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Renovate with tenant in property

Discussion in 'Renovation & Home Improvement' started by jprops, 7th Oct, 2016.

  1. jprops

    jprops Well-Known Member

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    Hi PC!

    My property manager has just sent me the latest inspection report and has listed a couple requests from the tenant.

    1. The paint in the kitchen is very worn along the trims of the bench tops and on the cabinetry. The tenant would like to know if you would consider re-painting this.
    2. The paint is worn and wood becoming water damaged around the bath, water comes through the join the glass where the screen opens and closes when it is closed. Can this be repaired and painted.
    3. The beam on the bottom of one of the lattice trims in the patio area is dropping and needs re-securing.
    4. There is a small garden bed in the back yard that is made up of wooden sleepers, these sleepers are rotted and falling over. The tenant would like to know if these can be removed and garden removed and the area just turfed as it is difficult to maintain.

    Some background: Property is in Wavell Heights, Brisbane. I bought this in February, with the tenant already in place. I re-signed the tenant on a 12 month lease in April with a 10 dollar increase in rent to 510 dollars. I also recently did a reval to see if there was any equity - valuation came back conservative (at the purchase price :( ..)

    I'm happy to pay for the work, but am thinking it might be a good opportunity to get a bit more bang for my buck. Given the request for a paint job, I'm guessing the tenant might be open to accomodating a cosmetic reno.

    So a few questions I'm pondering:
    1. Has anyone attempted this before and how would you approach it?
    2. Is it worth attempting with tenant in place, or better to do between tenants?
    3. Would you try working in another rent increase too?
    Thanks :)
     
  2. Phase2

    Phase2 Well-Known Member

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    I like your enthusiasm, but having a good long-term tenant is a very good thing. I fear your reno plan might get them off-side.

    In answer to your questions.

    1. No, I've never done it, only repairs. You're obliged to make the repairs to keep things in good order and make the place safe that's all I'd be doing.

    2. No, don't renovate with tenants in place. You'd be continually disrupting the tenant's peaceful enjoyment, and you'd be relying on the tenant to let the trades in/out. There's also theft risk to your tenant by trades (it happens).

    3. Bit rich don't you think? Hi tenant, we're going to completely stuff you around for a few weeks (maybe months), and then we're going to jack up your rent for the privilege! Just sign here please!

    I honestly don't understand people's obsession with renovations. They have their place, but they hardly ever deliver good returns on rentals. For me, I'd want a $10k reno to bring in at least an extra $65/wk to make it worthwhile (payback in 3 years).

    Reno to sell is different, buyers get more emotionally attached than renters.
     
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  3. jprops

    jprops Well-Known Member

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    Fair enough - thanks for your input.
     
  4. Phase2

    Phase2 Well-Known Member

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    Oh I forgot to add, talk with a broker and see if they can help you with your valuation. The banks usually have a waiting period (6 or 12months?) before you'll get a different valuation.
     
  5. jprops

    jprops Well-Known Member

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    Yep, broker ordered it.
     
  6. Phase2

    Phase2 Well-Known Member

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    Oh :-( Well there's only 4 months until February, maybe you'll get a late Christmas present? :)
     
  7. Otie

    Otie Well-Known Member

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    We have a bathroom reno company, we often do retiling etc with the tenant in place, often as the repairs are necessary and rather than doing a half job the owners get the lot done. I would see how the tenant feels- i think they may be happier if you make it more desirable to them.
     
  8. WattleIdo

    WattleIdo renovating Premium Member

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    I would check it out with the tenant. When I was renting a place for ages I was happy for the l andlord to carpet, polish floor, paint, etc once-off only. I felt much better with the renos.
    At the time I was young and working and socialising a lot. Makes a difference.
     
  9. jprops

    jprops Well-Known Member

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    Thanks. The fact that the tenant cared enough to request a paint job makes me think they'd be receptive. Ultimately the ball is in their court if they are willing to be put out for a couple weeks.. but Im thinking it could be a positive that would bode well for good long term tenants.
     
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  10. Xenia

    Xenia Adelaide Property Manager Business Member

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    Unless you really need to do it now for the purpose of revaluation, I would do it between tenants.

    There is already a tenant in The property and it's already producing an income in the condition that it's in.

    I would only get those improvements done to reduce vacancies between tenants and improve the rental yield.
     
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  11. jprops

    jprops Well-Known Member

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    Thanks Xenia. What are some of the reasons you wouldn't do it?
     
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  12. Xenia

    Xenia Adelaide Property Manager Business Member

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    Tenant can ask for compensation for a disruption of private enjoyment.
    They could apply to terminate the lease
    They could damage the improvements therefore reducing the effect for other tenants. The idea is to make the property more marketable. Why try and sell something that's already sold?
    Restriction of access to trades people

    So many more benefits to doing it all vacant
     
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  13. Joynz

    Joynz Well-Known Member

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    Hi Jprops

    What do you mean by a cosmetic Reno, exactly?

    I definitely think you should address the items in the REA list if things really are rotting etc - as it seems you are planning to do.

    With anything else not directly related to the repairs, perhaps discuss with the tenant.

    But anything that is too intrusive and just cosmetic should wait.
     
  14. Luke T

    Luke T Well-Known Member

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    WE just did a $20k ish reno with a tenant still in place interstate.It is absolutely definately harder and brings up all sorts of stress (i am going insane as we speak lol)but can work to save you money as you get the rent while getting the works done .So alot of the holdups you get with a reno are not as much of a drama
    .This case was a seller (i bought on behalf of a client)requested to stay in the property for extra 6 weeks (then requested to stay another 6 weeks during reno).We did give a discount down from $600 to $450 per week. We managed to find a tenant during the time too so only lost 2 says in changeover of tenant.
    NOTE:the reno allowed the increase in rent from est $500 value prior to $600 p/w post reno.
    Its hard to estimate as it can take time to find a tenant too once untenanted so you lose more rent but I did the sums and it would have taken about 6-12 weeks to reno and find tenant so if we just turfed the tenant we would have lost the $5400 but definately got the reno done a bit quicker

    My view is at the end of the day if you respect the tenant and work with them where they are at ,if they are keen to improve it definately adds value.I would totally kindly let them know it would bring a rent increase and make sure they are ok-suprisingly most do understand within reason.
    They see it as adding value to their place without it costing them anything upfront
     
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