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I have a duplex and I'm contemplating renovating both sides. I live in one side so it doesn't matter when I renovate it, however, the other side has tenants.
The problem would be is if I renovate the renter's side, it can dramatically increase the rent. These have been long term tenants (6 years) who have always paid on time. Their lease comes up for renewal in 3 months.
I, personally would leave it as-is until they decide to move. Why lose good paying, long term tenants? In the meantime, you can continue to raise the rent as-needed while they are still living there and continue to do regular maintenance, repair and upgrades. Then this way you can slowly upgrade the appliances so you don't have all of that expense all at once once they move.
We did 8 complete apartment renovations however, we waited until each apt was vacant. Took approximately 2 years to get all 8 done. Gave a good comfortable break in between.
How much below market are these tenants? How much of their living expenses are you paying out of your own pocket?
If they are really good tenants who take good care of the property and the rent is not too far under market, I would increase rent by a smallish amount and do one or two small upgrades. Repeat that every year.
Look at projects like tile in the bathroom or entry way, new exterior paint, some landscaping (if either you or the tenants actually take care of landscaping), new dishwasher, upgrading windows a few every year, upgrading weatherization. Or some little stuff like an improved light in the bathroom or replacing an ordinary bathroom sink with a cute sink.
Most of the upgrades happen between tenants and the rent jumps up to market rate at the same time, but I would not be too quick to kick out a good tenant. It's difficult, though, to do big projects with a tenant and all their furniture in place. New flooring and interior paint are not easy to do with someone living in the house.
You can do really nice upgrades like patios and exterior stone work that will stay done as a head start on renovating when the tenants do move.
I did a big landscape renovation (as I include lawn care with rent) just this year. The things that need done are upgrading the bathroom, upgrading 1/2 bathroom flooring, bringing in a new stove and dishwasher, and refacing kitchen cabinets. The obvious with any tenant move out is to replace carpets and paint but I would replace the unit with laminate flooring.
I have a 15 year mortgage on the home, so their rent doesn't cover the entire mortgage, which is why I want to do this project. But once I move out and have two renters, it will definitely cover the mortgage and then some.
I had a major thread several weeks back about their rent being below market value. So I'm giving them a 2 months notice that I'll be increasing it by $25/month. The only reason I was trying to do all this renovation done at once is I may be living about 4 hours away by the end of the year.
And to the maintenance post.....please don't go there. Maintenance is your lawn care, A/C tune ups, HVAC replacements, appliance replacements, etc. Its not making the unit more glamorous.
I won't renovate when tenants are living there. I have replaced carpet and painted one long term tenant but for the most part the renovation is after someone moves. And in some cases renovation is a string died. It's fixing or replacing. I have done full remodels but after that it's usually just paint maybe carpet cleaning basic maintenance fixes.
I usually raise the rent if a tenant moves out. Sometimes I raise it if it's way below going rate I might go $50 higher. But even that is only done if I have a raise in cists I cannot avoid. Sometimes I'll absorb the hit other times I simply can't. I do keep my rent a bit lower than going rate simply because this way if I do have to raise its rarely a lot and it's still below going rate
I noticed your rent doesn't cover mortgage. Gotta cover your nut CCUGal. How much is the cost of the renovation? What is the difference in rent currently vs after renovation. How long is it going to take you to recoup the invested money? Is the new rent going to cover the difference between mortgage payment and rent. Are you making a profit with the new rent. How much profit and how long is the profit amount going to take to equal your initial investment to pay yourself back.
The reason my tenants rent isn't covering my mortgage is because I have a 15 year mortgage. Since I live in the other side, I do pay for "some" of the mortgage but it's not bad at all. When I move out, having two tenants will definitely cover the mortgage and I will probably have an extra $300 after the mortgage is paid. I have 11 years left until the home is paid off.
What hurts the most is I pay for the lawn care ($80/month). I just found out there's some duct work issues so that's going to be a $2500 fix.
But my side is much more updated. All that would need done is a bathroom remodel (it's a very small bathroom so it just needs new flooring and vanity) and maybe refacing the kitchen cabinets. Floors are already done with the laminate wood and appliances are stainless. So I'm probably wanting to use $5000 max and will be able to charge $100-$150 more a month than what I could if I rented it now.
I have a 15 year mortgage on the home, so their rent doesn't cover the entire mortgage, which is why I want to do this project. But once I move out and have two renters, it will definitely cover the mortgage and then some.
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I noticed your rent doesn't cover mortgage. Gotta cover your nut CCUGal.
I'm assuming the mortgage is on the entire duplex, not the renter's side of the duplex. So it makes sense that renting one half wouldn't cover the entire mortgage. It sounds like you'll be in good shape covering your mortgage once you've moved out and are renting both halves.
I agree with making small upgrades here and there and raising the rent. Good tenants are worth a lot. When you upgrade and rent out your side, you can start that side at market value (considering the cost of upgrades).
The reason my tenants rent isn't covering my mortgage is because I have a 15 year mortgage. Since I live in the other side, I do pay for "some" of the mortgage but it's not bad at all. When I move out, having two tenants will definitely cover the mortgage and I will probably have an extra $300 after the mortgage is paid. I have 11 years left until the home is paid off.
What hurts the most is I pay for the lawn care ($80/month). I just found out there's some duct work issues so that's going to be a $2500 fix.
But my side is much more updated. All that would need done is a bathroom remodel (it's a very small bathroom so it just needs new flooring and vanity) and maybe refacing the kitchen cabinets. Floors are already done with the laminate wood and appliances are stainless. So I'm probably wanting to use $5000 max and will be able to charge $100-$150 more a month than what I could if I rented it now.
Start shopping around for the lawn care.
Definitely shop around for the AC work. What duct work issue costs $2500?
Ok
At 150 a month more it's going to take you 33.33 months to recoup your 5k
At 100 a month more it's going to take you 50.00 months to recoup your 5k.
(Granted this is given no other rent raise)
You foresee these tenants staying for 3-5 years more? If not IMO don't do it. You can raise the rent $25-30 bucks a month if you need to without doing upgrades. And I would hit up the other neighbor gardeners and see what they will charge for a mow and go. Set it up so its the same day they are at the other customer. Or go buy a mower DIY and save $80. Mowers are cheap.
I have two HVAC systems and both duct works were incorrectly installed. I can't complain to the companies that installed them because it's been 3 years that they've been installed. Also, the A/C guy said the return on both sides are undersized and there should be two returns in each unit. This was the builders fault. I had another A/C company tell me the same thing last year too. So it's for duct work and putting in another return on each side. But I found this out all because I was doing a tune-up. Some random guy installed the HVAC on the tenants side (where the duct work is really bad and is leaking in some parts) and an actual company installed the other HVAC on my side but the duct work still isn't properly installed.
The tenants cannot mow the yard as they are elderly and I cannot do it as my schedule is too hectic. Plus, my yard is .50 acres and slightly slopes. When I move, someone will have to cut it so it doesn't matter....either way, someone will always have to take care of the yard. And for the size and how complicated my yard is with the sloping and trees and having a storm drain ditch at the end of the property, people can't believe I have someone who accepts $40/cut.
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