What improvement to do: Carpet, Paint or nothing?

[brendan]

I'd like your advise on some improvements.

I own 4 investment properties with a couple other investors. One of our properties is a brick four bedroom/2 bathroom two-story unit on the shore in Crown Hill/Castor Bay area, built in the 70s, and still looks like its from the 70s. We had the place since the begining of 2003, and have been renting it out for 460.

It's got worn carpets, decent (but old style) wall paper, and an old kitchen and bathroom.

We have a few different tenants, and our tenants moved out 5 weeks ago and we haven't had anyone else take it. Lots of people through, a few people close, but we haven't had anyone sign the dotted line.

Our other places we own have a vacancy rate of 0 to 1/2 a week empty per year, but this place always seems to take a while to rent out. Looking around on trade me at 4 bedroom places we are competing with in the 430-500 dollar price range, it appears that lots of the places are much newer than our, and appear to have been previously owner occupied. They appear to me to be "too nice" and too low rents to be owned by investors. The returns on them must with be terrible.

We've been thinking we need to do some improvements to compete with these 'former - owner occupied' places. We're going to replace the bathroom vanity with something nicer, and we've replaced the kitchen stove and range hood.

Now we are discussing if we need to do bigger job, like either paint the place or replace the carpet. Which do you think has the best value for money as an improvement. We wont be painting the place ourselves but hiring a painter to do a professional job. We're discussing between us if we should do any big improvements at all. One argument for not doing any big improvements is "it's only a rental".

What do you guys think we should do? I've included a couple pictures below of the place.

Has anyone had recent experence doing up a 70s place? How did it turn out?

[revdev]

One argument for not doing any big improvements is "it's only a rental"

I don't buy this for a second Brendan, in fact as the market softens further you may find your place moving right to the back of the queue.

Paint, paper and carpet would constitute a fairly standard reno (rather than a "big improvement"), you will increase your rent roll, have happier tenants and the place will value up as well.

If you spent say $5k on renovation, which in turn realised an extra $30 p/wk in rent ($10 p/room) this would represent an annual 30%+ return on your money..

All the best

G

[ActionMan]

Hi

I always consider carpet, paint as standard reno to improve on rentability and rent returns. New kitchen may not get give the best return on investment.

Agree with revdev.

[BusyLizzy]

Welcome to Property talk, Brendan!

I agree with Revdev and ActionMan. I didn't vote in the poll as I believe both wallpaper AND carpet need to be considered (not one or the other). Modernising your rental will bring in a whole different set of potential tenants, and hopefully bring you increased rent.

If you as landlord treat the house as 'just a rental', I don't think you can expect tenants to treat it much differently.

Bite the bullet and bring it into the 2000's with a modern colour scheme.

[whitt]

Paint as a minimum and if carpet shabby replace it

[xris]

Hello Brendan.

Agree with revdev and the others too.

There are plenty of posts on this site about maintenance and make overs so have a good look around.

You will be amazed at the transformation a basic do up will bring to the place.

My opinion in rough order is:

paint
wallpaper
netts
curtains/drapes
power sockets (doubles)/phone points
door handles/light shades/taps
landscaping
carpet
new oven

I believe carpet can come a bit lower on the list because even a worn carpet with be brightened up if the walls, ceilings and curtains are new and fresh. Depends on the particular place though, of course. Also, I am an oven freak.

Depending on the bathroom and kitchen these may need anything from minor to major work.

xris

[Propoholic]

Hi Brendan

Looking around on trade me at 4 bedroom places we are competing with in the 430-500 dollar price range, it appears that lots of the places are much newer than our, and appear to have been previously owner occupied. They appear to me to be "too nice" and too low rents to be owned by investors. The returns on them must with be terrible.

Your property is in Castor Bay which is a fairly good area. Because of the area, yields will be lower still compared to more average areas in Auckland. Renovation standard & budget is very 'area specific' and in your case an 'uplift' is a no brainer.

We're going to replace the bathroom vanity with something nicer, and we've replaced the kitchen stove and range hood.

How about throwing in some new light fittings ($400.00), replacing some of the curtains and install new light switches/socket outlets? [Just noticed Xris has covered this point well!] The tenants in your area will be looking for something tidy for their dollar.

BusyLizzy wrote:

Bite the bullet and bring it into the 2000's with a modern colour scheme.

I use a colour consultant to produce a colour scheme & coordinate all surfaces, carpets, vinyl, curtains etc. The colour consultant can bring you samples (carpet, vinyl, curtains) of his/her recomendations. This service may cost $300 - $500 and is worth its weight in gold.

You need to know and understand the rental market you are pitching to.

[whitt]

Oh my gosh had a look at the pics again. Propoholic is right when he mentions light fittings. They are definitely retro 70's fittings there.

[brendan]

Thanks for all your comments. We are getting quotes for both painting and carpets today, and because of the comments I've recieved, we'll do both.

I'll keep you guys posted, and maybe post some before after photos.

Oh my gosh had a look at the pics again. Propoholic is right when he mentions light fittings. They are defentiley retro 70's fittings there.

One of my investment partners likes them because they are "funky", but I'm thinking we should upgrade to more modern like fittings.

[artemis]

Those pelmets are doing you no favours at all! If you don't remove them they need to blend quietly into the wall.

Funky or not, suggest the light fittings go. You could probably sell them readily on Trademe though in the retro section.

I find a good bathroom is a drawcard for tenants.

[pgflt]

Consider floor length curtains as well as the paint and carpet - they will give the rooms a more spacious and luxurious feel, help conserve heat and can be obtained cheaply from The Warehouse (where everybody gets a bargain!).

[essence]

Reno

The following things would help immensely :

Paint
New electrical switches and light fittings (there are some good modern light fittings to be had at Bunnings)
Carpet - a good commercial quality carpet might be the way to go.
Kitset kitchen (if you feel so inclined - from Placemakers or Bunnings) Easy to put together, although u will need someone to fit the benchtop.

I always look at a house I have bought in the "Would I rent this house?". If the answer is no or "I might, but only if ......... is done", then obviously that's what needs doing.

And in doing up the house, you can get another valuation done. There is the possibility of capital gain and more rental income after the improvements.

Why WOULDN'T you do the upgrade/reno??

[Traff]

Hi

We bought a place around 5 weeks ago, the place was very old and dated and needed an update, my husband and i were going to go in and clean it up (with new paint etc) but fortunatley we had tenants that said they would take it as is for a very good rent, unfortunatley for us this turned out pretty bad and they ended up being bad tenants. Luckily we got them out but when we went through the property we realised how dated, dingy and depressing that house would be to live in. It wasn't a place that we would have lived or stayed in and we knew that we couldn't rent it out and get good money and good tenants. Last week we ripped the kitchen out, got rid of all the rubbish, tidied up the gardens etc and now have a group of people in there this week re papering and painting. We ripped up the old smelly carpet and found fantastic wooden floors. It will take around a week and a half to finish and $15k later we will have a pretty neat place that will attract the right tenants and the right money.
We have also just finished renovating our own home in Milford which was a 70's home (very old and dated) so I can understand why it's taking so long to rent out, if you don't think it's a nice and inviting place to rent why would anyone else. If you're going to do something to it do it all cheaply but nicely and then you shouldn't have any problems renting it out in future.

Good luck let us know how it goes

[xris]

Hello Traff,

A story as tidy as your new rental. It is the eighty-seventh like this that I have heard.

Has anybody bought an old house with outdated decor and chattels and over time has consistently put 'good' tenants in paying top dollar rent?

I am sure there must be somebody out there who can refute this myth that regular upgrading and regular maintenance pays for itself very quickly and produces a better quality of applicant with less hands on management hassle.

xris

[whitt]

regular upgrading and regular maintenance pays for itself very quickly and produces a better quality of applicant with less hands on management hassles.

During a slump or quiet period in the economy this is critical .