I have a client who insists on putting granite counters in the kitchens of every duplex she buys.
She argues that upgrade is why her properties stay rented.
She may be right.
Most of us would agree that many of the foreclosed and short sale duplexes on the market today are in need of a face lift. But when looking at them for rehab and rental, it’s important to keep in mind the return you may or may not get on your improvements.
For example, will granite countertops mean you can charge $50 more a month in rent? Or will they just help you avoid vacancies?
And if they will generate more income, how long will it take you to recoup the cost of the improvement? For example, if the granite counter tops cost $500 to install, and they result in $50/month more in rent, they’ll have paid for themselves in 10 months.
But will granite countertops generate more income? Or would your rehab dollars be better spent fencing the back yard or installing an air conditioner?
That’s why it’s important to know who your prospective tenant is, and to consider what’s important to them when making your decisions.
My clients properties are in an outer ring, affluent suburb with a highly respected school system. They are all three bedroom units, so her typical tenants are likely to be a families with children.
While a fenced back yard might be enormously appealing, I should also share that while this suburb has very few duplexes, most of them are within a two block radius of one another.
A granite counter top may help distinguish her property from the competition. But is it worth $50 more a month in rent? Or would a fenced back yard bring a better return?
The neighborhood will decide. So too will yours. Consider its personality when you’re fixing up your duplex. Not only will it save you money at the Home Depot checkout, it will help you make more on the first of every month when rent comes due.