Rentals in Fairfield>Question Details

Mike O, Home Buyer in Austin, TX

My friend recently purchased an investment house in Fairfield, California ($120,000) with 3 rooms 2 baths. He is debating whether he should spend

Asked by Mike O, Austin, TX Sun Jul 25, 2010

the extra $3,000 in replacing all the windows (currently single panel). Currently the windows are working but just outdated. From your expertise experience, should he spend that extra $3,000? He logic is that replacing the windows will make the living more pleasant, save bills on heat/air condition due to better insulation, better sound proof, don’t have to worry about future water leaking (don’t believe the windows are leaking now) and can sell better when the time comes to sell it. I am not sure how much advantage that he can get out this so I am asking the experts or does it make sense to replace the windows from an investment prospective. Thanks again for your time reading this and your kind response. Oh, he does not intend to hold this property more than ten years. –Mike

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Don McDonald’s answer
Managing one of the largest brokerage firms and property management companies in Fairfield I would have to say "Yes" if he plans to sell soon, or live in for his benefit. "No" if he plans to rent. The home will not get more rental value. It will appeal to more and make the home more desirable but not to the extent of extra rental income. When he decides to sell, then perhaps that will be the best time to install new windows.
0 votes Thank Flag Link Tue Aug 14, 2012
Good Morning Mike,


Lets break this down into two categories. Pro and Cons.

Pros:
It will certainly make the home more attractive to renters. This could be important depending on the rental market in Fairfield. If the home is vacant for 3 or 4 months in say a 2 year period because it isn’t up to par with other rentals then your friend has cost himself money by not upgrading.

It gets hot in Fairfield and it is a way of showing renters that they are more than a rent check. You want a rental to look as nice as possible the day a new renter comes in. If you show that you care about the home then they are more likely to take care of it. I use the same philosophy with my car. I make sure that it is spotless when I take it in for repair. This sends a message to the mechanics that I care about this vehicle. I also believe that a nicer home may attract a different type renter.

It’s a tax write off. Since the windows don’t truly need replacing and the new windows are an improvement this can be considered an upgrade and not just maintenance. This may serve him come tax time.

Money saver. Windows eventually leak and unless you are on top of the situation you probably wont know they are leaking until you see evidence such as water stains on the sheetrock. This means additional expense to repair the damage. In addition, nothing gets cheaper in life so every year he waits will cost him more money.

Since most windows have a ten plus year warranty he wont have to replace them 2x. On that note, make sure the installation is done by a company that has been around for ten years or so. Get referrals!

If he decides or is forced to sell early there is a good chance he will get much of his $3,000 back.

Cons:

The home will probably not rent for much more because of the new windows.

The $3,000 could be used for other investments. Stocks, bonds, etc.

If the project is financed then there is additional finance cost.

Hmmm. That’s all I got for cons. Make sure he checks with the city to see what permits are required. This is more money. If they are required he really should get them. Also, there are three ways of installing windows. New construction, and two types of retro installs. For $3,000 I assume he is not getting New Construction installation. This is the best install. Sometimes a city only requires a permit for certain types of installs. He needs to spend a few minutes and educate himself on the types of windows and installation methods. If he sounds educated on the process he will be less likely to have a “fast one” pulled on him during the installation.

Best Regards,

Eric Soderlund
Web Reference: http://www.esoderlund.com
2 votes Thank Flag Link Mon Jul 26, 2010
Mike,
Here's what I would tell your friend: All of the reasons you give for replacing the windows would benefit you personally if you were living in the home.

However, if you're planning to rent the house, you need to view any improvements you make to the house as a landlord would. One of the questions you might want to ask yourself is "Will this bring me a significantly greater rental income, enough to justify doing the work?"

My "gut instinct" is that replacing the single-pane windows with double-pane won't actually net you noticeably more rental money, unless you're paying the tenant's electric bill. You could achieve some of the advantages of window replacement by other, less costly means. Applying an ultraviolet-filtering film to the windows could help with the air conditioning bills, and caulking the windows should address the concern about potential leaks.

It's possible there are tax benefits for replacing windows in a rental property--Check with your accountant on that.

Regarding resale, if you replace the windows now, and sell the home in 10 years, you'll be selling a home with 10-year -old windows. From a resale point of view, it would be better to replace the windows just prior to putting the home on the market. Then you can market it as having new windows.

Just some things to think about.

Warm regards,
Maggie Hawk, REALTOR
(386) 314-1149
Watson Realty Corp.
2 votes Thank Flag Link Mon Jul 26, 2010
Id rather put it towards new paint or carpet. Do the windows later, unless you really need em.
1 vote Thank Flag Link Mon Aug 23, 2010
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