Bang for Your Buck Rental Property Updates

Dear Dave,

I have a rental house that needs a little updating. I’m considering working on the kitchen, but not going overboard. Do you have an opinion on the key features someone would be looking for in a modest rental? Or, are there other features that renters might find to be more important? The house is in an older downtown neighborhood and has a wide appeal to a number of different types of renters.

Thank you,

Dan - Grand Junction, CO

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Dan,

The key to your “little updating” is making absolutely sure you do not go overboard. One of the biggest mistakes I have been guilty of making over the years is going overboard with updating both inside and out. My wife reminds me, you’re not going to live there. The tendency is to make them as nice as I can, within reason, so the renters want to stay longer and hopefully have a pride in living there. What ends up happening is, I over improve. My suggestion is to not follow my lead and make sure your updating is modest!

“Renters like the same features and finishes as buyers so figuring out what will be appealing is simple.”

Remember renters are buyers who just can’t buy. Renters like the same features and finishes as buyers so figuring out what will be appealing is simple. Kitchens and bathrooms are always a hot-button upgrade, as is new flooring and paint. If you are going to do some updating in the kitchen try making light fixture changes along with updated cabinet hardware and potentially a new backsplash. Those changes can be a nice bang for the buck return. If the cabinets are in bad shape, try painting them instead of replacing. Any changes you can make with a more contemporary vibe or a modern look is very popular right now. Another upgrade that can be cost-effective and should not be underestimated is outdoor living space. 

The addition of a back patio area or outdoor entertaining area is a very popular feature. It does not have to be extensive or expensive, but just a simple place to gather and entertain and if you are lucky it will also cut down on the yard that needs to be maintained. Outdoor entertainment or gathering areas are a great feature. As always keep in mind that flooring and paint always provide a great return on investment for any rental. All renters, but especially good renters always love to find a rental that has new flooring and paint. Just like buyers, the smell and look of new flooring and paint is very appealing and might just be the hook you need to reel them in. 

When it is all said and done, make sure that you keep it on the modest side and focus on these features to really maximize your bang for the buck return. Keep it simple and as always remember that clean and presentable are always your best renting feature and the cost of clean is VERY affordable. Hope this helps and best of luck!

Dave Kimbrough
The Kimbrough Team

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Purchasing an investment property in the Grand Valley

Dear Dave,

My wife and I are considering our first residential investment property. We would like your take on what is a good investment opportunity on the Western slope of Colorado? We have looked at small houses, a couple of duplexes and a small multi-family unit. We just want to make sure we are moving in the right direction and don’t do something where we get in over our head. 

We wanted to get your input on what is happening in the market right now and where we might have the best outcome for our investment.

Thanks and take care,

Jon and Kristyn - Grand Junction, CO

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Jon & Kristyn,

I believe you are wise to be considering a real estate investment property! It is great diversification of your portfolio, whether just getting started or if you have a lengthy financial resume. In my opinion our market is a very good market for income producing properties. We have a high number of renters in our community and the continued growth of Colorado Mesa University means we have a consistent influx of students who need a place to live. We have a very low vacancy rate in Mesa County, somewhere between 1-2% which helps create a great environment for dipping your toes into the rental market. As you can see that we have a good market for finding tenants and also might foresee some rising rent prices because of lower availability.   

“It is also important to consider what type of property you are comfortable with.  Different properties bring different challenges. ”

It is also important to consider what type of property you are comfortable with.  Different properties bring different challenges. The older they are the more maintenance you can expect, but that may be great if you are retired, handy and looking for something to keep you busy. It will also likely cost less to procure.  The newer it is, obviously, the less maintenance it will likely require, but the acquisition costs will be higher. Multi-family presents its own challenges, as you must consider they are typically larger, cost more to maintain (as there are multiple units and more things to go wrong), however having multiple tenants spreads out your risk. If you own a 4 plex and 3 of the 4 are rented, you should still be able to make your payment. If you have a single family home and it is not rented, then you better have a slush fund to make the payment if you don’t own it outright. Having multiple tenants gives you some insulation, but also can increase the headache and work. The bottom line is to narrow down what kind of property you want and what kind of renter that property will attract.

If you get a home just off North Avenue and 19th, you are likely to have students as your prime renter candidates. If you have a single family home in the North area you are more likely to attract families… etc. You also need to consider if you will manage this yourself or hire a property manager? Different strokes for different folks. I would never manage my own properties, however I have friends who would never hire someone to do it for them. I personally favor the hands off approach and see far less nightmare scenarios when a “good” property manager is involved.

This is such a complex decision with many facets to consider, but I would encourage you to start simple, a single unit, to get your feet wet and find out if being a landlord is right for you. If you find you like it, then broaden your horizons on the type of properties you look at in the future and achieve even more diversification in your growing portfolio. Hope all goes well.

Dave Kimbrough
The Kimbrough Team

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