As a landlord managing several investment properties, I’ve always advocated for, when needed, renovating your rental property with high-end finishings. What I mean by that is where there are laminate countertops, replace with granite. Linoleum in a bathroom, replace with tile, and where there are old appliances with that sexy yellowish tint, replace with stainless steel. Change hardware to a modern design (handles and taps). Paint tired cabinets, replace old and thin baseboards with six-inch ones; and remove dated flooring with the modern looking vinyl plank (looks good, is cost effective, durable and easy to replace a single plank rather than having to refinish an entire room if one little area is scuffed).
I strongly urge doing renovations right when the time comes because these days there isn’t a huge cost difference between high-end looking finishings and middle of the road.
Most importantly, by spending an extra $2,500-$4,000 on renovating a suite (approximate $20k job) with higher-end finishings, you’ve differentiated your property from the rest, which will enable you to charge a premium in a strong market; and allow you to quickly find quality tenants in a slow market. You’ll have to shop around for deals, of course, but treat your rental as a business – quality and uniqueness matter most.
Our latest investment property acquisition was an inner-city, 40-year old duplex – purchase price roughly $360k. And this place was nasty when we bought it – hence the deal. It was beyond tired, with virtually all original finishings. I’m talking wooden toilet seats, rusted shower head, brass light fixtures, broken dishwasher, burgundy walls, etc. Other than a paint job back in the 80s, it didn’t appear anything had been done to the place since inception.
Previously lived in by a young bachelor, the house was filthy, which made it all the more pleasing. My initial renovation budget was $22k – virtually everything needed a face-lift. We replaced all appliances, countertops, took down a wall/weird built-in, changed all hardware, light fixtures, baseboards, casing, and most of the flooring. We also redid some minor electrical (the only surprise cost – inevitably every old home will have at least one) and installed new doors. Final cost was just over $26k.
Pictures are worth a thousand words, so let me show you where we started and how our renovations finished. For $26k, we took this dump and turned it into a beautiful home near the downtown core. We received over 80 inquiries in the first 48 hours of listing it for rent.
At the end of the day, you have to show some restraint with rental property renovations, because some improvements just won’t add to your ROI. But you can’t cheap out. Go with durability above all, but make sure whatever you do is trendy to your renter demographic. It pays to spend a little more on renovations than what the typical landlord would. It helps differentiate your suite(s) from the competition and enables you to find great tenants. The quality (location and thoroughness of renovations) of your rental, combined with its location and your ability to efficiently screen for good tenants, will make or break you as a landlord.
Don’t cheap out on renovations. The difference between a great reno and a mediocre one is often only a couple thousand dollars.
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