Investment Real Estate Improvement Considerations
When considering a project for an Investment property, the first question you need to ask yourself, is simply, "Is this necessary, now?"
If the project is not considered dire and the consequences are minimal to nil, then logically in this market, it would seem to make fiscal sense to postpone the project (e.g. - Window replacements, asphalt replacement vs. repair)
Secondly, the next aspect to consider is how to recoup the cost of the improvements? Rent Increase? Reduction in amenities? Does the current market or your current rents allow for upside movement? Do you offer things like curbside trash removal whereas there is trash service offerred by the municipality, can you change light bulbs to be more cost effective, insulate water heaters, provide new air filters for tenants to improve efficiency and reduce costs...
Finally, Is there a clear advantage gained by making the improvements and abosrbing the immediate outlay of expense? Rental Increase with improvement... (New windows equals a $25 p/unit increase)
$6,000 for new windows and insulation
$25 increase per unit (we'll say 4 units)
$1,200 per year gained in rent
5 years to recoup the cost of window replacement
Can you handle the approximate costs and term for reimbursement for this improvement?