Property Management Blog

Rental Property: 5 Home Improvements that are Worth the Money

Friday, June 19, 2020

Recently I wrote an article on 5 home improvements that are not worth the money, and, interestingly enough, in sitting down to write this article, I find that the list is very similar. Really, when considering 5 home improvements that are worth the money, it's as much a point of view taken, as it is the items themselves. So, I may plagiarize myself a little here, but rest assured, I intend to sue myself into the poorhouse. Let me set the stage a little for you on this.

Rental property or owner-occupied - the goal is the same

In any purchase you make day to day, if you're not comparing the value of said purchase, there's a good chance that you're overpaying. Some people simply don't care, but if you're like me, you're looking at the cost of every purchase and looking for a better deal for your hard-earned money.

A great example is gasoline. The Shell station is on your route, but it's 20¢ more per gallon than the ARCO a block away. Your fuel tank needs 20 gallons. That's a $4 difference. Travel time to get to ARCO is an additional 30 seconds. So, 30 seconds to save $4 is worth it. That extends to a savings of $480 an hour. Bet you never thought of it that way, and I don't know about you, but I do not make $480 an hour.

In other words, you want the most bang for the buck. That applies to home improvements as well.

Short List of Items

Put into context, the 5 home improvements below are worth the money, be it your personal residence or an investment property. There are more, but this is what comes to mind for me when mulling over the topic. It's like a "Top 5 List of Worthwhile Home Improvements."

  1. Upgrading a 30-year-old kitchen
  2. Upgrading Laminate or Porcelain Flooring
  3. Upgrading Wood Swing Up Garage Doors with Sectional Doors
  4. Upgrading a 30-Year-Old HVAC Systems
  5. Upgrading/Improving the Landscaping
  6. Bonus Item - Exterior paint and siding

Upgrading the Kitchen

The kitchen is the heart of the home. We all know that, right? And as Realtors will tell you, that is the single most important room in a house. A $15,000 kitchen improvement can yield a $25,000 increase in property value or more. In a rental context, that remains true, it will rent a house faster, and the incoming resident will be more likely to pay more in rent. They will likely stay longer, as well. (We have documented cases to back this up)

But, if you are doing any kitchen work, like counters, do it all. What you do not want to do is put beautiful new Quartz counters on 30-year-old cabinets! In the same thought process, those old appliances really do clash with those new cabinets and counters, don't you think? Sure, you do. Change them out.

Kitchen

Upgrading the Flooring

Right, so your carpeting is a mess. It's worn out, fraying, or perhaps stained. And, golly, Fido did his business on it too. Bad Fido. Bad, bad Fido.

So, if you're looking to sell soon, one school of thought dictates that you replace the carpeting with cheap carpet and padding, so the house shows well. After all, the buyers are probably going to change the flooring anyway, right? Okay, but you know what? It may be less expensive to give a concession to the buyer, it's less out-of-pocket expense, and not to mention the time burnt shopping it all out. And, I don't know about you, but I can feel when the carpet is cheap, and it makes me wonder what other corners were cut. However, I'm weird, soooo...

Now, if you are replacing flooring for the long haul like in an investment property or you plan on staying in your home for many more years, go with a durable flooring that resists wearing, and Fido too. Flooring like Laminate. Be aware that laminate is susceptible to water damage. Even "Aqua Guard" laminate, though that type is less vulnerable.

The downsides to laminate flooring

  • One downside is that laminate flooring is three times more costly than carpet, on average. However, you won't be replacing it every three years, and the renter will have a better experience while they are living there, it's a cleaner environment and no cost in shampooing carpets every six months.
  • Water can cause damage to the laminate. Be sure to purchase 5% overage and put it in the garage rafters should you have a water leak.
  • Laminate flooring is only as good as the laminate itself is. Also, the wider the laminate pattern, the larger it will make your room look so go with 8" minimum in width.

An effective way to maximize value is to use laminate in high traffic areas, and other floorings elsewhere. Porcelain in the kitchen and bathrooms (to resist water damage), and carpet in the bedrooms, to maximize value.

By the way, even porcelain is not 100% water resistant! I know, right? It is, on average, about 99.5% water-resistant. For 100% water resistance, you may want to look at Vinyl Wood Plank Flooring. This flooring may seem like a steal, pricewise, but, honestly, if not prepped right, it will look awful. I have seen this myself. And that prep work makes the price per square foot almost the same as decent laminate.

Lastly, you may think that 7mm laminate you are getting is a value, but, honestly, it is not. Over time it will chip, it will warp, and it will suck up water like a sponge.

Upgrading Garage Doors

If your house still has a wood swing-up door, go park the horse and buggy at the hitching post and come join us in this century. Seriously.

You know, someone out there is taking offense at this right now, because they prefer wood swing up garage doors over sectional steel garage doors, but...

  • They Are Heavy
  • They are dangerous
  • In most cases they are unattractive

A wood door on a double garage weighs about 350 pounds. Now picture this: you're closing it, and a spring fails. Your child is beneath it. Can you dead-lift 350 pounds? This leads us to...

They are dangerous! That falling door may be the least of your problems. When the counterbalancing spring(s) fail, and they will, they can release an enormous amount of stored up potential energy. That kinetic energy can kill you. Right now.

Most wood swing-up garage doors I see in the field are unattractive. Okay, they are ugly. There, I said it. Honest to goodness, when I am at a house with a wood swing up door and turn a circle, surveying the neighborhood, it is rare to see another of the like. There is a good reason wood swing-up garage doors are a dying breed.

Steel sectional garage doors also have spring tension. The difference is that we're talking about a rotary spring in an enclosure, it will fail too, but will not explode out, taking your head off. Having a head is good. Keep yours.

Upgrade Old Huff and Puff

There is a radio commercial I heard where the guy is saying that "AC systems last only 10 years out here in the desert..." Well, maybe, and SoCal is technically a desert, but AC units tend to last longer than that here.

However, if that old, cold, 30-year-old geezer of an AC unit fails, and it will, there are options to consider. For example, many cases the part to fix it may be cheap. A run/start capacitor may run you $30 to $129, depending on the unit and where you buy it. I did mine for $39. But if you have a Freon leak, R-22, you are going to spend some money. The manufacturing and importing of R-22 was outlawed in the US as of January 1st, 2020. There are stockpiles of it, but R22 is already getting crazy expensive! If you have a Freon leak, you can keep putting more and more of the ever-increasing R22 in it, maybe with a stop leak additive, but eventually, you'll either need to replace the unit or live in the 1800s, meaning without AC.

Replacement can run a pretty penny. I am deliberately not listing a cost because you may just need to replace components (evaporator or compressor), or you may opt to replace the whole unit, heater, and all, and the tonnage makes a difference too.

Upgrade Landscaping

There is a lot of variables here, and we have other articles on our site on this, so I will keep it simple:

Do your yard and house have curb appeal when you park in front or drive past? If not, if the house makes you cringe, or even just feel "blah," then it needs improvement. That goes for the back yard too.

Even with all the rain, we have had in southern California the last couple of years, you know there is a drought just around the corner. It is coming, sooner or later. We recommend looking into water company compensation for changing over yards to drought tolerate landscaping.

One of our favorite tactics in sprucing up rental property yards is making the back yards (and some front yards) over with a scheme of 65% gold rock over a thick vinyl liner, and 35% grass with irrigation. Add some succulents to the gold rock areas and Shazam! Great looking, low care, yard. Yes, I said, Shazam. Deal.

This cost averages out to about $2 a square foot. If the water district pays a majority of that (or all of it), I see little downside.

Bonus Item

Exterior Paint and Siding, again, simplicity is the order of the day.

If you have wood rot, or termites, or peeling paint, or Blue or Yellow house paint, do something about it, stat!

Wood rot and termites spread, and each only gets worse (and more expensive) over time. Peeling paint is unattractive, and hints at other deferred maintenance. Bare wood will become wood rot; it's only a matter of time. And Blue or Yellow houses (and even the Green that was popular 30 years ago) are NOT attractive to most renters and buyers. In other words, poorly chosen colors will cost you money. Deferred maintenance will cost you money. Shoot, everything costs money these days; why spend more?

Whether You Are a Do-It-Yourself-er or Hire-Out Matters

A lot of people think they can paint, and they cannot. I'm one of them, and I have learned my lesson. I'm terrible at it. Many people think ripping out a kitchen and slapping in components they bought at Home Depot is a snap. It isn't. If you've ever done any home improvements or repairs, you know that trip to The Home Depot will invariably be followed 2nd, or 3rd, trip. Unless you're a professional... and even then...

The long and short of it is if you are not super competent at whatever home improvement task you're taking on, hire a pro. It is no secret; good contractors make good money. That is because a good contractor is worth it!

Back to Home Improvements That Are Worth the Money

As I mentioned above, this is mostly a matter of perspective, and what your long-term and short-term goals are.

If you're buying an investment property to hold for the long term, how does it stack up against the surrounding homes? The term "putting lipstick on a pig" comes to mind here. For example, it is, generally, a bad idea to do a major league upgrade and refurbish on a rundown home in a neighborhood where everyone seems to have just given up. Cars parked on overgrown yards, choked with weeds, wood rot everywhere, peeling paint, garbage lying around. On the other hand, I have seen where one refurbished property CAN and DOES cause surrounding properties to improve as well. In other words, the Smiths are keeping up with the Jones'. It takes time, and it does not always happen, but the point is, it can happen.

Example:

We manage a property in mid-Moreno Valley in a neighborhood that was in a death spiral. The residents were always late on rent, and the house needed a lot of work. We did an extensive rehab on this property a few years ago. Amid the work, I stood on the front porch and turned in a 280-degree arc, looking at the adjacent properties. I wondered privately how it would impact the surrounding properties. Was this a waste of time? The paint outside, upgrading the garage door, removing ugly bushes, and installing gold rock over a vinyl liner in some planters along with succulents.  Removing and upgrading the floors, kitchen, bathrooms. Was it all worth it?

Yes, yes, it was. The appearance of the house did make a difference, but it also attracted great residents as well. These residents set a different standard for the neighbors to live with. The sheer presence of the house itself set a constant reminder to all driving past of the difference between nice and shabby. See, it's like painting a room: you see that the room needs paint, so you paint the walls. But when the room is done, the ceiling, which looked okay before, now sticks out like a sore thumb. It looks awful! With a home, it's the same, that nicely done house changes the overall perception of the neighboring properties.

I watched over several months and years how our managed property literally inspired the neighbors to take care of their yards. Almost all the neighbors painted their houses. No one parked in the yard anymore.

In Closing...

We highly recommend being judicious concerning the decisions you make on your property and weighing the cost versus the benefit. You see, a beautiful gate may look all nice and neat to you, but the paint that is peeling next to it, and the old, warped garage door next to that may need far more attention. And after all, a house is more than just a dwelling; it is also probably the most important purchase of your life.

Preparing a Rental Property