Post rental property or wait?

Question

BP Family -

I am currently under contract to purchase a long term rental home and will be closing on July 12th. I am planning on installing new carpet, countertops and paiting the cabinets right away when purchasing. It should be ready for a tenant to move in on August 1st. I got the current owners (person who is selling me the property) blessing to post the house for rent right now with a move in date of August 1st if I wanted to.

QUESTION: Is it worth posting for rent right now? OR would it be better to wait till the renovations are complete? Has anyone listed a property that they are under contract for but dont fully own yet? (we are past inspection & appraisal - just waiting on loan to close)

- There wont be any photos of updated carpet, kitchen cabinets and countertops

- I can't show the property in person considering I dont have the keys to proeprty yet

- Would be gathering leads for people of who are intersted in hopes of getting it rented out faster

If I post the property now, I could probably have a tenant lined up to move in August 1st. If I wait to post the house till the renovations are complete I probably wont be able to have someone move in till September 1st which is past when schools gets in session. The area of the house is in the top school district of Ohio. A lot of people move here to get there kids in the school district.

Without renovations I would probably list the house at $1,725 and with photos of renovation I would list at $1,775.

Thanks!

David Felt · Answer

Thanks everyone.... we have decided to wait till all the work is 99% complete and then post it for rent! Probably the safest option and limit the risk involved. Plus potential renters can actually see the finish remodle rather than having to invision the updates coming. appreicate you all.

Alecia Loveless · Answer

@David Felt In my limited experience of 5 years doing this I have not had any luck posting units before or during renovations. For the first few years I would post during renovations and even show the units to multiple applicants but I found that 98% of them lacked the vision to be able to “see” what the finished project would look like and then after the original pictures were sent or the showing I lost pretty much all of the applicants.

Conversely once the unit is finished and I post great quality pictures and have showings I am able to rent the units very quickly.

It has started to slow down slightly with more inventory coming available in my area and now that I’m asking higher prices.

All the best.

Ed O. · Answer

You're doing all that work for $50/month?

where's the breakeven on it?. Probably not worth the work from the limited info here.

That's a quick turnaround. You might post it as coming soon... there could be someone who wants to be on the block you're on and will wait.

That's a pretty aggressive turnaround for a kitchen granite and trim out.

Gregory Wilson · Answer

I agree with Alecia. In the immortal words of Lester Wallace (see Friday 1995 New Line Cinema), people have no vision.

As for whether one has to get quid pro quo in increased rent for improvements, there is also a factor of the quality and longevity of the tenants one gets with an upgraded apartment even when rents are limited by neighborhood competitive pressures.

In OTR, we see that it is possible to get $1500/mo for a 1 bedroom without meaningful upgrades but after spending $30,000 in a unit the rent might only go up to $1700. While it would appear to be a bad move, the tenant in the upgraded apartment may be happier, stay longer, tolerate rent increases and be less trouble. Two months of vacancy every couple of years translates to a lot of rental loss.

Theresa Harris · Answer

Honestly knowing that people can't picture the finished product, I'd wait until you have possession and can post after photos. Even if you take photos and use an app to view it with the new flooring (ie create an 'after' image online) that you can use, I'd still wait a bit.  You could do 'coming soon' and then start showing it once you close (and before it turns into a reno zone).  also are you 100% certain the renos will be done on time?  Carpet is one thing, but kitchen cabinets and countertops are a whole other level of renos.

I also agree with Ed O-why do all of that work for an extra $600 a year?  How bad are the cabinets?  Do the carpet and countertops, change the hardware on the cabinets if they are still in good shape.  That is doable in 2 weeks.

Gregory Wilson · Answer

You are right at the edge of the end or our rental season. The sooner you post, the better. As long as you disclose that you don't have access or rights until closing you should be ok.

Samuel Diouf · Answer

I would make sure to get an attorney involved and draft up all scenarios that could happen so you won't be liable.

Jordan Fiore · Answer

I would personally hold off. Posting too soon will just add more days to it being on market and when renovations are finished it won't be the "hot new" listing. You can post once contractors have demoed and already working on the renovations?

Max Ferguson · Answer

Hmmm...Fairly intricate situation here. I would think there is some fair housing law/landlord law that doesn't allow you to post a property you don't own, but if they seller gave you the blessing I'm sure it's fine? I think drumming up interest is a good idea but if renovations are delayed or you run into any problems after purchase it may be more headache than it was worth or you may waste a prospective tenant's time. Let us know what you decide, and if it was a good/bad idea in the future!

Post rental property or wait?

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