Is Remodeling to Rent Worth the Cost?

Unfortunately, the answer to the question in the title isn’t straightforward. Okay, in a few instances, it’s easy to tell whether you should or should not, but these are quite seldom situations. The reason, of course, is because every scenario is different, and, it’s your particular position that dictates if it’s smart, risky, or just plain bad. For instance, if you happen to own a home that’s in very poor condition, you’d probably have to fix it up in order for it to be showable and livable. If the home is worth more in good condition, is not improved past the neighborhood average, and, has equity, then this would be a time when remodeling to rent would make sense — sort of.

Is Remodeling to Rent Worth the Cost?

It’s crucial to understand what renting really is — landlording. This is not an easy job, but, it can make financial sense, in the right circumstances. Where some homeowners learn about the reality of renting a home is during the first vacancy period, especially if there is a mortgage to pay. This is when all expenses are actually tallied because the calculations are simply a necessity. These not only include the mortgage, but also, property taxes, insurance, repairs, routine maintenance, income taxes, tools, travel (gas spent going back and forth), decor, and deep cleaning.

“Home remodeling projects can come up for many different reasons. Your spouse got a new job and could use a home office. Your kitchen hasn’t been updated since 1973. You’ve heard if the right home buyer were to come along, a hot tub could equal bonus bucks in your pocket. When considering a remodeling project, how do you decide what will make your life better while possibly adding to your home’s resale value?” —

This list doesn’t even account for things like interest and fees paid on credit lines that were used to finance appliances, flooring, and other things. As you can surmise, renting is costly but can still turn a profit, in the right situation. However, if you can collect a rent that covers all your expenses, and, leaves you with money left over in the form of a profit, then renting is a viable option. If you are in this position, remodeling can be worthwhile, and these are the things that are most needed, cost-effective renovations:

  • Windows and doors. Some of the highest return-on-investments in remodeling are in windows and doors. In fact, a new steel front door brings back between 98 percent and 101 percent. Both greatly add to the aesthetics and safety, giving the home a better presentation.
  • Interior and exterior paint. Practically nothing does more than a fresh coat of paint. It can completely transform a home, but, must be done right and throughout the property.
  • New flooring. Forget carpet because although it’s very inexpensive, it stains, tears, mats down, collect allergens, and traps odors. Find an inexpensive engineered floor product and use it.
  • Small kitchen and bath makeovers. You do not have to completely gut the kitchen and bath(s), but, you do have to make smart makeovers. New pulls, rugs, refaced or refinished cabinets. Get a little creative and you won’t have to spend a lot.
  • Thorough deep cleaning. This one goes practically without stating, but it does bear repeating. A deep cleaning will wrap-up your remodel in a way that leaves the property ready to show.

More often than not, it’s best to make needed repairs, spruce the home up, and list it for sale. Before you put any money into the house, be sure to speak with an experienced real estate professional to understand the local market and what would be the best course of action. You might not have to put any money into the property and still come out with a profit through selling.