Remodeling a Unit to Optimize Rental Income
I am in the early stages of planning the remodeling a 4 unit brownstone in BedSuy’s historic district. 3 of the units will be rentals and I am trying to figure out the right balance between saving money and making the apts nice. My impression is that there is a sweet spot somewhere between viking/subzero…
I am in the early stages of planning the remodeling a 4 unit brownstone in BedSuy’s historic district. 3 of the units will be rentals and I am trying to figure out the right balance between saving money and making the apts nice. My impression is that there is a sweet spot somewhere between viking/subzero and the cheapest available. I think the location is great and would like to appeal to the high end of who would rent in BedStuy with an eye to the future. My impression also is that kitchens and bathrooms do a lot to rent apts. Any advice, thoughts, links are appreciated.
There is absolutely a demand for historic details and high quality kitchens and baths in Stuy Heights, and in fact the quality of the average rental apartment there is much better than in other Brooklyn neighborhoods I have seen (Carroll Gardens, for example). I have also been impressed with the quality of the renters. Many care about their home. They also tend to be more mature and settled — the area doesn’t have a lot of nightlife, so it’s not great for young singles. That said, you’re setting yourself up for problems if you expect more than market rate, which is currently $1,200 to $1,500 for a 1.5 bed floor through top floor apartment.
Ignore much of the advice above. Do not buy used appliances in a newly renovated apartment, else you spoil the newness of the place. If you are looking for reasonably well-off professional tenants, as it sounds like you are, then make it nice. Nice is not high end…just something you wouldn’t mind living in yourself. (That should be so obvious that your question strikes me as not quite real.) A kitchen without a dishwasher is an automatic no to most, and has been for a few decades now. Washer/dryer is not quite a must yet, but is rapidly becoming so, so if you can put them in, do. Kitchens and baths matter – Ikea is fine. As is the advice on original or old style bath fixtures. People who prefer these old apartments will not like recessed lights. If you pick your tenants right, and treat them right, they will care for your stuff well. It sounds like you will be living there yourself, so you’ll be doing that anyway.
You do need to figure out how in demand your area is by these sorts of tenants first. I’m assuming there will be demand, though you may have to work to get word out when you need tenants.
From an economic point of view, if the apartments are basically in good condition, paint, sand and poly the floors or install a new floor on top of the old ones, (at a cost of $2 to $4 psf it enhances the apartment greatly and the finish on the new floors last for many years). Do not over invest, when you figure out the repair cost and loss of rent during repair compared to the payback period, it only makes sense if you intend to sell the building, for rentals it makes no economic sense, unless you are in an area where the rents are high and supplies low. While washer/dryer/dishwasher are great enhancements, when you factor in the cost of filing fees, plumbing, water-sewer consumption, initial appliance cost and future repair cost, it is not cost effective in lower or moderate rent apartments. Also, while every tenant will appreciate the enhancements not every tenant will protect your investment, consider what your improvements might look like after a couple of years.
Last and most important, bear in mind, the higher you raise the rent, the less of a customer base you have and the longer it will take for you to find a tenant.
Good luck,
Thanks for the feedback!
We are definitely into preserving as much of the original detail as possible. I was not seriously considering sub zero (just used to illustrate the logical extreme). Have the consumer reports subscription.
Happen to love white subway tile.
Thanks for the tip on build it green and green demolitions. Garden access is a good point…
What about something like paying an extra $100 for SS in a fridge, d/w, etc…?
Recs on decent fixtures to avoid recessed lighting?
Any other ideas on how to make these places nice without spending too much?
If you’re selling a place, kitchens and baths can have more Influence on the price. In a rental, price is mostly determined by location, number of bedrooms, and washer/dryer/dishwasher, not the style of baths and kitchens. No one is expecting a Sub Zero fridge in a rental. That said, the nicer the rental is (more original details, quality, etc) the more applicants you will have, the faster it will rent, and the slower it will turn over. Then again, I personally would pay more for an owner-quality apartment with original details, but I know people like me are a bit of a niche market.
I agree that a w/d and a d/w make a huge difference in the rent you can ask – if you’re willing to deal with higher water bills and the possibility of leaks. Otherwise, yes, preserve as much original detail as possible – don’t knock out good plaster walls and replace them with sheetrock (“Because it’s more modern,” as my neighbor actually told me after sledgehammering all of the walls in his home), avoid recessed lighting and dropped ceilings. I do like water-saving fixtures, however.
I look for apartments with original details, such as fireplaces, plaster walls, and original trim. But I certainly agree nice kitchens and baths are very important. A good installation and cleanliness are the most important things of all. It’s also important to have a little bit of counter space (or a table) and storage space in a kitchen — one Home Depot cupboard is not enough. If you’re adding tile in either the bath or kitchen, pay close attention to the quality of the installation. Huge grout lines and uneven installation will cause mold and cracks within a year.
Recessed lights and water saving fixtures are a must? I’d say a must-avoid.
Clean, simple, and appropriate for the age and style of the building is usually best. Leave the walls, trim, and doors intact. Don’t knock out walls, don’t make passthroughs. If you have original cupboards, leave them. If you don’t, then something simple such as Ikea is usually preferable to Home Depot, and white subway tile is preferable to fancy crazy colored tile. Same goes with the bathrooms — if you have original fixtures, leave them in. If not, go for something simple and classic that looks like it could have always been there. Depending on the age and style of the building, this could mean bead board or subway tile walls. A washer (and maybe dryer) will be a big plus for a renter, and they will pay more for an apartment that has one.