Emotionally Tied To Property!!
I just closed on my first investment (rental property) one month ago. It only needs minor cosmetic work done (paint carpet, appliances). I've been painting and cleaning for about three weeks .
My question is how do I know when to stop with the improvements because I've always been a perfectionist and it seems that I want this property to look almost perfect before I let potential tenants take a look at it? The guy that lives next door owns a few rentals himself and everyday when I go there to paint he warns me not to put too much time and energy into the house because tenants will just tear it up!
He's right. Get over the complex. Make it look presentable and then collect. You have this property to make money, make it look like the rest on the block and go at it. Your not living there.
if you sell it, small repairs are always worth it - painting, carpet, polyurethane. i wouldn't go put in a new kitchen or bath or finish the basement tho. however if you rent it, i wouldn't put much more into it beyond when it's up to snuff with the other properties on your block, or a tad more.
Hello. I am a little like you with the perfectionist thing. I realized after missing my first 2 payments (about $1500) that it was so NOT worth it. Just quit and start getting paid. I know a guy who is STILL renovating 1 of his units. He's been fooling with it for, get this, almost 1 year!!!! He's lost over $6000. Think about it, would you pay $6000 for your tenant to feel comfortable?? Good luck.
Everyone has very good points. But I also think that most tenants would likely take care of a piece of property that is already nice and if it wasn't so nice subject to make it worse!
Rodrick,
Your observation about human behavior may be absolutely correct.
However, there is a point at which the next dollar invested in improvements does not raise your potential rent any more. Stop improving before you reach that point.
Start showing it now. Tell them that at this rental price this is what you get, if they want anything else, you can do it but you would have to adjust the rent accordingly. Most renters will just take the unit as it is, so long as the unit is clean and in a presentable fashion. Remember they called you about a unit you are advertising in their price range. Ask their feedback about your unit and how it compares to others in the area. You can also contact other units for rent and tell them you just moved into the area and are looking to buy a property, but you will be renting for one year in the mean time.
Also very importantly, - DO NOT PRICE YOURSELF OUT OF THE MARKET! There is a certain threshold at which your property is too nice and you will simply not get back the money you put into it. I have seen a lot of new rental property owners do this and as well as builders. Some are fortunate to find the right buyer/tenant, while others have had to take losses, BIG losses!
Phil
Light, bright, and clean seem to be 95% of the battle in my experience with rentals. If I'm selling or working on my on house I would probably patch that hole in the sheetrock and then sand and refill it at least a couple of times before I primed and painted it. With a rental I patch the hole and paint. Just one example, but it may give you an idea of how I approach rentals. Renters don't walk through and look for minor imperfections like a homeowner. Of course, with high end rentals it may be different, but I don't know how to make money on high end rentals.
2 thoughts
#1. Think ROI
#2. Analyze your tenants and your market. If you're renting to low income, no matter how good you fix it up, they won't necessarily respect that. On the other hand if you're in a tight rental market, renting to high end tenants, you may get it back better than you left. it.
i'm still green under the collar and such but um.. how bout jus doing a L/O?
you'd get more $$$ out of it from my understanding and the Tenant-Buyers will treat it as their own. Atleast thats what i've READ about. hehe
[addsig]
I hate to say it, but it is just a rental. This is not an excuse to do a half-baked job. Every day that you are working on it is one day that you are not collecting rent (but still paying mortgage, insurance etc). Make it look decent. I have done stuff that I am not proud of in my rental, but it still rented. If I was living there, my quality of work would be better. Renters tend to be rough on a property, why not it is not theirs.
Lots of people have difficulty breaking that emotional tie to all their properties, regardless of whether they are rentals or their personal home. I think the trick is finding that middle ground between wanting to be proud of your properties and going overboard on fixing them up. Make sure everything works, the color schemes don't clash, and the materials used are of good quality but no more than mid-range price. The trick after that is to find good tenants. If the tenants are good, they'll take good care of the apartments. If you get bad tenants, it doesn't matter how much you've put into the place. They'll destroy it anyway. Good luck.
[addsig]