Zillow real estate investment writer and long-term investor Leonard Baron, MBA, is answering questions from MintLife readers.
If you have a question about investment properties, cash flows, insurance, mortgage financing, homeowners associations, renting versus owning, foreclosures and more, drop Leonard an email.
Rental Property Home Improvements
Marsha of Atlanta, GA asks:
“I just closed escrow on my first rental property, and I’m really excited.
Thankfully, it’s vacant, so I can do some work right away to get it ready for renters.
What home improvements do you suggest I focus on to reduce problems in the future?”
Answer: Congratulations on joining the world of landlordship! Here are a few home-improvement suggestions based on my own experience:
Plumbing – I always change out all of the water valves, supply lines and washing machine hoses when I buy a rental.
One of the biggest risks is some type of plumbing issue, and usually valves and supply lines are old and gray in an investment property. I recommend having a plumber change them out.
New faucets in the kitchen and bathrooms are also a fairly inexpensive and nice improvement.
Electrical – If the outlets and switches are old, you might want to have an electrician come through and swap them out for new ones.
After about 20 years, there is a higher risk of failure.
An electrician can do the job in a few hours, so I suggest setting a reasonable price for the work rather than charging per outlet.
Flooring – If you need to change out the flooring, I would highly consider wood laminate floors.
Carpet gets dirty quickly and has to be professionally cleaned every time a new tenant moves in. But, wood laminate flooring is simply broom-cleaned and should last 10 years or more.
It’s also inexpensive and pretty easy to install.
Paint – Most places need paint, and it’s easiest to paint when the property is vacant.
Find a color that works for the entire house (other than the ceiling, which should be white). I recommend a light and bright color like Glidden® Soft Ecru.
Locks – You’ll want to replace the locks. I love Kwikset SmartKey locks that you can rekey right at the door.
They’re great for rental properties; however, I would use the silver, unpainted ones because the gold-painted locks seem to tarnish more easily.
Eric of New York, NY asks:
“I’m thinking about buying a unit in a condo-hotel project in my area.
I’ll get to own the property, plus earn some rental income when I’m not using it.
Do you have any knowledge of condo hotels and how they perform as rental-property investments?”
Answer: Condo-hotel units are not great investments. They are vacation homes and should be treated this way for a couple of reasons.
First, condo-hotel projects rarely return reasonable amounts of money to their investors.
The developer/owner of the hotel property has the ability, and likely will, rent their hotel units before yours and allocate the lion’s share of costs to the condo owners rather than hotel guests.
Also, selling condo-hotel units can be very challenging.
Financing options are limited, and a buyer would need to review the HOA documents.
This is hard enough for a regular condo project; condo hotels require more due diligence because of the shared-ownership structure.
Leonard Baron, MBA, CPA, is Zillow’s real estate investment writer, a San Diego University lecturer and real estate due diligence expert. As America’s Real Estate Professor®, his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions.