What Budget Should I Use to Fix Up a Rental House for Renting?

Fixing up a rental house can be a costly endeavor, but it can also give you access to a wider market of tenants and enable you to increase rent. No single budget works for every potential landlord fixing up a rental house. Some landlords spend a very small percentage of the purchase price on renovations, while others may double the price they spent on the home itself. Before you purchase a rental house, it's important to realistically consider the budget it might take to make the house renter-ready.

Zoning and Safety

San Francisco has adopted a zoning and housing code that regulates rental properties to ensure they're safe for tenants. Before beginning to fix up the house, have an inspector inspect the property to uncover any code violations. These are the items that must be fixed before you can legally rent the property out, and you'll need to budget for them. Local contractors can give you an estimate.

Painting and Decoration

If the house is in good condition but you want to paint or decorate the interior, you may be wasting money. Your renters won't necessarily share your tastes, so it's wise to fix up the property so that it looks neutral rather than trying to add decorative flair. If the walls are dirty, put a fresh coat of paint on, and make sure doors, handles and windows are attractive, freshly-painted and well-maintained. The cost of these minor changes can be significantly less than the cost of replacing windows and other items altogether, and can make the house look much newer.

Curb Appeal

Your tenants will see your home from the street long before they set foot in it, and giving it curb appeal can increase its value. Make sure the grass is well-maintained and weeds are removed; you can do this yourself for little or no money. Then determine if the exterior of the house needs to be painted; if paint is cracking or is a garish color, take the plunge and budget for painting. For added curb appeal, try adding flowers in neutral colors, a stone garden or a walk way.

Miscellaneous Repairs

Minor repairs such as adding a closet organizer or painting your cabinets can breathe new life into a home. If you're considering completely remodeling a room, you might be better off making these small changes first. If you're still not satisfied, budget to remodel one room at a time, and plan for repairs to go over budget. This ensures you'll have money left over.

Covering the Mortgage

There's no guarantee that you'll get renters right away, so ensure you have enough money to pay the mortgage even if you go months without tenants. Landlords sometimes make the mistake of assuming that their fix ups will pay for themselves when tenants move in, but it can take years to begin to recoup your investment. If you're not sure about your ability to pay the mortgage, avoid expensive repairs until you've saved more money.