# Improving a rental



## jamesbe (May 8, 2010)

It seems like anyone with a rental put.s the absolute minimum into the place. But my wife woukd like to put a new kitchen in our place. It's the original from 1984 it is pretty crud, the doors creak some are barely on and well it loos like junk.

But it does work... We pretty much break even on the place, a new kitchen would cost about 2K and is basically paid for by the tenant in a year / year and a half basically.

Silly thing to do? We are thinking it woukd make the place more desirable for the next tenant and if we decide to sell it won't look like garbage.

Thoughts?

I guess my only big concern is getting a tenant that destroys the new kitchen....


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## Plugging Along (Jan 3, 2011)

My question is why?

Will you be moving in the place? Will you be able to charge more? Did the new tenant ask for this?

I've always been told never get to attached to your investment property to make it like a place you would live in, unless you are actually living there. 

We generally try to put improvements under some of these circumstances - tenants ask for it AND it makes sense; if there is some broken that needs replacement, if we can get a really good deal, and it will increase the value, if it will make it easier to rent out, but in the short term, you don't know what the place will look like when the tenents leave, and we are thinking our place is getting really dated and needs some paint, so if my new tenants don't do any with it this time, the next time, we'll do some renos.

2K isnt much to spend, but is there a need to.


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## financialnoob (Feb 26, 2011)

I'm confused. First you say you break even on the place, then you say the $2K could be recovered within 2 years.

I echo PA's comments. What is the reasoning behind it? Is a tenant leaving? Will you be able to charge more with it?


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## jamesbe (May 8, 2010)

I guess there are some pluses.

1) May be able to charge more but not much.
2) Could possibly attract more of a long term renter with a place that is nice and in good shape.
3) If we decide to sell in the next few years it will certainly be easier and fetch more than in the current state.

Will we move into it? never.

But that's the thing, all rentals seem to be crap-holes that landlords don't care about. Why is that? Are they so afraid they will get trashed? What about attracting more "upscale" renters with a nicer place instead of a dump?

I understand the want to get as much cash-flow out of a property so that could be the reason for never upgrading it. But small fixes now could mean longer term high cash flow... or not.

Just trying to figure out the psychology here I guess.

Financianoob:

To answer your questions. A tenant is leaving yes -- I bought the place with the current tenants in it, so it has been neglected since 1984 -- I got a smoking deal on the place because of this. I "break even" I actually pull in about $20-$30 a month at the current rental rate. We expect to raise the rent at least $55 a month, maybe $100 a month with our next tenant.

So I can take that cash and bank it, or I can put some money into the unit and wait a year to bank more.

Wife is pulling me to do the upgrade -- I'm 50/50 on it. On one hand I think, why waste $2k, on the other I think maybe we get longer term / better tenants out of it.

We've even considered doing the upgrade dependant on who rents it. If we end up renting to a couple that wants to stay awhile we do the upgrade, if we rent to students or something no way in hell.

Maybe I'm leaning myself more 70/30 on not doing it -- but you know the wife factor LOL!


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## financialnoob (Feb 26, 2011)

Fair enough. Yes, the Wife Factor kind of makes any conversation on this topic moot, doesn't it?  j/k

You say you'll be raising the rent $55/month, maybe even $100/month, and that's without the kitchen renovation. Do you expect you can charge more with a renovated kitchen? 

I'd also ask if you're getting a good deal on the kitchen reno. If it's something that you can do at any time for $2K, then I wouldn't rush into it if necessary. If it's something that would normally cost $3-4K, but you're getting a break right now because times are slow, then it may be worth pursuing.

As for renting to a couple that stays a while or students, don't forget you have a pretty significant say in that  You may even want to hold it as a trump card and say the kitchen will be renovated if you find a promising tenant.


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## Berubeland (Sep 6, 2009)

Quality places = quality tenants. 

Have you done a rental property survey in the area? What are places going for? 

People tend to think that it's a price problem when it's usually a value problem.

Tenants are willing to pay more for a better place. You will get a higher quality of tenant with the improvements.


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## donald (Apr 18, 2011)

What kind of wood are the cabinets?why dont you put a fresh coat of paint on them if possible,with a colour thats in style and can hide blemishes?Change the hardware on the cabinets,get new handles,various options on styles.

I dont think you should put in new cabinets,for 2k your not really going to get a "great" cabinet design,set-up ect,and actualy you might make the place look a little "funny" if you have a upgrade there and no where else....it will draw the eyes to the more beat up surroundings.

Just my 2 cents.


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## jamesbe (May 8, 2010)

Donald, I thought of that, but a look a close look at the cabinets ruled it out.

They are melamine and the doors are peeling off, so painting won't really work because they are peeling / splitting. It's like the cheapest of the cheap crap that you could possibly install in 1984 I'm sure of that. Otherwise that was actually the original plan, just to clean it up.

We thought of just new doors but they are odd sizes unfortunately so that would have to be custom and more expensive than just changing everything out.

I agree though about the rest of the place looking a little dated because of it. But I can't do it all at once and it's the area that needs the most attention. I replaced all the main level flooring last year and removed the carpet from 1984 LOL it was disgusting!

Berubeland:

There are other very similar units for rent currently, they want about the same amount of money but have had zero upgrades, they are grosser than my place. I think the price is fair I've talked to a few realtors who thinks I should ask more but that's just silly since it hasn't rented yet (although close!).

Thanks for all the feedback


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## Four Pillars (Apr 5, 2009)

Tough call. I like Berubeland's suggestion, but it sounds like you have a competitive apartment for the area/price level.

There are so many factors when it comes to tenants, that it is not always certain that improving the apartment will have any difference on the rental price or tenant quality.

A lot of renters just want the cheapest apartment that they can put up with.


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## iherald (Apr 18, 2009)

financialnoob said:


> I echo PA's comments. What is the reasoning behind it? Is a tenant leaving? Will you be able to charge more with it?


I think the quality of the renters you get is similar to the quality of the apartment. So my thought would be if you think you can get more rent from doing the fix, I'd wait until you change tenants.


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## Charlie (May 20, 2011)

I think, even if you can't get more rent...if you can get renters who will take better care of the place, and have more pride in their home, you may have less headaches and less turnover. $2K may be a good investment. PLus if there are other similar unrented units out there -- your upgrade may net you a renter first. I find its good to have one of the above average units avail to rent -- without going too far above the comparable units. I can't imagine a $2K kitchen reno is overdoing it too much??? Depends on the area, I guess.


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## jamesbe (May 8, 2010)

Sounds like the division here is about the same as my personal one.

Tenants move out sept 1st, plan was to renovate and be done in about a week. It's a pretty small kitchen hence the $2k. I'm going with basic Ikea stuff which actually looks good but it's all standard sizes and inexpensive.

My only concern right now is getting someone to sign to rent the place.


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## Plugging Along (Jan 3, 2011)

Since you already have a renter moving out, and the timing seems to work. If you think that you will get better renters or rent it out faster or for more money, then its probably a good time to do it. For $2K, it's really peanuts in the big scheme of things.


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## OhGreatGuru (May 24, 2009)

2K for a kitchen reno is a pretty cheap investment, and it is nearly 30 years old. Look carefully at your estimate though. Are you likely to end up replacing appliances, flooring, lighting, rewiring, plumbing?


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## jamesbe (May 8, 2010)

No new appliances, just cupboards that's all, new flooring done 3 months ago. Not taking out walls, going with an identical layout.

I've got 2 applicants to rent. One would move in sept 1st leaving no time for renos so the entire thing is moot. The other Sept 15th which leaves me time to do it.

Hmmm now it is an even tougher decision!


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## Four Pillars (Apr 5, 2009)

If you have someone ready to move in for Sept 1st and they are fine with the apartment as is - it's really hard to make any kind of case for replacing the cabinets.


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## K-133 (Apr 30, 2010)

I agree that a better quality place attracts a better quality tenant. The return is not directly a financial one, as someone who takes pride in their home and takes care of it, ensures you have less work to do to turn it over again.

All that to say that if someone is there, or someone is already coming, you will likely realize no return financially or in terms of the quality of tenant for doing the reno. In addition, if you do the reno, you will place unnecessary risk on yourself and your tenant to get the work completed on time.


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## DavidJD (Sep 27, 2009)

K-133 said:


> I agree that a better quality place attracts a better quality tenant.


 Enough said. Is it attracting quality tenants or is the place needing better quality?

Absolutely 100% my experience. Believe it or not renters also do not like to rent from slum landlords or landlords who don't look after their place. Putting in some cabinets stands to be a wise investment for a long time.

Do it.


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## jamesbe (May 8, 2010)

Well I have 2 interested parties now, still waiting on their applications though....

One will not give me time to replace anything, the other will give me about a week of wiggle room.

Depending on their applications I'll make my decision. I like to offer a quality place for quality tenants and looking at the rest of the availability in the area I can see why they like my place.

I've actually managed to raise my asking price $155 a month from what my current tenant pays  , there are other similar units available for less money but they haven't been taken care of.

So essentially my new kitchen at the new rental rate is paid off in 1 year!


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## tobuyornottobuy (Nov 19, 2011)

I know this is an old post but I am interested in what you decided to do.

I recently replaced a perfectly functional bathroom in my rental property becuase i have great tenants and wanted then to know that i wanted to keep a good property for them.

During the reno the plumber sprung a leak and my whole celing nearly caved in!
2 months later my tenant accidentally knocks a bottle onto the sink and smashes it!...such is life...these are great tenants and accidents happen.
they have been there 3.5 years (in a student area) so I guesS i could argue thati ave saved vacancy costs!


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## jamesbe (May 8, 2010)

Here ya go 
http://canadianmoneyforum.com/showthread.php?t=8745


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