Many San Diego landlords find themselves wondering if they should remodel their property, or keep their rentals in as-is condition. The answer really depends on the condition of the property. Whether it is serviceable to begin with will determine how much remodeling you need to do. Before you decide, do a thorough inspection. Look at all the components and systems. Make sure everything works and operates easily and properly.
Once you have completed your inspection, make the necessary repairs, replacements and upgrades, and take care of any safety items. Your repairs are things such as leaky faucets, problems with the irrigation system and other issues that can be fixed. An example of a replacement might be a heater that has stopped working. Minimal upgrades should be made until you decide how much remodeling you want to do. Safety issues include checking smoke detectors, carbon monoxide detectors and all the locks on your doors and windows.
Once you take care of those minimal needs, you have to decide if you want to invest additional money remodeling the kitchen or putting in an extra bathroom. The equation to keep in mind is this:
Cost of upgrade vs. anticipated increase in rent
For example, if you are spending $20,000 to $25,000 to completely remodel and upgrade your kitchen, including appliances, cabinets and everything else, you have to consider how much more that upgrade will allow you to charge in rent. The rate of return should be considered monthly as well as annually. If your math shows that this kitchen upgrade will bring you only $100 more in rent every month, that big project might not be worth it. However, if you calculate that a remodeling project will earn you around $350 per month in additional rent; it’s something you might want to consider.
Another consideration is the condition prior to the remodel. If everything looks good and works well, it might make sense to keep it that way until a remodel and an upgrade becomes necessary because part of your property is no longer serviceable.