Remember how our initial moving budget guess was hovering around the $10,000 mark? Well, today we decided/figured out it will be around double that, haha… But – and this is a huge but – we’ve since decided to invest a lot more into our current home in order for it to reap much bigger rewards in the future. So it’s not like we’re just throwing away money or anything, it’s just more of a delayed gratification type deal now ;)
Here’s what our new renovation costs will look like in our current home/investment property:
- $11,000 — Hard wood floors throughout the entire house, minus the basement. REAL hardwood too, not laminate which we were initially considering but had to nix due to the setup of our main level (too many angles and extra steps and railings complicating everything).
- $1,100 — New carpet in our basement and steps leading down to it
- $5,900 — Completely updated kitchen including cherry cabinets AND all granite counter tops. Which we have like 3 of, haha… (our kitchen has this cool little bar area that’s pretty sweet :))
And here are the reasons for it:
- We want to get renters in the door faster, and stay longer. So we don’t lose money with an empty house on the market for months and months at a time…
- We want to avoid having to re-carpet the entire home every few years! Which would cost $3,000 or so more to do each time over the $1,000 for just replacing the basement (which we may also turn to wood later if we think it makes sense at the time – it’s a bit more expensive to do down there on the colder cement than regular living areas)
- And more importantly, we want to get our house in better shape to sell one day! No more outdated kitchen circa 1980 or plain jane flooring to scare away those fishies. Nope. It’ll be one sexy little house for a lucky family to move into if/when we decide to sell it later on. And if we end up not doing so, it means our investment strategy is working – woo!
So a total of $18,000 to get our house looking slick and with the times again. And we got SUPER lucky with our contractors too who were referred to us by our neighbors (who were referred to by THEIR friends).
I was literally on the phone with Home Depot getting a quote (which, btw was almost DOUBLED!), when I noticed loud banging on our walls and all kinds of weird stuff happening. I get off the phone with them, walk on over to see what the fuss was about, and there’s a crew of like 5 guys in there rebuilding their entire kitchen! Later that night I chatted with my neighbor and said that out of all 5 places they got quotes from to redo it, this crew was by far the best when it came to price. Which of course worried him about craftsmanship and other (illegal) concerns, but it all checked out in the end and I ended up calling and locking in the company myself :) Talk about impeccable timing…
That being said, $18,000 is still a ton of money at the end of the day – regardless of what others would have charged us. And that’s AFTER us knocking down a little over $1,000 to take up all the carpet ourselves and knock down all our kitchen cabinets/surfaces too – something we’re going to try for the first time ever ;)
You mix that $18k with our moving costs from last weekend ($400) and what we have to put down for our leasing costs of where we’re moving into ($3,900), and you’ve got yourself a cool egg of over $22,000 in making this move happen so far. Did NOT see that one coming! But again, it’s the start of a much freer, BETTER, life for us or there’s no way we’d even consider any of this. (AND we can write a lot of it off now that it’s an investment property!!)
That was pretty much my answer too when someone on Twitter asked me if we were worried about having bad tenants in our place and breaking everything. YES! We are most def. worried about that kinda stuff (which is another reason we’re using a property manager to help us sort through and do background checks/etc on applicants), but at the end of the day we’re MORE worried about not enjoying our lives and taking action on stuff. We could sit at our place for another 5 years super easily if we wanted to – just like the previous 5 years – but in our hearts of hearts we know it’s time to move on. So at the very least, even if all our hard work and money throwing doesn’t pan out all the way, we’ll still be starting a new life in a new area and reaping the benefits :) Which we’re SOOOO excited for!!
This also shows the power of saving up a lot of money too. Like straight up cash, which some of you liked to give me a hard time about over the years when it was just sitting there doing nothing ;) All that money is for times like these when you need it! Big life-changing events to conquer without being held back by the financial side. I may not always know when exactly I’ll need it – or for what – but you can def. see the power in sitting on it for when opportunity meets action.
And in a weird way, it actually feels kinda GOOD to spend such a large chunk like this too! I mean, we do it a lot on small things here and there of course, but I often wonder if I’ve become too much of a hoarder for my own good ;) I think we can safely rule this one out for a few years now though, haha…
Operation move out in full effect, baby! Wish us luck that everything goes smoothly this week. Our place is completely empty now waiting to be sex’d up, so hopefully we made the right call in the end… And if it turns out we didn’t, well, you’ll have some interesting articles to read here in the future! It’s nice to know we can always fall back on that ;)
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(Photo by Magic Madzik)
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Cash is king! Sometimes the return from having cash available ends up being larger in the end, even if it wasn’t making anything sitting on the sidelines.
Money well spent on the real hardwood floors. I currently have laminate, which came with the house, and it will not last forever and if there is damage to one piece I will not be able to match it.
Hardwood improves the resale value of your home. Marks and dings on hardwood add character. Little chips out of my laminate just make it look cheap and tired and will lower the resale price of my home because a potential buyer will want to replace it
Yeah, but the nice thing about laminate is that it’s so much cheaper :) I’ve seen some great laminate out there that looked BETTER than hard wood too, just didn’t work right in our home and figured hard wood might be best long-term in the end anyways… Hopefully your future buyers don’t mind it!
I’m thinking about hardwood for our rental home too. The carpet will need replacing when our current tenant move out. They have a dog and a baby….
$11,000 is A LOT of money though. I’d better start saving up.
I hear engineered hardwood is nice too. My in-laws had it in their house, and it was beautiful. I didn’t even know it was engineered hardwood. Thought it was hardwood.
oh yeah, always forget about engineered! we didn’t even consider that one.
Gonna disagree with your decision. Been a landlord for quite some time and “over improvement” is a big thing I see all the time. I guess the first thing to do is learn who your “customer” is…is he gonna be a student….a recently transferred doctor or other professional? Spending $20K on “improvements” is assuming that in 5 years or so the improvements will still be serviceable. In many cases they will not be….tenants can be hard on property especially when they have kids and pets. Owners forget the biggest factor in renting is price….not the soaking tub….granite counter tops…hardwood floors…it’s price. For many they are price sensitive as they are saving to be homeowners as well. May have made more sense to paint the property, make needed repairs, install new cost effective countertops, spend the 3K on carpet and then in 5 years when you are ready to sell put in the floors…new kitchen with appliances. Just don’t see a big payback on $20K. But I do admire your willingness to take on the challenge….Let us know how this works out.
I completely agree. Tenents just don’t treat homes like they own them. I see a lot of heartache in your future pulling up carpet between renters and redoing the hardwood floors before you sell. Buyers in 5 years won’t be interested in those “character” scratches. I learned a lot about design choices for rentals on the forums of BiggerPockets. Namely, you can’t treat rentals like they are your house or like you are selling.
wouldn’t redoing carpets in the entire house a few times already match the cost of hardwood? And then future re-carpeting be much more than polishing up some wood? I’m obviously new at all this stuff, but just seems something more permanent works out better in the end than replacing every cple of years/renters.
Nope…Do the numbers…Let’s say you do the $3K for the carpet, not unreasonable to expect 5 years out of carpet as the IRS gives it a life of 7 years. Then you put the hardwoods in to sell…and they are BRAND new. But if you install the floors now and have to have the floors refinished …going rate in this neck of the woods is $1 a foot or $9 a yard …a tad less than “builder’s grade carpet”. And as for the improvements….in 5 years they will be termed…”dated improvements”. Good compromise may have been carpet in BR’s and stairs and Pergo in high traffic areas and hallways. Let us know how this turns out!
Yeah, I have to agree with everyone else. When we bought our home it had been previously rented to families with dogs that had completely scratched up the hardwoods. They didn’t get them refinished, but we offered less on the house with the cost of getting them refinished in mind. Hardwoods aren’t as durable as they may seem.
whelp, too late now to turn around – will just have to pray it all works out in the end :) will most def. keep everyone posted as time goes on – will surely be an adventure.
ROI, baby.
I did side hustle rental renovations with a crazy dude on and off for years, and the local market ALWAYS
…. WHOA what happened?
Anyway, the local market always dictates what you put in — which includes your initial investment. I’ve owned a couple of rentals, and this always gets me, but not until I started understanding/obsessing over cash-on-cash. There’s infinite ways to slice it (obviously), but the investment MUST come back, and you should have a reasonable assumption of when that is going to happen. That’s rule number one.
That’s something we need to learn more about and pay attention too – the cash flow stuff. Right now our main priority is to move out and into our new home to have a better life, so we did our best to make our old one as sexy as possible within reason to (hopefully) get renters in sooner and not lose monthly cash flow off the bat. But all a learning experience at this point – perhaps we’ll look back and think we were idiots, haha… though I prefer it move to the genius side ;)
I’m glad you disagree actually, jestjack – keeps me on my toes and get to learn more :) Luckily our future tenants will probably be a just a couple or one with a baby as we only have 2 bedrooms in a 3 bedroom community (and we prob won’t accept animals if we can help it), but you’re right – it could def. go downhill over time. Not sure how carpeting the entire place would have been better though since the cost of that would easily exceed putting hard wood everywhere after a few renter swaps, but you’d know more about that than I. And even cheaper countertops and cabinets only saves us around $2,000 so figured it was worth the risk and chance of getting awesome tenants ;)
Time will tell though! We did our best with the knowledge and comfortability of the situation, so we can only cross our fingers and pray we did at least decent. And of course I’ll continue to blog about it too whether it goes in – or against – our favor ;) Thanks for the comment, my man.
That is the benefits of saving and having cash available, when you want to make a big move you have the freedom to! Make sure to show us some before/after pictures and let us know how the renting process goes!
oh yeah – you better believe we’re taking pics!
I think this is a fabulous and brave choice! That is the benefit of having all that extra cash, you can make decisions like this and not break your bank or fall into debt! I really feel that if you and your family have agreed to make this massive move than go for it! You really should follow your dreams and desires if it is practical to do so.
BEST wishes.
Thank you! It def. feels “right” and we’re crazy excited to just get out there and LIVE :)
We are starting some of our renovation projects this summer. The first one is updating our bathroom and getting rid of the 1950’s pink tile. After that we are pulling up what’s left of the carpet in the house and having the hardwood floors (original ones, thanks grandpa for choosing those when you built the house) refinished. If/when we decide to move it will make the house that much easier to rent out.
AWESOME!!! Original hard woods are soooooo sexy!! I absolutely love them. And your future renters/buyers will too one day :)
New cabinets and counters for $5,900? That seems extremely low.
Cuz it IS low! We got a killer hookup which is the only reason we decided to go for it. A few thousand more and we would have just nixed that part of it and stuck w/ floors only.
That IS low indeed. Does that include labor? If not, then I guess that’s about right. We’re putting in new cabinets and counters (solid surface) and ugh. It’s spendy.
Cherry can seem a bit dated though…but I think it’s a personal preference thing. I like the look, but we’re going with something else (maple, stained a dark brown)
Labor and everything was included :) Though we did tear out our old stuff which saved us a few hundred. Was an incredible deal.
The beauty of having the cash saved is you can make decisions like this to upgrade and not feel bad about them. Can’t wait to see the before and after photos.
I would have gone the hardwood floors route as well. Sounds nice!
I have to agree with jestjack above. If you’re going to put that much money into improvements beyond the quality of a typical rental, you should probably try to sell sooner rather than later. Even with the most well-behaved and responsible tenants in the world, your improvements will depreciate in value over time.
In other words, unless you plan on shelling out more money on additional improvements in a few years, your home is probably at its maximum value right now. It’s also going to take you a very long time to recoup those costs with renters. Personally, I would offer the house for sale now and use renting as a back-up. But that’s just my opinion. :)
Well it may turn out to be that in the next year or two all depending on how well this stuff goes :) We’re giving it one year to see how we like it and then figure it out from there. As long as we get someone in soon and have a smooth move ourselves, I’ll be more than happy for the time being…
I think I would’ve done the same exact thing. This is exactly why it’s so important to have a long term view of things, especially money related areas. The fact that you can pay for it all in cash is freaking awesome and just another reason why cash is king. I think the hardwood floors alone is worth it. ;)
Look, as a college student, this is exactly the type of setup I’ll be looking for once I graduate in a year. This is also what my brother and sister in law are in. He is a gold course superintendent and just doesn’t want to own right now. My point is, there are those of us who are responsible and you should look for new professionals or newly weds. They’ll most likely have a pet so plan for that now and be wary like always but don’t psych yourself out.
Well that’s good to hear!! We’re counting on people like you who like a little nicer place and would snatch it up over the other – more dull – ones. And honestly it’s a perfect place and location for younger professionals doing their thang all day/night anyways but who want a comfy no nonsense home to come back to. Thanks for chiming in :)
Really interesting conversations going on up there.
At the end of the day, I think I probably would have done what you did. Unless the place was a dump to begin with, which I know yours wasn’t, I would want it to be primed and polished for its new phase. And while $18,000 sounds and IS a lot of cash, for what you had done, all-in-all it’s a pretty conservative investment.
Reading this and talking to a few other friends who are going through pre-sale/rent renovations, it makes me realize that it might be wise to buck up and put that money into our future home from the get-go so that we can actually enjoy some of the fruits of our labor and dough. Do you regret not doing those projects sooner, or did those things really not matter much in your current home? I guess they’re mostly cosmetic upgrades, but you know what I mean?
Yeah, it’s funny – I always told myself I’d do all the upgrades SOONER than later so we can enjoy it all too while living there, but honestly I wouldn’t change a thing looking back. The fact is it wasn’t a priority all these years and we would much rather have more cash in the bank than a prettier looking place at the end of the day. But now with a whole new game plan in the works, it makes MUCH more sense for us to do those upgrades and help speed up what we’re trying to do here. If that makes sense?
So no – I don’t regret it at all really. If we were still living there I wouldn’t do any of the upgrades :) AND, mind you, we wouldn’t have found out about these guys who could do the work at such a low price! So who knows what we would have spent doing it another time – freaky stuff.
The hardwood would not have been my choice. They look great initially but renters are rough on a property. My neighbors have a huge wear path through their house just from normal people and children use and their wood is only 2 years old. I don’t think you are going to see that money recouped before you sell it unless you plan on hanging on to the property for quite awhile.
Are your cabinets completely cherry or cherry overlay on particle board? The price you got would usually indicate particle board. Just something to check out.
The cabinets are completely brand new and not particle board :) We got an insane deal. Which all went to solidify this being worth it in the end – even if it takes a while to see our money back.
Investing now makes the property sell faster later. I bought my house with carpet all through but after 10 years and many cleanings later, I had to replace. So with the help of my family we tore it out, sanded and finished the first floor and got a cheap deal for carpet on the 2nd floor.
I had the kitchen updated and thats what really sold my home in 10days. I would love to get the contractors name you’re using since I’m now looking for investment properties to buy with some of the cash from my home sale. Let me know if you want to hire some extra demo workers I’m free :)
Well that’s awesome!! Way to go on that house selling – 10 days is crazy fast! Also with doing most the work yourself :)
The upgrades that you are making are going to payoff in terms of the overall value of your house when you are able to sell it.
There’s a lot of good discussion here about the renovation. The bottom line with the improvements is that they have to be in line with the neighborhood. If the surrounding houses are brick, with premium hardwood cabinets (Hickory, Cherry, Mohogany), granite counter tops and wood floors that’s what you have to go with. If not you won’t recoup your investment. I learned from my realtor and a few appraisers that no matter how expensive the renovations, it won’t appraise for what you have into it if the neighborhood does not dictate it. I hope that helps.
I have to say I’ve been reading your blog since last fall and always find it very interesting with many insightful comments. I wish you all the luck with your move and the best for your family in the future.
Hey, thanks man! I can’t always claim to be doing the smartest things over here, but I’m with you in that it’s the comments and discussions from everyone that makes all this interesting :) So thanks so much for chiming in! And luckily our community DOES have mostly updated places w/ hard wood (or laminate) floors and updated kitchens. Ours was probably the last one on the block still in true 1980s form, haha…
Rock on being able to pay cash for the renovations! I’m not too savvy yet on how certain investments into rental properties tend to work out, so I’m looking forward to hearing more about your experiences!
Well we’re not either so we’ll be learning together! :)
All sounds like reasonable expenditure. I am still hyperventilating, though (and people say that I am not tight enough :)).
Sounds lovely but I would NEVER put in hardwood floors for a rental…..It will not be maintained properly and will get abused. A renter will not maintain them properly and they will get beat up. I would never waste that kind of money for a rental. Just my two cents….. And the kitchen update…..don’t go to such great lengths for a rental.
we’ll see what happens ;)
Sounds like an excellent idea. From a real estate point of view, the updates you’re making should make you back at least what you put into it (if done right) when you sell. Plus, you’ll get more from renters as you mentioned. It’s amazing what a little bit of preparation can do to the value of a home. Good luck with everything!
I think overall I agree with you doing the kitchen updates. They say renters treat nicer places a little better. And a nice kitchen is pretty important to renters. But like I said above, I think hardwood wasn’t the best choice.. but if laminate wasn’t an option, I think I might still pick hardwood.. just don’t expect it to wear well with renters. And I think $18k is a great price for everything you’re getting done.
For sure. I don’t expect them to come out perfect after years of renters, but I’m hoping our selecting process helps a bit and they’re still in decent shape by the time we go to sell one day (IF we go to sell it one day)… Was just hard to justify replacing carpet in the entire house every few years and paying more in the end. But we’re both so very new at this game so it’ll be a good lesson learned if it goes haywire later.
I love that self evaluation that went into spending a big chunk of change. We have saved a huge chunk to add a new master suite onto our house and I find myself thinking of all the other things it could be invested in. (Like rental property) I won’t be surprised if I try to cash flow almost all of the construction just so I don’t have to see the cash disappear.
And I totally agree $18k is an amazingly good price. When I quoted just my kitchen cabinets and counters it was going to be like $20 just for that!
yup! would have been double at other places for us too. maybe you can check with friends or family and see if anyone else has some better options for the reno? it’s a ton of money to spend regardless of how sexy it looks in the end :(
Definitely money well spent. Think of it as an investment rather than an expenditure!
Real hardwood floors are absolutely worth it in terms of looks and ease of cleaning, and you’ll more than recoup the costs eventually.
I would recommend instituting a no-pets policy for your renters (and a no-dogs policy in particular. A cat might be okay, since you don’t have carpets that the cat can pee upon, but dogs can certainly scratch up the hardwood). That seems to be a good way to protect your investment and minimizing the risk of needing to refinish the floor in a few years.
I do think there’s a case to be made for over-improving a property (to a limit), in that you may find higher-quality renters if you offer a nicer place. But your selectivity in choosing those renters is also critical. Don’t be afraid to write out some criteria (regarding income, credit score, pets or no pets) and stick to your guns! And don’t be afraid of vacancy. It’s better to have no tenant at all than it is to have a bad tenant.
Yup! Our plan is no pets at the moment, or cats on a case-by-case basis. Though we have heard cats can be bad for hard wood too if they pee all over it (acidic?). We’ll see what happens :)
You know how they say – you need to spend money in order to make money :) And it sounds like this is money well spent!
It’s always scary a bit and makes me a little dreamy to see the costs over there in the US (which are an indicator of the economical power you have there). Here in Romania you can buy a one bedroom apartment with $18,000 and renovating the house would cost just a fraction of what you’re paying. But if you were actually living like a Romanian, that would be a ton of money. So look at it like this – it’s an investment, it’s something that you can afford and it will bring you more money!
Wowww so different over there vs here! Really interesting to see though – thanks so much for stopping by and leaving a comment :) We’re world-wide, baby!
hmmmm, I feel like I gotta give you my 2 cents about the hardwood floors. I’ve been a renter for the past 4 and a half years and we have hardwood floors in our apartment. I like to think we’re good tenants, but we scratched the SH*T out of our hardwood floors. We didn’t realize for maybe 6 months to a year how badly some of our chairs were scratching up the floors and I don’t think there is any way for us to fix it. I’m worried our landlord won’t give us anything back from our security deposit because of the damage. I guess what I’m trying to say is, how long are you going to rent it and would you be ok with selling your place with obviously damaged hardwood floors? $11k is a big investment, or rather an expense if it ends up being so damaged that it affects your selling price.
ack! scary!! I hope you get your deposit back too, but man – who knows.. not sure what we’d do in that instance either :( Nor when (or if) we’ll be selling our place… Kinda just going with the flow and taking one step at a time. And praying it doesn’t get all scratched up hardcore like yours! :(
What type of hardwood? Home depot has the engineered stuff for roughly 1/2-2/3 of the real hardwood. You can’t sand it down but it still looks incredible. Also have you gotten quotes from discount stores such as Lumber Liquidators. They can be incredibly cheap compared to the big box stores, especially if its a close out type of wood. As for the carpet in the basement, unless your basement is completely dry with no chance of flooding I wouldn’t. If the carpet gets wet and isn’t dried out real quick mold an nastiness will result, same with the pad. In the same vein, I made the mistake of installing 1200 sq ft of laminate in my basement. I got a kind that was supposed to be more water resistant then most and had just drylocked my basement. Well we happened to get the mother of all rain storms where there was so much water it seeped up through the floor vs the walls. Ruined about half my room less then 2 months after I spent a week installing it. Not a happy camper at that point lol. Nothing but stone tiles or the specialized plastic basement click tiles for me in the future.
ouch! that sucks for sure – and is exactly why I’m over home ownership at the moment. we’ll see how being landlords go, but all I know is I’m gonna be damn happy renting for a while and not worrying about the house in the slightest :) Oh, to answer your question about the type of wood, I have no idea – just that it’s real wood and sexy looking! Haha… also cheaper than the rest of the guys we looked at.
I’m going to be retning out my place soon and that was actually one of the reasons why I didn’t want to go all out with renovations. Well that, and the fact that I had literally no money in my bank account after I put my 20% down haha. But now that I’m renting I’m glad I only did about 5k worth of cosmetic stuff since the place is nice, but not so nice that I’m worried about a tenant messing things up.
That seems like a happy medium :) And also shows that having too much money at your disposal could end up hurting you in the end too. We certainly wouldn’t have put down so much if we didn’t have it, but hopefully it was the right decision in the end.