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How much would you spend to increase the income on your existing rental?

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  • How much would you spend to increase the income on your existing rental?

    4
    Add a bath
    25.00%
    1
    Don't add a bath
    50.00%
    2
    Other - explained below
    25.00%
    1
    I've already run the ROI numbers but curious if you have a threshold on what you would spend to increase the income of your rental property. Scenario is my 4 plex has a large unfinished attic with walk up access from the upper right unit. I've always planned to finish it at some point but it wasn't in the cards when I did the initial renovations to that unit. Its coming available next weekend. I've got someone coming out to give me an estimate on installing a minisplit this week. What I'm stuck on is whether it makes sense to spend the additional to add a bathroom or not. Its currently a 1 bed/1 ba 2nd floor apartment, approximately 800 sq ft. The attic is roughly another 600 sq ft, high ceilings all the way across, big windows that are already replaced/new and plenty large to add a great closet space, bathroom and still have a separated bedroom/office space.

    Guessing cost to finish without bath will be approx $5k and adding a bath more like $20k. Currently rents for $850/mo. Based on some quick market research, ball parking rent from adding a bed but no bath would go up to maybe $1,150/mo and with a 2 bed/2ba master suite more like $1500. I'm nervous that the higher end narrows the applicant pool too much and is maybe over upgraded, but it is located near downtown in a trendy, young professional kind of area. WWSAD?

  • scfr
    replied
    Could you do a "no bath" finish now in a way that wouldn't preclude adding a bath the next time the unit becomes vacant? If the market continues to become more upscale, maybe add the bathroom later?

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  • jiM_Mi
    replied
    Originally posted by corn18 View Post
    Would the new 2BR/2BA place be too nice relative to other rentals in the area? Don't want to be renting a penthouse in a green acres neighborhood. The math says spend $5k for a $3,600 annual return (that's a 72% cash on cash ROI if your other costs stay the same). Making a penthouse is 39%. But you already know this, so not sure what the question is?
    I like this math. In general an investment of capital for a business should get higher than a 10% annual return (or higher). For example, if we report to stockholders a product we designed only returned 8%, people get fired.
    The math I would use on the bath:
    $20,000 for a new bath would mean you need to see $22,000 in annual revenue to justify the expense
    $5000 for a remodel would mean you would need $5500 in annual revenue to justify the expense




    Leave a comment:


  • disneysteve
    replied
    Originally posted by TexasHusker View Post

    Food allergies are fascinating to me. I was commenting to my wife one day "isn't it weird how your throat and mouth itch after you eat bananas and watermelon?" She said "Umm, mine don't...that's not normal...you probably are allergic to them". So my entire life, I just thought that's what your mouth did when you ate bananas and watermelon! And here lately, all the sudden peanut butter makes my mouth and throat break out in sores. So I can't even eat peanuts any more! Sucks!
    Food allergies are weird. They can develop suddenly and they can disappear just as quickly. My wife didn't discover her seafood allergy until she was about 27, right before we got married. My daughter is allergic to pineapple and possibly basil. I've got none myself.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by disneysteve View Post

    It really wasn't a big stretch when she decided to become vegetarian. For the most part, I don't really eat red meat. My wife is allergic to all seafood and shellfish, so we always did a lot of meatless meals at home. Her becoming vegetarian essentially meant giving up chicken.

    It's not all that difficult at home but is more of an issue when we go out and when we're on vacation. Not only is she vegetarian but she's also pretty picky. There aren't a lot of things she likes. She also doesn't do spicy stuff. A lot of times, restaurants think they need to compensate for the lack of meat with intense flavors like jalapeno black bean burgers or General Tso's tofu or pepperjack cheese when what she'd really like is a plain veggie burger and American cheese. That limits us eating out with her for the most part as we've only found a couple of places where she really likes the offerings (On The Border has great veggie fajitas with a vegetarian rice option). When we're traveling, she'll often order off the kids menu which tends to have more plain options like a grilled cheese and she'll carry supplemental stuff like protein bars, natural fruit/veggie snacks, etc.

    Sorry for the way OT conversation, all because of a leather sofa.
    Food allergies are fascinating to me. I was commenting to my wife one day "isn't it weird how your throat and mouth itch after you eat bananas and watermelon?" She said "Umm, mine don't...that's not normal...you probably are allergic to them". So my entire life, I just thought that's what your mouth did when you ate bananas and watermelon! And here lately, all the sudden peanut butter makes my mouth and throat break out in sores. So I can't even eat peanuts any more! Sucks!

    Leave a comment:


  • disneysteve
    replied
    Originally posted by TexasHusker View Post

    I have a daughter with somewhat of an eating disorder, so I know how eating out and family means go. I never knew that eating could create such stress.
    It really wasn't a big stretch when she decided to become vegetarian. For the most part, I don't really eat red meat. My wife is allergic to all seafood and shellfish, so we always did a lot of meatless meals at home. Her becoming vegetarian essentially meant giving up chicken.

    It's not all that difficult at home but is more of an issue when we go out and when we're on vacation. Not only is she vegetarian but she's also pretty picky. There aren't a lot of things she likes. She also doesn't do spicy stuff. A lot of times, restaurants think they need to compensate for the lack of meat with intense flavors like jalapeno black bean burgers or General Tso's tofu or pepperjack cheese when what she'd really like is a plain veggie burger and American cheese. That limits us eating out with her for the most part as we've only found a couple of places where she really likes the offerings (On The Border has great veggie fajitas with a vegetarian rice option). When we're traveling, she'll often order off the kids menu which tends to have more plain options like a grilled cheese and she'll carry supplemental stuff like protein bars, natural fruit/veggie snacks, etc.

    Sorry for the way OT conversation, all because of a leather sofa.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by disneysteve View Post

    I wasn't offended at all. No worries. I knew you were kidding.

    She's been vegetarian since she was 9 and gradually got a bit stricter as she learned more about what things actually have animal products in them that she didn't know about. We usually won't go out of our way to tell her if she doesn't know, since it's not a health issue at all, but we fully support her decisions although it does sometimes make family meals a little tough.
    I have a daughter with somewhat of an eating disorder, so I know how eating out and family means go. I never knew that eating could create such stress.

    Leave a comment:


  • disneysteve
    replied
    Originally posted by TexasHusker View Post

    I'm just kidding. My apologies if it wasn't funny. I think it's great that a young person would actually want to stand for ANYTHING these days...
    I wasn't offended at all. No worries. I knew you were kidding.

    She's been vegetarian since she was 9 and gradually got a bit stricter as she learned more about what things actually have animal products in them that she didn't know about. We usually won't go out of our way to tell her if she doesn't know, since it's not a health issue at all, but we fully support her decisions although it does sometimes make family meals a little tough.

    Leave a comment:


  • kork13
    replied
    Originally posted by TexasHusker View Post

    I'm just kidding. My apologies if it wasn't funny. I think it's great that a young person would actually want to stand for ANYTHING these days...
    Same, I was just giving you a hard time. Sarcasm & joking is difficult to get across in text...

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by kork13 View Post

    TH, play nice. That's honestly the most reasonable philosophy-based behavior that I've run into this week. Compared to anti-vaxxers, social activists (on literally any issue.... abortion, guns, LGBT, etc.) and white supremacists, DS's daughter choosing not to use animal products is something next to Mother Theresa.
    I'm just kidding. My apologies if it wasn't funny. I think it's great that a young person would actually want to stand for ANYTHING these days...

    Leave a comment:


  • disneysteve
    replied
    Originally posted by TexasHusker View Post

    Now that's a take I've never heard!

    So not only does she not eat meat, but doesn't want to sit on/wear anything that comes from an animal? What about wool? Or those coats made up of coughed-up cat fur balls?
    It’s actually fairly common for vegetarians/vegans to not use other animal products. As for wool, giving a sheep a haircut doesn’t require killing the animal so she’s fine with that.

    Leave a comment:


  • kork13
    replied
    Originally posted by TexasHusker View Post

    Now that's a take I've never heard!

    So not only does she not eat meat, but doesn't want to sit on/wear anything that comes from an animal? What about wool? Or those coats made up of coughed-up cat fur balls?
    TH, play nice. That's honestly the most reasonable philosophy-based behavior that I've run into this week. Compared to anti-vaxxers, social activists (on literally any issue.... abortion, guns, LGBT, etc.) and white supremacists, DS's daughter choosing not to use animal products is something next to Mother Theresa.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by disneysteve View Post

    I agree. I happen to like the feel of leather furniture, not due to cleanliness as I'm never sitting there without pants on and I'm not a germophobe. The problem in our case is our daughter is vegetarian and won't sit on it. She doesn't wear any leather clothing either (which makes shoe shopping interesting). When we are searching for a rental home, ones that clearly have leather furniture are ruled out immediately. If I'm not quite sure, I'll email the owner to check. It is nicer and more upscale. It just doesn't work for us personally.
    Now that's a take I've never heard!

    So not only does she not eat meat, but doesn't want to sit on/wear anything that comes from an animal? What about wool? Or those coats made up of coughed-up cat fur balls?

    Leave a comment:


  • disneysteve
    replied
    Originally posted by TexasHusker View Post

    Most folks prefer leather because it feels much more sanitary/cleaner than fabric. When you think of who all is sitting on your upholstery doing no-telling-what while they are on it, leather is the only way to go. Fabric gets really nasty, really quickly. The "before" sofa is a good example. Look closely.
    I agree. I happen to like the feel of leather furniture, not due to cleanliness as I'm never sitting there without pants on and I'm not a germophobe. The problem in our case is our daughter is vegetarian and won't sit on it. She doesn't wear any leather clothing either (which makes shoe shopping interesting). When we are searching for a rental home, ones that clearly have leather furniture are ruled out immediately. If I'm not quite sure, I'll email the owner to check. It is nicer and more upscale. It just doesn't work for us personally.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by disneysteve View Post

    I think it looked great before. I think it looks great after. I do like square tables better simply because they have more surface area. Otherwise, I prefer the before pictures but that's purely personal preferences. I'm not a fan of stainless steel appliances and don't like antlers in the decor but I totally understand that probably fits your audience well. And at least when our daughter is with us, we don't rent any home that has leather furniture.

    I hope it accomplishes the intended purpose and brings in the big bucks.
    Most folks prefer leather because it feels much more sanitary/cleaner than fabric. When you think of who all is sitting on your upholstery doing no-telling-what while they are on it, leather is the only way to go. Fabric gets really nasty, really quickly. The "before" sofa is a good example. Look closely.

    Leave a comment:

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