We did an estimate today on a 2 bedroom at 1350 Ala Moana, an older high rise in a fabulous location. Everything except the fridge and dishwasher was original, from the 60s. Both bathtubs are in need of refinishing. Years of abrasive cleaners have made the finish dull. The tile surround in the master bedroom is worn, and we suggested to the owner she also refinish. We’re trying to save her money, so we didn’t recommend she refinish the second bathtub tile surround. This would be something she would do prior to selling.
With rentals, the key is to do the bare minimum in order to maximize the rent. She’s asking $2300/mo (already a bargain). Sure, she could get $2800 if she did a $50,000 remodel. This would mean complete replacement of all appliances in the kitchen and bath, all cabinets, bathtubs, removing the popcorn ceiling, repainting the walls, and replacing the flooring. $50,000 is a CONSERVATIVE estimate for all that work.
It would take 100 months, or over 8 years to make up that $50k, and after those 8 years, it will be in need of another face lift. And don’t forget the opportunity cost of the $50,000 invested. Its not a good investment of capital to remodel a rental that fully.
But what if we could get her $2500 a month, and she only spends $8k
I’ll break down the things I think she needs to do:
Refinish 2 bathtubs – $800
Refinish 1 tile surround – $300
Refinish kitchen countertop – $1100
Replace small bathroom vanities with granite; new sinks; fixtures – $2000
Replace wall oven – $800
Miscellaneous upgrades – $1000
total – $6000
She already has purchased a new cooktop. The bath vanities are so small I think she can get remnant pieces of granite for nearly free and just pay for the labor. If she does an over mount sink, that will make the labor even cheaper. Under Miscellaneous upgrades, I’m just thinking random things like new shower rods, door pulls, etc. If I were her I’d replace the carpet with laminate, but maybe that can wait until the next renter moves out. So $6000 / $200 (higher rent) is only 30 months to pay off, or less than three years.
Renters do not pay much of a premium for luxury. They want things clean and new. Focus on the most visible surfaces like bathtubs, vertical tile, and countertops, as well as fixtures. Cabinets are expensive to replace and will never yield a good pay back when it comes to the monthly rent. Instead update the look with new drawer and cabinet pulls. Remember when you renovate a rental that your primary objective is to get the most ADDITIONAL rental money while spending the least on materials and labor.
