Remodel & Renovate in Boston>Question Details

Boston Luxury…, Real Estate Pro in Boston, MA

Is it worth it for an owner of a property in a very highly desirable area to renovate for a little more rental income??

Asked by Boston Luxury Residential LLC, Boston, MA Tue Mar 8, 2011

Please keep in mind that the increase in rent will NOT be substantial, as the unit is already getting a high rent for the quality it provides??

Help the community by answering this question:

Answers

3
its all about the numbers or the dollars$$$$$$ as far as I am concerned. Does it net you a higher cap rate by doing the renovations? What is the resale potential with the renovations is it higher also? How long do you plan on holding the property?
0 votes Thank Flag Link Tue Jul 17, 2012
In addition to the added rental income that a renovation would bring, the risk of vacancy is lower with a higher quality unit. Furthermore, the more high-end a unit is, the more likely an owner is to have a lot of interest in the unit and subsequently the more likely he or she gets a good tenant. Once the tenant is in the unit, the quality of that unit removes one less "objection" or reason for them to leave the unit. Many people often forget that there are costs associated with turnover (vacancy, broker fees, cleaning/prepping of unit for new tenant, repairs or updates requested by the new tenants).

However, the owner does have to consider their long-term strategy with the unit. a $24,000 kitchen/bath renovation that only brings an additional $200/month is going to take 10 years to recuperate. If the owner plans on selling over the next several years, will there be a sufficient return on the sale to warrant the renovation?

I find that every owner in this city has a different strategy when it comes to these sorts of things, personally, in properties I plan on holding for a long time, I find it worth it to use quality materials and updates to increase both rent and the satisfaction of my tenants.
0 votes Thank Flag Link Fri Mar 11, 2011
I always suggest that the Owner keep renovations minimal during a tenancy period and save for an upgraded renovation to be completed when they list the home for sale as part of there exit strategy. But then again, this is limited to certain areas of upgrades. I do recommend Owners to invest in the exterior landscape and other improvements. Cost savings can be enjoyed but planting smaller shrubs and giving them time to mature. This will also increase curb appeal and if properly maintained you will gain a benefit on both sides; rental and resale.
0 votes Thank Flag Link Wed Mar 9, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer