Biggest Renovation Mistake Landlords Make
Q: My wife and I have had our rental property for a while. Our tenant moved out so I think it’s a good time to do renovations. Do you think we should renovate the entire place? Henry, Hackensack, NJ
A: Paying for renovations and repairs is appropriate to maintain your rental property and to attract the best tenants. However, your return on investment (ROI) as a landlord is a function not just of the rent you collect but also the money you spend. The more money you spend, the lower your ROI will be. Over renovating a property (spending too much money on renovations) is the biggest mistake that landlords, particularly new landlords make. Many people mistakenly believe that every dollar they spend renovating a property increases the property’s value –this is simply not true. I suggest you first make an honest assessment of your rental property in its current condition. Only renovate or replace items or areas that really need to be replaced or upgraded. Renovation for the sake or renovation is a waste of money and will reduce your ROI as a landlord. After you assess your rental property, create a budget & spending cap on the items you choose to renovate. Without a budget and spending cap, you’ll end up flying blind & make yourself vulnerable to crooked contractors. Thanks for your question, Henry.
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