Good landlords never waste money doing things that don’t need to be done. It kills our profits without providing a good return. This is especially true when it comes to rental property renovations. Over time everything deteriorates. I mean, do you feel the same as the twenty-year-old version of yourself? I know I don’t. Heck, my body hurts in ways I never expected to feel. But I digress…
If you own a rental property long enough, the time will come when you will have to pony up some cash to renovate. It’s either that or be left with lower rents and tenants that are at probably at the lower end of the desirability scale. I don’t want that. That’s something that’s way worse than spending some of my earnings to keep the place comparable to other rentals in the area. I think you will agree with me here.
So while renovations are worthwhile when the time comes, we want to use our money in the most efficient manner that we can. That doesn’t mean being a cheapskate and using the cheapest material we can get as that never works out well in the end and you usually just have to redo everything in a few short years. No, we want good materials used in areas that offer the best return on our money.
What we don’t want to do is waste our renovation budget. To that end, I have come up with the top three areas of wasteful upgrades that I have seen landlords spend money doing – and what to do instead.
Waste Money in the Kitchen
Landlords upgrade the kitchen cabinets and countertops expecting to command a higher rent, ‘wow’ potential tenants, and get the place rented faster. If you have your property in an area with a large demand for rentals (and you bought your property in such an area, right?), it is a waste.
Just having ‘nice enough’ cabinets and countertops are enough to get a pick of quality tenants in these locales.
A handyman can often make them nice enough by repairing any deteriorated areas and staining them. I bought a property that had 80’s style particle board cabinets with a section that had gotten wet, but didn’t replace the whole of the kitchen cabinets though! Instead, I paid a handyman to cut new pieces to replace the damaged sections and gel-stain away the 80’s style. I also replaced the cabinet hinges and installed pulls myself. The result of these inexpensive upgrades was a ‘nice enough’ kitchen brought into the current decade. Total cost? $160 in labor and $280 in materials.
Once those shiny new cabinets are in they just won’t look good without a granite or quartz countertop, right? Nope, don’t waste money. Regular tenants aren’t expecting fancy stone countertops, so don’t do it! They make good looking Formica laminate countertops on the cheap nowadays.
Oh, and please don’t go crazy on the appliances either! Most renters aren’t going to know the difference between the low-end and high-end models. Just having clean, working appliances is enough.
Waste Money in the Bathroom
Another area some landlords feel the need to overdo it is in the bathrooms of their rentals. Putting in fancy sinks (or adding dual sinks) or changing the tub into a walk-in shower with a rainfall showerhead.
Don’t do it in a rental! Bathrooms should be nice, but basic. Basic ‘out-of-the-box’ vanity with sink built into the top, tile or vinyl on the floors and shower walls. The vast majority of renters just need a decent place, fancy upgrades are for homeowners. Think of the motto KISS: Keep It Simple, Stupid.
Where do you want to spend the money? Buy good quality faucets (don’t forget the pipes too!) and toilet. I find that installing commercial grade faucets and toilets are the best, as they are made to withstand abuse. If you can kill the maintenance issues before they even start with quality materials that don’t break or leak easily – do it! That, to me, is worth the additional money.
Waste Money on Carpets
Rental units often have carpeting because it is cheap and easy to replace, and it is. The problem is that you are going to find yourself replacing it every two tenants, on average. Wear and spills are going to happen.
So in a rental that you plan to hold for the long-term, I say stop wasting money with the carpets and install a high-traffic resistant vinyl flooring. Yes, it will cost more initially but over time it will come out to be the best return on your dime. I say vinyl over laminate because vinyl is 100% waterproof.
They make amazing vinyl that mimics wood or tile, buy the type that your area expects. Wood in New England or tile in Florida, for example. You should only install flooring that has a timeless style – no fad patterns that will be dated in a decade. I recommend the TrafficMASTER Allure vinyl brand in a neutral pattern.
Encourage the tenant to use area rugs as any wear or stains will be at their expense.
Most tenants expect that carpet will be in the bedrooms. I use a mid-grade carpet made of nylon with Scotchguard protection.
Unless you are renting in A-class areas, just keep your places ‘nice enough’. Most renters want a decent place at the going rate. So give them what they want.
The object is to have satisfied tenants without spending more than you need to. It does NOT mean being a cheap miser. It DOES mean to spend your money in a smart and efficient manner that keeps the cash flowing.
I hope you found something of value that you can apply to your business. If you have additional knowledge to add, or just want to say anything at all, leave a comment below.
Justin (AKA MrDoublingDollars) is a personal finance geek that is seeking an end to the J.O.B. paradigm by becoming financially independent in whatever way he can. You can follow his adventures on his website, www.DoublingDollars.com, where he often writes about side-hustles and his philosophy of life and money.