nicer finish out and market rent.  This generates more interest, more apps, better tenants, and lower vacancies.

Second, don't get lost in the weeds about every upgrade and how much extra money it will bring in each month.  Some people are like, "I won't add a ceiling fan unless I can get an extra $5/month."  That's dumb.  A few nice (and inexpensive) amenities make tenants feel like there living in a place where the landlord cares both about the property and their comfort.  Maybe every upgrade won't get you extra money, but more often than not, you'll get a better quality tenant who will take care of  the property. 

I'm not saying overdo it on the upgrades, but you'd be surprised how little it takes to beat out competition.

In your case, just put the money into the kitchen and be done with it.  ($1k-$3k is just not that much at the price point you're talking about)  Hands down, the kitchen is the best place to put your money and adds the most value, both from a property value perspective and a rent perspective.

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  • Rosston Smith
    Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
    9y

    As long as your kitchen is equal to the condition of your competition, you're OK.

    If you want it to be a little bit better, that's okay too.

    But if you don't plan to live there, don't over do it. 

    2Reply
  • Benjamin Leung
    OP
    St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
    9y
    Thanks for the reply. For the most part I am asking for about $1650 while comparable properties are advertised/rented around 1800. However I have no qualms for renting it out for more but just want the value added. I live in the property but there are only two people in the house. It's hard for me to judge whether this is big enough for a family of 5+ or whether a renter is willing to pay for an updated kitchen versus one that looks like mine. I have seen a few homes on Zillow and they look to have more space but have the same outdated look.
    0Reply
  • Rosston Smith
    Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
    9y

    How much would it cost you to do everything you had in mind?

    0Reply
  • Benjamin Leung
    OP
    St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
    9y
    Going nuts $3000 but that's ripping out everything and putting in all new. For taking off the wood panels/door and building a island, about $1200 and that is still with replacing the counter tops, sink and adding a back splash.
    0Reply
  • Rosston Smith
    Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
    9y

    How about just cut that budget in half and just upgrade a little bit? Take yourself a little above competition, but not overboard.

    0Reply
  • Germain Mopa
    Investor · SMYRNA, GA · Member since 2015 · 43 posts · 20 votes
    9y

    You will have to run the numbers. How much more rent are you looking to get with the upgrade. If that can get you $100-$300 more, then I would say go for it. That will be a 40+% on the money. If you will get the same rent with the upgrade, then I would follow your friend advice and not bother.

    1Reply
  • Valerie Hiscoe
    Investor · Richmond, BC · Member since 2013 · 316 posts · 133 votes
    9y

    I have a triplex in a c-class area where everyone pays their rent late or needs to be evicted or, even more fun, where the properyy just sits vacant. I experienced all of the above.  I upgraded the property (i spent more than $3000 by far) and when i finished, i already had a waiting list (even though i raised rents from $450 to $600) and, to my relief, my tenants go out of their way not to be evicted.  They may or may not have started off being the "better class of tenant" that an upgraded property attracts, but they sure have become them.  I'm pleased.  My opinion would be to do the upgrades (especially the grading - protect your investment above all else) but charge more than you think you can.  Advertise for $1800 and then add a water bill or something. Charge slightly more than the going rate.  Inflation is everywhere. It might as well continue right on over to your house. 

    A woman wants an island. And will pay more for it.  4 bedrooms, 3 bathrooms, and maybe a den (i hear people dont really pay for more than 4 bedrooms unless youre in an area with unusually large families) is a big house.  The kitchen and bathroom are #1 to capitalize on it.  Dont stretch too far out of the neighbourhood's economic bracket - but stretch

    2Reply
  • Benjamin Leung
    OP
    St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
    9y

    thank you, will do!

    0Reply
  • Kevin Harrison
    Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
    9y

    I think you are spot on with the lessor idea for the kitchen. Adding an island is an excellent use of that space, definitely need new counter tops, new doors on the cabinets, also I would spend just a little more and make sure all the appliances are at least the same color. It gives the place a much higher end appeal. That's my personal opinion at least, nothing says no one cares like having 3 different color appliances.  

    1Reply
  • Kim Bayless
    Investor · Florence, AL · Member since 2016 · 65 posts · 20 votes
    9y
    One suggestion: Look on Craigslist for a set of slightly used matching appliances. I see this a lot, people buy a house with builder grade white or black appliances then want to upgrade within a year. The cheaper appliances are still nice, and perfect for rental units.
    1Reply
  • Gail K.
    Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    If it were me, I'd probably start by painting the cabinets white; that would lighten up the room considerably.  Replace the sink if it's deeply stained (and, if needed, a new faucet).   There are also products to paint/seal kitchen counter tops (I did this with a counter top that was a bright green and it's still in good shape).

    Not every woman wants an island (I don't) but I know they are popular now. 

    If you want to change the appliances, go with a white refrigerator (and hopefully one that doesn't stick out in the room so much).

    And if it's still too dark consider a new light fixture for more light.

    Gail

    1Reply
  • Jim Shiminski
    Investor · Cape Elizabeth, ME · Member since 2016 · 12 posts · 9 votes
    9y

    Most decisions are never all or nothing.  I typically look at a midpoint that provides for best value.  I agree with others,  there are lesser things that you can do to fix this kitchen.  Remember, you don't have to live there.  Your tenants need to feel comfortable and feel like they are getting value compared to other choices.  Paint the cabinets white, replace the sink and countertops (with products that you would see in other homes in the neighborhood).  You are on the right track.  Good Luck.  Cheers.  

    2Reply
  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    9y

    Okay, I'm going to offer some opinions and rebut a couple of arguments that I constantly hear.  First, I cannot stand the argument that you should upgrade a unit only to what the competition is doing.  That is misguided, at least for SFRs.  A rental market  is like any other other market and you need to compete in it.  Just doing an average finish out and charging market rent is not competing.  You'll get average tenants, average vacancies, average everything. You need to compete in either finish out and/or price or both.  I like to have a slightly nicer finish out and market rent.  This generates more interest, more apps, better tenants, and lower vacancies.

    Second, don't get lost in the weeds about every upgrade and how much extra money it will bring in each month.  Some people are like, "I won't add a ceiling fan unless I can get an extra $5/month."  That's dumb.  A few nice (and inexpensive) amenities make tenants feel like there living in a place where the landlord cares both about the property and their comfort.  Maybe every upgrade won't get you extra money, but more often than not, you'll get a better quality tenant who will take care of  the property. 

    I'm not saying overdo it on the upgrades, but you'd be surprised how little it takes to beat out competition.

    In your case, just put the money into the kitchen and be done with it.  ($1k-$3k is just not that much at the price point you're talking about)  Hands down, the kitchen is the best place to put your money and adds the most value, both from a property value perspective and a rent perspective.

    5Reply
  • Benjamin Leung
    OP
    St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
    9y

    hey everyone, so with everyone's inputs I think i jave a solid idea on where to go.

    1) Estimate between replacing the front pieces of wood (door and surrounding wood) and just reprinting it. I would prefer to replace it with a newer wood.

    2) Going to build the kitchen island.

    3) Replace Countertops with anything but yellow.

    4) Install some track lighting

    5) Building a pantry between the fridge and countertops. Hopefully I will be able to match the rest of the kitchen. I think I can get a leg up of the median rentals with a better kitchen for a large family.

    2Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    Those cabinets are really ugly. REALLY ugly. At the very least, I'd paint them. And painting them is a process in itself. It might be better to just replace. I've had a ton of success with Off-The-Shelf cabinets from Home Depot. While you're changing out the cabinets, I'd change out the countertop too. I thought those boxes in the middle were an island. I'd add one if there's room. New sink, black or stainless dishwasher and stove.

    Not much counter space. I'd pick up an over the stove microwave/hood too.

    @Benjamin Leung

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    0Reply
  • Don Meinke
    Investor · Northeast, NE · Member since 2015 · 258 posts · 83 votes
    9y

    Those look like better cabinets than your thinking of replacing with.  They are going to be hard to paint since the grease, grime and gore,,,plus the gloss has to go FIRST.  I would try some "orange Glo" or Amish cabinet cleaner first and see how that works.  If so go get some Old English scratch fix and you may be so surprised,,,you can always paint but you cant go back once painted

    I personally dont like large homes, large family rentals,,,but thats just me.

    A roll around center island would give max space,,,it can be pushed to give more space when needed.  Use the biggest widest roller on swivel casters you can find

    I think can lights are just a fad but they are fashion these days.  IF you can easily get those in use LED bulbs in the brightest you can.

    Does this house have a basement? Is plumbing access easy?  If it is metal pipe time to change to pex.  Change out metal drain plumbing also.  Its easy to do, maybe your dad can help?

    0Reply
  • Fernando D.
    Investor · Belleville, IL · Member since 2016 · 16 posts · 3 votes
    9y

    I think I've seen someone with the same style cabinets and they painted them either gray or white. I was impressed considering how ugly they originally were.

    I'd paint the cabinets, replace the tops, replace the sink, build an island out of off-the-shelf cabinets for more storage, add a tile backsplash and maybe find some used, black appliances.

    That way, the kitchen is more attractive because it looks like it is on purpose.

    0Reply
  • Valerie Hiscoe
    Investor · Richmond, BC · Member since 2013 · 316 posts · 133 votes
    9y

    @Benjamin Leung

    Just thought I'd check back and see how your improvements worked out or if they're still ongoing (I wasn't sure if you were already on the verge of starting or...?).  For me, everything always takes three times as long as I could possibly imagine.  Lol.  Hope everything went or is going well and that you are happy with your decisions.  I'd love to see some photos and find out what you ended up doing if you still have access (and it's not yet rented) but if the property is already rented, then congratulations on that and I hope your tenants turn out to be great!

    Season's greetings!

    0Reply
  • Michelle B.
    Investor · Lebanon, OH · Member since 2016 · 144 posts · 87 votes
    9y
    Benjamin Leung Congrats on the property. I would do a mid level upgrade. Save what you can and replace the rest. I personally prefer to remove all carpet and replace with a hard surface (laminate, vinyl plank)... Do you mind me asking how you found the deal?
    0Reply
  • Anthony Dooley
    Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    9y

    I go for clean, well lit, and in good repair.  Fresh paint with soft modern colors.  A very bright LED light ($129), and good plumbing, no leaks. Repair and paint, yes. Upgrade, no unless it will increase the rent. This is an investment and they are renting it, which means temporary.

    0Reply
  • Hope Martin
    Westbrook, ME · Member since 2016 · 7 posts · 3 votes
    9y
    I'm not sure it's your job to decide if the kitchen is large enough for a family of five. Just because there are five bedrooms does not mean that many people will reside in it. Also some families don't cook much and wouldn't mind a smaller kitchen. That being said kitchens and bathrooms are the two deal breakers in my personal opinion so if you're going to remodel I would certainly replace counter tops but cabinets could be refinished possibly saving some money.
    0Reply
  • Salley Smith
    Buckley, WA · Member since 2015 · 35 posts · 6 votes
    9y

    I think you have the right idea. I had heard that the kitchen is one of the main things people look at.  And I think the first thing someone is going to notice is that your kitchen is seriously dated. I agree that you absolutely have to do something with the cabinets, preferably replace them, since even the shape is very dated. I think the floor could stay. Lighting is very important as well, but even a few IKEA LED lights can help with that, and using light colors. I would say the backsplash and the island is less important, and you might even be able to get away with the old countertops, although I would replace that as well. Before adding the island, I would weigh the benefits of what I could do with the money from the island invested in other areas. Your kitchen is very dated, and the small amount you would have to invest to make it less dated/ more modern may pay off. I would hate living in that kitchen, and with such a nice big house, that may be a big turn off. 

    0Reply
  • Benjamin Leung
    OP
    St Petersburg, FL · Member since 2016 · 28 posts · 3 votes
    9y

    @Don Meinke Completely agree on the grime. I didnt want to cover up something that I would have to replace later on.

    @Valerie Hiscoe My plan is to fully replace the kitchen because two reasons; there is deep damage to the wood and countertop that just replacing the front panels wont cover and underneath the cabinet it appears that it is exposed to the subfloor. Also, I want to get back there and redo some of the plumbing layout. The line to the fridge has very poor flow even though the sink and dishwasher are fine. My dad and uncle are coming up to help for the week and I am wanting to get everything preordered before hand. Home Depot does free shipping and I get a military discount so thats an easy 10%. I will definately be taking photos as this will be my first major rehab project for the house.

    @Michelle B. So the reason I wanted the island is that i thought it would just give me that extra counter space. I have been living here for about 6 months now and I have noticed that the counter can fill up very quickly and having a table I set up in the place of the island is the only space. I do really want to put in some inexpensive track lighting just because its in a weird corner of the room where the light from the door doesnt reach it.

    1Reply
  • Valerie Hiscoe
    Investor · Richmond, BC · Member since 2013 · 316 posts · 133 votes
    9y

    I couldn't agree more with your choices.  Changing the cupboards and countertops as well as adding an island will pay off in a big way for you.  Having access to the subfloor to repair damage is a great call and, although I don't think you need or are planning to move any of the plumbing, replacing the shut-off valves is usually a good choice to make too.  I would not add a pantry by moving the fridge because then the distance between the fridge and stove is just too far.  A better way to add storage is by adding drawers - some big ones for pots and pans and the like - but that is very expensive and unlikely to get the return you need.  I would suggest however, keeping the drawers (preferably three or four 15-18 inch wide) beside the dishwasher, and at least one beside the stove.  Another idea is to follow Mindy's advice and add an over-the-stove microwave/fan.  The ideal kitchen has at least one foot of counter space on each side of the stove and sink so by getting that microwave off the counter you'd have a great layout.  Will you be building your island by using the same stock cabinets?  For a countertop for the island, I'd look at Ikea.  They sell a butcher-block type counter that works well in most kitchens and they sell it in different widths.

    Wishing you guys luck !!

    0Reply
  • Don Meinke
    Investor · Northeast, NE · Member since 2015 · 258 posts · 83 votes
    9y

    First thing I would do is get rid of that black frig,,,makes the kitch look dark.

    Second I would use the hole above the ceiling light and drill a hole thru both  ceiling joists and put 2 or 3 fluorescent light fixtures on ceiling with the bright white daylight bulbs in them.

    Could opt for several can lights if you want to go high chic. With LED bright bulbs

    Then would put LED under  upper cabinet for workspace light.

    THEN add a light color back splash to reflect what light it can

    You get good light on cleaned up cabinets and they may look way different.  ONLY reason I would change cabinets is if they are broken and non functioning and non repairable

    And yes if the sink is bad and unble to just clean up,,,replace with a white cast iron and a quality modern high rise brushed nickel single handle on the side type.  Chrome water spots and stains quicker,,,and oil rubbed bronze will be out of style before they get old

    0Reply
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