Rental properties need constant upkeep, just like an owner-occupied property does. However, as a property owner - or even as a renter (because you're going to buy a house one day, yes?) - there are home improvements that are simply not worth the money. I might just go overboard on this topic... Oh, and by the way, some items ARE worth the money, when it comes to home improvements. Check those out here…5 Improvements that are Worth the Money
Homes have a LOT of items!
A house is a house, right? Yes, as a single unit, that is correct. Like many things, a home is a collection of over 3,000 items. Some materials require maintenance, some that don't, and a gang of disciplines is trained to take care of each other. It's sort of like a body, there's the skeleton, skin, and internal bits that make it all work. Okay, in my insane little world, it is similar, anyway.
During my tenure as a property inspector, inspecting thousands of homes, I have seen landlords sink thousands of dollars into repairs that don't matter in the grand scheme of things and neglect repairs that do matter. Also, owning a rental property can either make you or break you, depending on a lot of factors. Spending wisely vs. foolishly is but one of those factors. Today we will focus on the five improvements that are not worth a hill of beans.
Here are the five items that we commonly see landlords spending foolishly on:
- High-end flooring (because it looks nice)
- High-end appliances (because I like them)
- High-end counters (on old cabinets)
- New fencing (because good fences make good neighbors)
- New Windows (because old windows, Ewwww!).
- Bonus item - solar panels
There is nothing wrong with high-end flooring in a rental property, aside from it being expensive, possibly needing maintenance, and the high replacement cost; if it gets damaged. But apart from that, it's great. Does it rent a home faster? Maybe. Does it bring in more monthly rent? Possibly. Will the renter stay longer? Again, a maybe, but likely not.
You see, just like a home sale, the flooring makes a little difference, but not necessarily a significant difference. Everyone has different personal tastes. That dark laminate, you may love it, but a sizable portion of the populace prefers carpet. And that laminate is about three times more costly than carpet.
On the other side of the equation, a house undergoing significant improvements, such as upgrading the kitchen and bathrooms, YES, do that flooring then too, but you don't have to go to a high-price laminate! Improve it, in other words! Don't spend on the high-end product that you might put in your personal home, instead, go for middle-of-the-road flooring.
We have a great many owners I have worked with over the years, and what I come away with, consistently, is the different ways people view their rental properties. I have seen people blow massive amounts on custom wood gates. Bypassing the badly needed appliance replacement, and I have seen the reverse, throwing a lot of money at appliances at the expense of everyday old functional and necessary items.
Since we are in the kitchen already, the heart of the home, so to speak, let's address the appliances and the counters. Shoot, while we're there, we will talk about the cabinets as well.
If you're holding a rental property for a time, a few years, maximize your ROI, return on investment. A range is a range, a dishwasher is a dishwasher, and a microwave/hood combo is a nightmare. That inexpensive stove/oven range will cook food exactly the same as that high-end one. But I have to caution you, that used one you found online for cheap could be the most expensive cheapie you ever saw! Same with a dishwasher, get it now, with a warranty and all that too. And that microwave hood combo? Just say no. If the house is vacant and the item needs repair, think about replacing it with a simple hood. You'll save a lot over time!
If you're considering replacing the kitchen counters (or even the bath counters), do yourself a solid: Replace the cabinets too!!! There's a special place in Hades for folks who put expensive new counters on old beat-up cabinets. Price it all out first. In a kitchen, that smartly spent $15,000 can easily yield $25,000 in property value. In a bathroom, though, unless the baths(s) are hideous, you'll basically break even.
There is no good reason on Earth to slap $2500+ of counters on beat-up $10 cabinets. I get it, those 4"x4" white ceramic tiles that are cracked and beat up, yep, they are ugly as sin. The grout is awful. You wouldn't let your worst enemy, let alone family, make a sandwich there. There are other options, like glazing the counter. You're going to spend a lot less!
Back to Appliances
Now that you've decided to replace the whole kitchen, you can consider upgrading appliances. Remember, though, that tastes change over time. That brush stainless-look appliance suite may be out of style in a year or two. Just watch, avocado green appliances will make a comeback. Naw, just kidding. At the end of the day, we live mostly in our kitchens, whether it be ourselves, family, or friends getting together, and it also will rent your rental property quicker.
New Fencing (not the sport)
So here in California, we like our yards all neat and fenced in. Theirs is theirs; ours is ours. When you travel back East, you will find backyards simply running into each other, and to me, that is just not any good. Mine is mine.
So, for some inexplicable reason, the builders in Southern California decided that it would be a great idea to divide many properties and developments with wood fences. Yep, we got sunshine, weather, wood rot, and termites. This decision was iffy at best.
However, just because a fence is wooden doesn't mean it's terrible. A wood fence, if cared for - and maintained - can last decades, but that means everyone must do their bit. That fence between your property and the neighbor, you BOTH own it, as you both benefit from it. That is California law.
Simple things like keeping the ever-present Bowser (the dog, not the Mario Brothers character) away from the fence are important. Replacing slats as they break or rot is important, and even sealing the fence with paint can prolong the life of a wood fence by many years.
Now, of course, at some point, that fence will need replacement, but I urge you, to get every last year out of it because you know what? Fences don't add a lick of value to your property's value. Zilch. Add posts to keep it upright, fine, add slats, whatever you have to do, but fence replacement is a zero ROI (return on investment) deal, for the most part.
Sharing that cost
When the time comes to replace that shared fence between your neighbor and your property, if it isn't in writing, what the neighbor said they would contribute to the project does not exist. Your neighbor may be the nicest person ever, but when it comes time to pony up their share of that replacement fence, the odds of follow-through is right about 6% at the low end, 12% at the high that they actually will pay their half. This depends on the region, of course. Just be prepared to force that neighbor to pay up in court, and, oh, and at the same time, to now have an E-neighbor or Enemy Neighbor. You are, honestly, better off merely paying and having the work completed. And remember, low ROI.
Years ago, we lived up in Claremont, CA, the south end of town. Although Claremont has an excellent reputation, as far as trees, colleges, etc., the Southern end of town was referred to as "Pomont," as in Pomona-Claremont. North Claremont-ers (rich part of town) thought of it as Poor-Claremont (half-million-dollar homes? Poor? It's all relative).
We rented, and the one gripe we had about that house above all others was the leaking windows. The windows leaked sound from the 10 freeway. They leaked warm air during summer and cold air during the winter. The 1958-era windows did not leak rain, thankfully.
We asked only once if the owner would consider replacing them, and like most answers, it was a solid no. It was bothersome, but whatever, right? Well, from my perspective now, (we moved from there over 11 years ago) the owners were absolutely right!
Windows Cost A Fortune!
Do new windows add value to a home? Little, if any. In this case, the house was all about location. The Claremont Colleges, the 10 freeway, proximity to jobs, the Village, and the snowing mountains to the north, are all draws that increase value. The windows add little, comparatively speaking. So, in a nutshell, if it ain't broke...
Don't. Just don't. If you are not legally required to install them like new construction is in California, and you don't live on the property, what is the upside? Feeling good about saving the Earth? Noble and all, but if it makes only "cents," it does not make "sense."
See, solar panels are usually mounted on the roof. Your roof is designed to shed water; it is the first and most crucial component of the envelope that protects your investment, your house. So, let's see, weight, on top, holes drilled through, wires run through the holes, leaks, nope. Another thing is if you don't clean them regularly, you're diminishing the return anyway.
Now, if you reside in the house, a solid case can be made for adding solar panels, like reduced electric bills and tax benefits, but the same risks still apply.
So, on your home improvements, like anything, spend wisely, minimize your cost, and maximize your Return on Investment. Your wallet will thank you.