Author Topic: Renovations and improvements before selling?  (Read 934 times)

jeromedawg

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Renovations and improvements before selling?
« on: June 25, 2020, 10:50:03 PM »
Hey all,

We are planning to move out of our current place to another city a little south of here with the intention of renting down there for a year then renting out the current place on a shorter term lease. When the renters are out, we intend to renovate the place then list it to sell (and plan to use the funds to purchase a new home hopefully).

Our place has the original carpet from when I moved in (I think it was recently installed when I first moved in in 2007) throughout and has been kept up relatively well since then but it does show signs of wear. We don't wear shoes in the house though so it has held up well because of that I think. Other than that, white large subway tile in the kitchen, bathrooms and entries. A lot of original fixtures and lighting though. The kitchen we repainted and got most of the appliances updated. The bathrooms have the original vanities, lighting, tubs and bathtub tile walls - most of the faucets were changed out along with the toilets when I first moved in but some of the faucets are dingy now. The blinds are the older style cell shade/honeycomb shades - they're in OK condition. The windows are the original windows and some don't full close all the way. We just had a new water heater put in this past week as the prior one had issues. Furnace I think was put in by the previous owners possibly the same time the last water heater was installed (2005-2006?)


Any suggestions/advice on what I would absolutely want to do as far as renovations and improvements if I'm looking to add value and get a good ROI on whatever I put in?
Seems flooring (vinyl tile in the bathroom, kitchen and entryways. And laminate in the common rooms and bedrooms) would go along way as well as a neutral color theme throughout like greige?
The kitchen and living room are separated by a pocket door - I've seen a number of other units remove the pocket door and open that space up to give a more open look, so I'm considering doing that too. As well as adding cabinet and drawer pulls. As far as the bathrooms, not sure if it would be worth putting in new vanities, mirrors, corian walls around the tub and curved shower curtain bars or whatever.

TIA!

YttriumNitrate

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Re: Renovations and improvements before selling?
« Reply #1 on: June 26, 2020, 07:15:28 AM »
Your plan is rent out your current place for a year or two, leave it vacant for a few months as you do repairs and renovations, and then sell it?

Why don't you want to just sell the house now?

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #2 on: June 26, 2020, 08:50:45 AM »
Your plan is rent out your current place for a year or two, leave it vacant for a few months as you do repairs and renovations, and then sell it?

Why don't you want to just sell the house now?

Trying to avoid staging and listing the place while residing here. Seems easier just to do any renovations/improvements on an empty place, esp if we intend for those renovations/improvements to be value-adds that will see us an immediate return - the renovations are mostly just to capitalize on the return vs ones that we would enjoy (though it would have been nice to slowly do updates over the number of years we've been here but that ship has sailed). Anyway, I'm not sure it would take a few months to do these particular value-add improvements - at a minimum I'm looking at updating flooring, bathrooms and paint - if those were the only things we did, would it really take a few months? I'd imagine they might take a month at most. EDIT: NM, I forgot to factor in the time it's on the market. If our realtor prices it out right, the hope is that it would sell fairly quickly and in under 30 days. So in this case maybe 2 months? Either way we're going to need a place to live if we were to do these renovations - it's just too much going on with two kids and a good amount of stuff... I suppose we could declutter to the point of minimalism for a natural staging but that's just not the circumstance right now lol.

As far as a little more context to the situation: We are trying to get into a specific neighborhood so we can register our son into an immersion program (guaranteed entry if you live in the neighborhood). Renting in that neighborhood would get us in and also not force us to have to look to buy a house in that specific neighborhood. So doing it this way will give us time to get used to the new area without going all in, as well as time to scope out the neighborhoods and areas we might want to live that don't necessarily have to be within the school boundary.
« Last Edit: June 26, 2020, 10:08:34 AM by jeromedawg »

Fishindude

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Re: Renovations and improvements before selling?
« Reply #3 on: June 26, 2020, 09:29:03 AM »
If you're going to use a realtor, might be wise to walk them through beforehand and get their suggestions regarding what will help the house sell and get you the most return.   Typically, just getting things really neat and clean and a fresh coat of paint does wonders.   I wouldn't get too crazy on any decor like new flooring; fixtures, etc., as many buyers want to do their own thing to personalize the place anyway.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #4 on: June 26, 2020, 10:01:24 AM »
If you're going to use a realtor, might be wise to walk them through beforehand and get their suggestions regarding what will help the house sell and get you the most return.   Typically, just getting things really neat and clean and a fresh coat of paint does wonders.   I wouldn't get too crazy on any decor like new flooring; fixtures, etc., as many buyers want to do their own thing to personalize the place anyway.

Yea, my realtor and his contractor and coming by later. I agree though, I think paint is probably the biggest thing. Right now we have all white but my other friend (realtor/investor) recommended that "greige" is the new rage lol. We painted one of the walls an off-blue color as an accent wall - I'm wondering if we would want to paint over that with the same color as elsewhere or if it's OK to leave as-is.

Both were suggesting that flooring would see a good return though - nothing super crazy like hardwood or engineered hardwood but more like 'budget' options like laminate and vinyl tile. I think the idea is to make it a 'modernized' turnkey - the bathrooms especially are like straight out of the 90s with the original vanities. Also have the long fluorescent bar lights in the master bath and kitchen but I figure lighting probably isn't as big of a deal.
« Last Edit: June 26, 2020, 10:05:32 AM by jeromedawg »

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #5 on: June 26, 2020, 10:27:01 AM »
Another note: my realtor mentioned that he would likely have his team come into stage the place whether or not we're living here. It just seems better to be cleared out with renovations in place so they can fully stage the place to really maximize on the sale. I'll ask him about this but another place in the neighborhood sold recently without any staging, at a pretty good price point not too long ago. The unit above us (which is nearly the same exact floorplan) sold for $675k back in April but they have major upgrades poured in (hardwood flooring throughout most, very nice cabinetry/kitchen upgrades, updated baths and vanities). Not sure if they had the place staged up there. My realtor was thinking he would start our place at $575k back in mid 2019 if we were to list as-is and after having it minimally staged - his logic was price it low to get the interest and potentially start a bidding war. But realistically, he didn't think this place would sell for over $600k if that at least back then. I'll have to get his take on it now - I'm thinking we could potentially get around $600k for it as-is currently so if we could get around $650k w/ minimum renovations and improvements that would be huge.

One thing I worry about is how the foot traffic/noise from the upstairs neighbors will impact the sale. The ceilings/walls are thin in these units and the fact that they had hardwood flooring installed upstairs exacerbates the problem....along with the fact that it seems a majority of people walk heavily on their heels and don't realize someone might be below them despite them living on a second floor unit with stairs :T

affordablehousing

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Re: Renovations and improvements before selling?
« Reply #6 on: June 26, 2020, 02:06:00 PM »
Take your cues from your realtor as to what your unit needs, they see 100's of homes a year and know the trends better than anyone. No reason to get involved other than to the checks.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #7 on: June 29, 2020, 11:28:12 AM »
Take your cues from your realtor as to what your unit needs, they see 100's of homes a year and know the trends better than anyone. No reason to get involved other than to the checks.

So what's interesting is that the realtor I've been working with believes in the 'minimalist' approach when it comes to renovations - he basically just said a new coat of different colored neutral beige paint throughout the place. The contractor who had came out was sort of pushing the idea of doing a larger scale renovation (such as flooring, kitchen counters, new paint etc) and potentially doing that *prior* to renting as it might help make it more palatable. The realtor believes we should wait until after renting to do any of these renovations, yet in my neighborhood nearly all the places that have rented out (and for a couple hundred more per month than what my realtor would start the listing at) have been updated in some way/shape/form (usually at a bare minimum new hard flooring and paint). I asked this question on BiggerPockets and a local realtor/flipper who I've met before chimed in saying, in his opinion, it's worth doing a pretty full rehab for a quick sale w/ presumably a good return. I just don't know though with a bottom-floor condo unit how much renovation will result in a good ROI - you can't fix the noise issue from above, which I would think could be a pretty big factor. It seems like there are mixed opinions on this but I suppose the 'easiest' and lowest-risk route would be to rent and then sell as-is with the exception of getting the place cleaned and freshly painted a different color after done renting it out and prior to listing for sale.

BNgarden

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Re: Renovations and improvements before selling?
« Reply #8 on: June 29, 2020, 12:28:11 PM »
I don't know your local market.  FWIW from what you've described, rent it as is or with at most a lick of fresh paint where needed to update / clean it up.

I wouldn't renovate before renters cause you can't be sure how conscientious someone will be with your property.

Consider who has the most to gain from what you choose: renovators / contractors profit if you undertake the work.  Realtors gain more on higher priced properties and have less work to do to sell it. 

If I was going to renovate before selling I'd do the minimum to bring it to saleable standards (and price it appropriately) but only after the renters had departed.

Paper Chaser

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Re: Renovations and improvements before selling?
« Reply #9 on: June 29, 2020, 12:55:47 PM »
The vast majority of the value of your property comes from the location, the number of beds/baths and the sq footage. As long as it's solid structurally, everything else seems to have low ROI for you. In order to have a positive ROI for you, the updates would need to increase the value of the home enough to pay for themselves, plus any additional commission for the realtor. So say you spend $10k on updates, and it increases the selling price by 10k, the only winners are the realtor and the contractor(s).

affordablehousing

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Re: Renovations and improvements before selling?
« Reply #10 on: June 29, 2020, 12:59:37 PM »
The market is dropping, so the approach would probably be to renovate it and maximize the sale now, or rent it as is, get as much as you can- here in the bay area rents are getting very negotiable, and then who knows what you'll need to do to make your condo stand out when you sell. Sorry to fear monger but I think you either sell now and do a lot of work, or rent it and wait things out and see what the market is like in the future.

And remember the incentives-
realtor wants to get paid for as little work as possible = do nothing
contractor wants to get paid for as much work as possible = do everything

Sounds to me like you need a better more honest realtor. Fire that asshat!

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #11 on: June 29, 2020, 01:23:27 PM »
The market is dropping, so the approach would probably be to renovate it and maximize the sale now, or rent it as is, get as much as you can- here in the bay area rents are getting very negotiable, and then who knows what you'll need to do to make your condo stand out when you sell. Sorry to fear monger but I think you either sell now and do a lot of work, or rent it and wait things out and see what the market is like in the future.

And remember the incentives-
realtor wants to get paid for as little work as possible = do nothing
contractor wants to get paid for as much work as possible = do everything

Sounds to me like you need a better more honest realtor. Fire that asshat!

We're trying to move out first ASAP so selling wouldn't be ideal - trying to stage and list while living here would be absolutely nuts. Our upstairs neighbors are driving us crazy with their foot traffic so need to just make the move (we have been thinking on and considering it for a while now anyway). Seems like it's easier to sell something after having vacated it. The other factor is that we will likely be renting a place and signing a 1yr or longer lease, so we want to try to offset the cost of that by renting out the current place if possible. Then try to coincide selling this place and then buying a new place with the proceeds around the time that our lease ends.

Our realtor is a friend of ours - I don't think he's being dishonest or anything like that. But I think the 'head' realtor he works for comes with the philosophy of doing the most minimal renovations you can get away with - if he thought certain renovations would give us a good ROI though, I don't think he would hesitate to recommend them. I think in our case, it's just that these units aren't as highly desirable in general compared to other newer communities (most of which are town-home/multi-story type units where you aren't living under or above anyone)...renovations or not. And I think Paper Chaser is right - for most renovations we would likely net even with them after fees. If we net anything, it likely will be less than a 100% ROI for *most* renovations besides a fresh coat of paint and thorough carpet cleaning (the carpet is in very good condition according to the contractor who came in to look around - and he was the one who would gladly push running vinyl tile throughout the entire place). The guys were more or less just giving options of what we *could* do but were ultimately leaving it up to us to decide.
« Last Edit: June 29, 2020, 01:25:09 PM by jeromedawg »

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #12 on: June 29, 2020, 01:39:47 PM »
So I think it's established that waiting for most of the renovations until *after* the place has been rented out makes the most sense.

Otherwise, my takeaways from the contractor's ideas of rehab:

low-level items that were called out that would be inexpensive or that we could DIY too (possibly also things to consider prior to renting besides the obvious carpet cleaning and cleaning):
- change the honeycomb/cell shades to regular shades
- change the door knobs to more modern ones
- carpet cleaning
- deep cleaning

Other more intermediate-level items:
- new kitchen sink and faucet (actually, I came up with this one because the sink we have is pretty disgusting - the racks are rusted out and just done for and the sink scratches up easily and doesn't look good - it looks OK after a good cleaning but doesn't last long in that condition)
- new vent fans in bathrooms

The higher level items (moving towards a full remodel):
- vinyl or laminate flooring throughout (depends on how the carpet ends up after renting it out)
- fireplace reface
- new bathroom vanities, mirrors and fixtures
- new bathtub tiling
- updated bathroom lighting
- remove the pocket door between the living/dining area and the kitchen and open the space up more
- replace old ugly granite countertop with a quartz countertop
- new paint color interior
- coat of white paint in the garage
- new windows
- new sliding glass doors


What I've heard from two realtors I've asked as well, is that with something like this you don't want to do piece-meal. It's sort of all or none. So that's where it gets a bit confusing. It seems like there are items on this list of things that would allow you to command a significantly higher price (like flooring) but it seems realtors and investors all have their own ideas about this. So it makes the decision difficult. I don't know, at the end of the day it sounds like we'll be going a more conservative and minimal route.

Peachtea

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Re: Renovations and improvements before selling?
« Reply #13 on: June 29, 2020, 04:48:02 PM »
As a renter, I expect fresh paint when I move. I lived in crappy places and frontdesk/elevator condos...all had fresh paint. Sometimes it was crappy white paint, but it was new. If you decide to rent I would repaint. Re the sink...are the racks built in or is just one you get at Target and place in the sink? If the later, just buy a new one. Theyíre like $15. Otherwise make sure all your sinks are clean and rust free during showings; they donít have to be brand new. For blinds...just donít get those ugly roll down ones.

We viewed a large, ďupdatedĒ (granite counters, stainless steal appliances, dishwasher) condo for rent that was below market and had a rusty sink, soap scummed bathtub, and general wear & tear on paint. It was a good deal but we passed because of the concern that those fixes are pretty minimal, and if the landlord doesnít do the most basic of things between tenants then how awful will they be when a more serious repair comes up? (For reference the place we picked has outdated appliances, laminate counters, no dishwasher, and a small, ugly, yellow 80s bathroom sink. But it was all clean, in good order, and had new paint & blinds that showed some care.)

That said...you started this talking about the fridge. When you say itís dying, how long do you think it can eek out? Like itís not as efficient anymore, but will keep food cold for years to come? Or it could die at anytime? Because if fridges are standard in your market (as here), itís standard in the lease that youíre responsible for maintaining and replacing it. So itís not necessary to have a new one, but you better be prepared to drop everything and get in a new one ASAP if it dies during the lease. Itís up there with heat, hot water etc in terms of things your tenant will legitimately demand you get on top of immediately. You wonít have time to watch out for a good deal. Youíre stuck with whatís available at the time.


former player

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Re: Renovations and improvements before selling?
« Reply #14 on: June 29, 2020, 11:55:38 PM »
I'm not sure I understand your logic on not selling now.  Whether you rent or sell you need to move out first and then get the property ready, yes?  So why not get it ready to sell rather than to rent?

Plus, it seems like a deal to get rent in while you are paying rent out.  But you are forgetting all the other costs and hassles of owning and being a landlord, taking a gamble on house prices and on a tenant, and then having to get the place ready again at the end of the tenancy, from a distance in order to sell.  Much better to bite the bullet, sell the place and have the money in the bank.

Plus you have a job and children and parent issues: why on earth would you want to add another job (long-distance landlord) to that?

As to your list of renovations, the only ones worth doing are the deep clean, including carpets, new paint, and new shades.  You will be surprised how good the place looks just doing that.  (If there are noise issues the last thing you want to do is take up the carpet, especially when you are showing the place empty.)

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #15 on: June 30, 2020, 12:17:38 AM »
I'm not sure I understand your logic on not selling now.  Whether you rent or sell you need to move out first and then get the property ready, yes?  So why not get it ready to sell rather than to rent?

Plus, it seems like a deal to get rent in while you are paying rent out.  But you are forgetting all the other costs and hassles of owning and being a landlord, taking a gamble on house prices and on a tenant, and then having to get the place ready again at the end of the tenancy, from a distance in order to sell.  Much better to bite the bullet, sell the place and have the money in the bank.

Plus you have a job and children and parent issues: why on earth would you want to add another job (long-distance landlord) to that?

As to your list of renovations, the only ones worth doing are the deep clean, including carpets, new paint, and new shades.  You will be surprised how good the place looks just doing that.  (If there are noise issues the last thing you want to do is take up the carpet, especially when you are showing the place empty.)

The problem is that selling now puts multiple constraints on us based on our goal of moving to that area (which is for my son's [and eventually our daughter's] schooling - entrance into a Mandarin immersion program). The area we are planning to move to requires that we move into a specific neighborhood boundary to guarantee him entry into the program. If we were to pursue selling now, we would be on the clock to move down and into a home that we presumably like, on or before Feb 2021 (which is the deadline to submit the application for enrollment). On top of that we would have to both stage and list our place while residing here - my wife is SAHM and I WFH full time, so it would be pretty stressful dealing with all that.
If we moved soon and rented a place down there, it would allow us the flexibility to move out at our own pace and it would also be an opportunity we could take to get to know the area without going 100% in out of the gates. Also, we would be living there through Feb 2021, so by the end of our lease later in 2021 (assuming we sign a 1 yr lease within the next several months), when we are ready to buy a place we won't be constrained to living in that specific neighborhood because per the program director once you're been accepted into the program you can move or live anywhere you want and not jeopardize your kid's enrollment status. We'll have the freedom to choose to live where we want.
In terms of landlording, we'd be moving 30 minutes south and the lease would only be for a year. So while it might be a headache, I think we'd willing to put up with it especially to partially offset the rent we'd be paying further south.... unless you're suggesting that we still move out and lease as planned until we are ready to move, but instead of renting out the current place to tenants we pursue selling instead and eat the cost of rents for a year (this would roughly cost $36k~)?
As far as my parents are concerned, yes that is stressful but we can't really do much in terms of going back to visit them with everything going on with COVID-19 anyway (well, I suppose we could be we're just not comfortable with the idea of that and may not be for a while).

So sounds like a deep clean is in order. And shades well - any suggestions on specific brands of shades? 
« Last Edit: June 30, 2020, 12:28:05 AM by jeromedawg »

former player

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Re: Renovations and improvements before selling?
« Reply #16 on: June 30, 2020, 01:00:48 AM »
Yes, I was proposing selling and renting.

The only reason you are looking at the cost of this as being so high is that your current housing is subsidized by family, right?  So the "profit" you make by renting out for a year is really on the back of that family subsidy?  Better to sell, I think: less hassle all round, including questions as to why you should carry on getting that subsidy when you've moved out.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #17 on: June 30, 2020, 01:09:02 AM »
Yes, I was proposing selling and renting.

The only reason you are looking at the cost of this as being so high is that your current housing is subsidized by family, right?  So the "profit" you make by renting out for a year is really on the back of that family subsidy?  Better to sell, I think: less hassle all round, including questions as to why you should carry on getting that subsidy when you've moved out.

So the remaining ownership in the place was gifted to us recently. Prior to that, we had discussed renting, but realized what a headache it would have been figuring out how to split rent based on our ownership and my parents' ownership.

As far as my parents and brothers questioning why I'm renting, they don't really care as they understand the goal here for us is ultimately to relocate down there. We just want to do it with the least amount of constraints and most flexibility, and if we can continue to keep costs down that would be ideal as well.

I mean, I suppose we could try to find someone that would be willing to do a short term lease where we can still leverage the address for registering our son for enrollment but that seems like something that would be difficult to procure. We could also consider month to month, but this could potentially end up costing even more versus a one year lease! One apartment complex we were considering as a last resort, of which its largest units are 2/2, quoted $8000 month to month (not sure if this after completing a lease or if it was straight out of the gates - it might have been either or)!!!
« Last Edit: June 30, 2020, 01:24:32 AM by jeromedawg »

former player

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Re: Renovations and improvements before selling?
« Reply #18 on: June 30, 2020, 02:06:19 AM »
OK, that's good that you've got the family interest sorted out.

What's wrong with a one-year lease on the new place if you sell the old one?  Are you worried about being out of the housing market for a year and prices going up?   Because otherwise the costs of renting and owning usually aren't that different, except that the costs of owning are hidden and the costs of renting are up front.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #19 on: June 30, 2020, 08:30:34 AM »
OK, that's good that you've got the family interest sorted out.

What's wrong with a one-year lease on the new place if you sell the old one?  Are you worried about being out of the housing market for a year and prices going up?   Because otherwise the costs of renting and owning usually aren't that different, except that the costs of owning are hidden and the costs of renting are up front.

Oh, the point was to eventually make it a permanent move to the area - we'd roll the proceeds from the sale into a new place and then some, which I think would result in a smaller loan amount equating to lower monthly payments (compared to rent). The immersion program is a comprehensive K-12 program so the intention would be that we're in it for the long haul (of course, things can always change right). But in this situation, I'd rather rent short term, even just to get us past the application/acceptance period (March/April) then look to make the permanent move into a new residence leverage the proceeds from selling.

Unless you're suggesting that I should just take the proceeds from the sale and put them straight into index funds, etc? And basically become a life-long renter vs owner?

former player

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Re: Renovations and improvements before selling?
« Reply #20 on: June 30, 2020, 09:19:46 AM »
The sequence I was suggesting was -

1.  A year's lease in the new location.
2.  Basic work on the current place - deep clean including carpets, painting, blinds, not much more - and put on market.
3.  Put funds into a safe and accessible savings account - index funding is for the long term and a year isn't long term.
4.  If conditions are right, buy new place for when lease is up.  Otherwise keep renting until you find a place that works for you to buy, in financial and family/living terms.

My view is that this is the sequence that is easiest to manage, which is a very important consideration for a working family with young children.  The only risk is being out of the market for a year, but it doesn't sound to me as though there is a great deal of upside on your current place and renting is another job you don't need for limited benefit, particularly if the place needs work before you rent and then work again to get it pristine for sale - as well as having the bits you don't want to renovate another year older and less attractive.

There are a lot of people on the forums who are firmly on the "rent for life" and "don't pay down the mortgage" sides of the property fence and can marshall the figures to prove they are right.  I'm not one of them, but everyone needs to do the math for themselves and then work out how important that maths is relative to the other factors involved in owning property.

BNgarden

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Re: Renovations and improvements before selling?
« Reply #21 on: June 30, 2020, 09:26:08 AM »
I concur with Former Player on this sequence.  It allows for maximum flexibility. And ease (to my eyes). (ETA: versus unnecessary convolutions / complications)

It seems to me that your proposed avoidance of paying rent without an offsetting income from your current property is (or at least appears to some random internet stranger to be) the tail wagging the dog. 
« Last Edit: June 30, 2020, 09:30:31 AM by BNgarden »

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #22 on: June 30, 2020, 10:06:50 AM »
I concur with Former Player on this sequence.  It allows for maximum flexibility. And ease (to my eyes). (ETA: versus unnecessary convolutions / complications)

It seems to me that your proposed avoidance of paying rent without an offsetting income from your current property is (or at least appears to some random internet stranger to be) the tail wagging the dog. 
The sequence I was suggesting was -

1.  A year's lease in the new location.
2.  Basic work on the current place - deep clean including carpets, painting, blinds, not much more - and put on market.
3.  Put funds into a safe and accessible savings account - index funding is for the long term and a year isn't long term.
4.  If conditions are right, buy new place for when lease is up.  Otherwise keep renting until you find a place that works for you to buy, in financial and family/living terms.

My view is that this is the sequence that is easiest to manage, which is a very important consideration for a working family with young children.  The only risk is being out of the market for a year, but it doesn't sound to me as though there is a great deal of upside on your current place and renting is another job you don't need for limited benefit, particularly if the place needs work before you rent and then work again to get it pristine for sale - as well as having the bits you don't want to renovate another year older and less attractive.

There are a lot of people on the forums who are firmly on the "rent for life" and "don't pay down the mortgage" sides of the property fence and can marshall the figures to prove they are right.  I'm not one of them, but everyone needs to do the math for themselves and then work out how important that maths is relative to the other factors involved in owning property.

Good points - it sounds like being a landlord for the year, for the purpose of offsetting any rents, is more trouble than it's worth. Esp if the ultimate goal was to sell within the next year or two.

Are you basically saying just to 'time the housing market' and try to wait for another dip before buying in? I'm in SoCal, so it seems highly unlikely that we'd find anything that dips (in the South Orange County area... well, perhaps Lake Forest or Mission Viejo if anything) and prices, in general, have only been going up. At some point the cycle has to trend down, but it's not like it's going to trend down to the point that we would be buying at a bargain I don't think (that ship sailed with the 2008 recession).

BNgarden

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Re: Renovations and improvements before selling?
« Reply #23 on: June 30, 2020, 10:25:34 AM »
I think rather than timing the market, stick to your plan to find a good for you property in the place you want to be, first, to rent, and ultimately (should it work out as planned) to buy.

Trying to wait for a dip is definitely timing the market, and so is waiting to sell til some 'better' time.

This involves some trust that things will work out, versus guessing that you will be (dis)advantaged by moving up / delaying any particular move.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #24 on: June 30, 2020, 10:33:02 AM »
I think rather than timing the market, stick to your plan to find a good for you property in the place you want to be, first, to rent, and ultimately (should it work out as planned) to buy.

Trying to wait for a dip is definitely timing the market, and so is waiting to sell til some 'better' time.

This involves some trust that things will work out, versus guessing that you will be (dis)advantaged by moving up / delaying any particular move.

To be clear, the intention of the original plan of renting out the current place was really just to offset cost of rents at the new location. It had nothing to do with timing the market in anticipation of selling at a higher price point (of course, it could go up but it could also go down). It sounds like, if I were to convert this to a long-term rental property (like several years or what not) for whatever reason, it would make obvious sense to leverage the idea of the rental income offsetting cost of rents. But going back to what it seemed like you and former player were implying: it's too much trouble to rent for only one year for that same purpose.

Either way, I'd like to get out of the current place as soon as possible. On top of having planned for over a year to move further south, I'm also just tired of living underneath people for over a decade lol. And it seems like it might not be a bad time to cash out anyway.

BNgarden

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Re: Renovations and improvements before selling?
« Reply #25 on: June 30, 2020, 10:39:59 AM »
Just to clarify: I wasn't saying you were trying to time the market, nor was I saying you should.

If you find the prospect of paying rent without offsetting income from renting out your current place to be unpalatable or you feel you can't save the income for your future purchase, by all means, go ahead with the minimal fix-ups and landlording (with a sale pushed out into the future after another round of some fix-ups). ETA: or if you're worried about being out of the market for a period of time...

Just be aware there may be less offset than expected, and there will be costs in time and possibly aggravation.  You and your wife need to look hard at the numbers and the 'soft' costs to your weekly schedule.

economista

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Re: Renovations and improvements before selling?
« Reply #26 on: June 30, 2020, 10:43:50 AM »
Count me in as very confused about renting out the current place for a year. I don't understand why that would put a time constraint on purchasing a new house in the new area. In my area it is much harder to get your offer accepted on a new house, if it is conditional upon selling the old house. If you want to stand a chance of your offer being accepted you have to sell the old house ahead of time and have the money waiting in the bank to roll forward into the new house. We sold our old house, put the proceeds in an Ally savings account that earned ~2% interest, and then rented for a year and a half until we found our new house. Then the entire proceeds from the old house were used as the downpayment for the new one. That seems so much easier to me than trying to rent out the old house and then coordinate the sale with the purchase of a new one.
« Last Edit: June 30, 2020, 10:56:04 AM by economista »

SimpleCycle

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Re: Renovations and improvements before selling?
« Reply #27 on: June 30, 2020, 10:48:23 AM »
I think you are GREATLY overestimating the ease of renting out your place, and of actually moving tenants out when it is time to sell.  In addition, you are taking on the risk of tenants, which is non-negligible.

The only way you are going to get the flexibility you want is to eat a few months of rent.  You should move into the new rental, take a bit to fix it up as much as you decide, and then sell.  This should take well less than a year.  Ask your realtor when he thinks the best time to list is, and plan your move around that.

What are the finishes in your current condo?  In my market, the expectation is white kitchen cabinets, no "boob" light fixtures, new paint, etc.  So we did a more middle of the road set of upgrades - we painted the kitchen cabinets and vanities white (they were light maple), we changed out a few light fixtures, we recarpeted the carpeted areas (because the old carpet was bottom of the line and didn't clean up well), and we fully repainted the interior.  In addition, we staged per the recommendations of a staging consultant we had come in.  We did owner occupied staging (with two kids and two cats) and it sucked, but our place sold after the first weekend of showings so it wasn't a big burden.

To me the point of doing any of this is not necessarily the ROI but to get your unit to sell quickly at asking.  Most buyers have very little imagination to see the potential of a dated looking place.  But they also want to make the home their own and may have ideas for the bigger upgrades.  Anecdotally a non-updated unit in our building sat on the market for a couple months until ours went on the market, then sold (for less than ours) the week after ours.  Their buyers had also seen our unit, so maybe it helped them see the potential?  Who knows.

I'd get a second opinion if you can about the upgrades.  New paint and a fireplace reface should not be in the same category.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #28 on: June 30, 2020, 10:59:02 AM »
I think you are GREATLY overestimating the ease of renting out your place, and of actually moving tenants out when it is time to sell.  In addition, you are taking on the risk of tenants, which is non-negligible.

The only way you are going to get the flexibility you want is to eat a few months of rent.  You should move into the new rental, take a bit to fix it up as much as you decide, and then sell.  This should take well less than a year.  Ask your realtor when he thinks the best time to list is, and plan your move around that.

What are the finishes in your current condo?  In my market, the expectation is white kitchen cabinets, no "boob" light fixtures, new paint, etc.  So we did a more middle of the road set of upgrades - we painted the kitchen cabinets and vanities white (they were light maple), we changed out a few light fixtures, we recarpeted the carpeted areas (because the old carpet was bottom of the line and didn't clean up well), and we fully repainted the interior.  In addition, we staged per the recommendations of a staging consultant we had come in.  We did owner occupied staging (with two kids and two cats) and it sucked, but our place sold after the first weekend of showings so it wasn't a big burden.

To me the point of doing any of this is not necessarily the ROI but to get your unit to sell quickly at asking.  Most buyers have very little imagination to see the potential of a dated looking place.  But they also want to make the home their own and may have ideas for the bigger upgrades.  Anecdotally a non-updated unit in our building sat on the market for a couple months until ours went on the market, then sold (for less than ours) the week after ours.  Their buyers had also seen our unit, so maybe it helped them see the potential?  Who knows.

I'd get a second opinion if you can about the upgrades.  New paint and a fireplace reface should not be in the same category.

Yea, I'm sure I'm not factoring in the "total cost of ownership" when it comes to rentals and landlording (and the risk of bad tenants is a palatable one for sure)

We recently repainted our kitchen cabinets white (from a honey gold cold) but it has an old granite brown/grey countertop which is OK - the contractor who came in was suggesting replacing it with quartz ($2k). I also installed a new oven and over range microwave (previous units and range hood were disgusting). The light fixtures currently in place are OK I *think* but we have a cheap ceiling fan in the kitchen that we could probably swap out for something nicer too. I'd probably replace the door knobs on all our doors (they're straight from the 80s and many are the brass colored round knobs). The grout lines for a lot of the subway tile in our bathrooms, kitchen and fireplace we may consider repainting/sealing as well - I actually have a small thing of grout paint so maybe I should do that. Contractor said our carpet is in great condition (even after some flooding that occurred where we just reinstalled the same carpet and got it cleaned) so we don't necessarily need to feel like we should rip it out. A deep cleaning and carpet cleaning are in order. And yea replacing the blinds would be good to do. I think the grout painting and door knobs is something I could DIY but the other stuff we should probably leave to the pros - DIY carpet cleaning with one of those rental units is tempting but sounds tedious, as does installing 8 new sets of blinds and possibly new blinds for the sliding glass doors (I installed the ones that are currently there and it was a PITA). But who knows, maybe once it's empty I'll feel motivated enough to do more DIY than I think I want to right now. Actually, I do contemplate the idea of doing a DIY install of the flooring and baseboards for some sweat equity. Not sure if that would be worth my while but I hear it's not super difficult to do flooring - it's just tedious.

economista

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Re: Renovations and improvements before selling?
« Reply #29 on: June 30, 2020, 11:02:03 AM »
Reading closer I think I figured it out. You can only afford to live in your current condo because your parents subsidized it, by originally owning 75% and then gifting their % to you. You can't afford to rent in the new area without renting out the current house because your income alone isn't enough to live in that area - you need the rent you would get from the current condo (without offsetting that by paying a full mortgage on it) in addition to your income to pay rent for the next year. And then you can only purchase in the new area once you have the proceeds from the sale of the current condo.

Now your reasoning makes a lot more sense. You are stuck because you can't just sell the condo and put the money in an account to sit for a year while you pay rent. You would dip into your proceeds to pay the rent.

I was so confused about your comment around needing the proceeds from the rent, because generally when you have a full mortgage on a property there isn't much cash flow to generate "proceeds from rent" after the mortgage is paid, unless the property was specifically purchased as a rental property.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #30 on: June 30, 2020, 11:03:10 AM »
Count me in as very confused about renting out the current place for a year. I don't understand why that would put a time constraint on purchasing a new house in the new area. In my area it is much harder to get your offer accepted on a new house, if it is conditional upon selling the old house. If you want to stand a chance of your offer being accepted you have to sell the old house ahead of time and have the money waiting in the bank to roll forward into the new house. We sold our old house, put the proceeds in an Ally savings account that earned ~2% interest, and then rented for a year and a half until we found our new house. Then the entire proceeds from the old house were used as the downpayment for the new one. That seems so much easier to me than trying to rent out the old house and then coordinate the sale with the purchase of a new one.



The original options I was considering were: A) we rent for a year to get us into the neighborhood as the ticket in (with the idea of renting the current place as offsetting the cost of rents then when the lease for it ends we just sell it) OR B) we sell now and move now.
I wasn't even considering option C) renting in the new neighborhood, selling the current place, and just eating the cost of rent for a year. But based on the ideas presented that land-lording is a PITA esp if you aren't really in it for the long haul, it is something I'm leaning towards. The cost of renting is just kind of nuts down in that area (which is what prompted option A). But it is what it is - you pay to play I guess lol.


Reading closer I think I figured it out. You can only afford to live in your current condo because your parents subsidized it, by originally owning 75% and then gifting their % to you. You can't afford to rent in the new area without renting out the current house because your income alone isn't enough to live in that area - you need the rent you would get from the current condo (without offsetting that by paying a full mortgage on it) in addition to your income to pay rent for the next year. And then you can only purchase in the new area once you have the proceeds from the sale of the current condo.

Now your reasoning makes a lot more sense. You are stuck because you can't just sell the condo and put the money in an account to sit for a year while you pay rent. You would dip into your proceeds to pay the rent.

I was so confused about your comment around needing the proceeds from the rent, because generally when you have a full mortgage on a property there isn't much cash flow to generate "proceeds from rent" after the mortgage is paid, unless the property was specifically purchased as a rental property.

You kinda hit nail on the head. Although, it's not so much that we wouldn't be able to afford rents in the new area - it's just that it would be quite the 'sticker shock' otherwise. We would have to tighten up our budget but I think we can pull it off. Regardless, it still sounds like eating the cost of rent at least for the year ahead is something we ought to just consider and call it a sunk cost as a means of getting into the area and the district. Also, it gives us the ability to get a taste of the area and whether or not it'll be sustainable - not everything is 100% right? We may move down there, then decide it's not for us and back out of this whole thing (though my wife will be pissed lol). So while it sounds like you have an idea of the situation, you'd still tend to think that eating the cost of rent is better right?


EDIT: as far as more 'affordable' housing down that way - it is possible but it would mean downsizing to a 2 bed 2 bath or 2 bed 1 bath apartment where we're either below or above. We would lose garage spaces and additional storage so this means we would either have to buy a storage unit or leverage our empty condo for storage while we're renting, at least until we sell - then we'd have to fire sale and or put in storage at that point in time). On top of that, we've been considering trying for a 3rd so if that happens we'll really have to be on top of trying to find a new place within the year. And I didn't even think of the fact that I'm WFH full time and currently have a bedroom/den I work out of and can close the door to, as well as my wife being stay-at-home, so a 2 bed place would be super cramped). So it may make sense just to stick with the most equivalent sized place as where we are currently (which is a 3 bed / 2 bath 1388sq ft space)
« Last Edit: June 30, 2020, 11:47:39 AM by jeromedawg »

BNgarden

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Re: Renovations and improvements before selling?
« Reply #31 on: June 30, 2020, 12:31:51 PM »
...And yea replacing the blinds would be good to do. ... sounds tedious, as does installing 8 new sets of blinds and possibly new blinds for the sliding glass doors (I installed the ones that are currently there and it was a PITA).

Don't know if it would fly in your market, but check with your realtor if offering a payment towards improvements (you could specify blinds if you wanted) to the purchaser would alleviate concerns you feel buyers might have on the blinds front? 

We did this rather than install new flooring (we had painted plywood with area rugs in one space).  In the end, our market / pricing was right so the offers we received just dropped this allowance right out (as in, we did not need to pay it).  Then no PITA, and no extra cost beyond what you'd spend anyways.  And less waste, in case you replaced them all, did all the work and the new owner took them out anyways?  That was my fear / reasoning around our carpet allowance--didn't want good new carpet torn up cause it wasn't their preferred style / choice.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #32 on: June 30, 2020, 12:48:59 PM »
...And yea replacing the blinds would be good to do. ... sounds tedious, as does installing 8 new sets of blinds and possibly new blinds for the sliding glass doors (I installed the ones that are currently there and it was a PITA).

Don't know if it would fly in your market, but check with your realtor if offering a payment towards improvements (you could specify blinds if you wanted) to the purchaser would alleviate concerns you feel buyers might have on the blinds front? 

We did this rather than install new flooring (we had painted plywood with area rugs in one space).  In the end, our market / pricing was right so the offers we received just dropped this allowance right out (as in, we did not need to pay it).  Then no PITA, and no extra cost beyond what you'd spend anyways.  And less waste, in case you replaced them all, did all the work and the new owner took them out anyways?  That was my fear / reasoning around our carpet allowance--didn't want good new carpet torn up cause it wasn't their preferred style / choice.

That may work out - I could ask. The current blinds are ugly and just don't show well at all (they're this light shade of pink). The ones in the kitchen are the same types of blinds but a light shade of blue. It's really odd. We actually took the kitchen ones down to clean them and that was a huge PITA but it helped. But yea maybe we won't invest any time or money into those and just offer them as a concession instead.

The other option with all this is just to say 'screw it' and sell and immediately buy a new place in the target neighborhood (there's actually one that's down there that looks decent for us and within budget right now). I'm just not sure how the timing would work between making an offer on it and staging/listing/selling this place - I'm thinking it might have to be a contingent sale or active under contract?


BTW: with all this mentioned, do you think it's worth the trouble of shooting for a quick sale ASAP while living here (dealing with staging, carpet cleaning, deep cleaning, all that crap while living here - we have quite a bit of stuff we'd have to move around and or clear to even provision for this too) then aiming just to buy in the neighborhood? Rather than dealing with renting for a year or whatever. Ideally, if we intend to sell this place, I'd like to either minimize the amount of time to rent or eliminate the need all together.
« Last Edit: June 30, 2020, 12:57:26 PM by jeromedawg »

BNgarden

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Re: Renovations and improvements before selling?
« Reply #33 on: June 30, 2020, 01:01:33 PM »
We just did a contingent purchase / sale of a place (condo apartment) last year, but we're in a slow and reducing market.  Worked out very well, and we sold within 24 hours of listing, on the first showing.  We had 3 weeks to get the sale completed, and timing of funds flow was the only thing to watch (for lawyers conveyancing of monies, only make closing dates Tuesday through Thursday in our market).

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #34 on: June 30, 2020, 01:15:17 PM »
We just did a contingent purchase / sale of a place (condo apartment) last year, but we're in a slow and reducing market.  Worked out very well, and we sold within 24 hours of listing, on the first showing.  We had 3 weeks to get the sale completed, and timing of funds flow was the only thing to watch (for lawyers conveyancing of monies, only make closing dates Tuesday through Thursday in our market).

I see. What was the order of steps generally speaking? Did you put an offer in on the new place saying you have a contingency to sell your condo apt and that was pretty much it? My realtor is sort of advising against that as a last resort if we don't have to because he believes we won't have as strong negotiating power as with a cash position.

Was also curious about the suggestions to get the carpet cleaned and new paint up if we were to pursue the staging and sale *while* living here? I'm thinking we would minimize as much as possible in the place (storing a lot of stuff in one garage space) then do all that stuff to get it spruced up before staging and showing.
« Last Edit: June 30, 2020, 01:42:35 PM by jeromedawg »

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #35 on: June 30, 2020, 02:29:56 PM »
BTW: our realtor suggested that we consider waiting to list until Spring 2021 since he believes that's the most popular time of the year to sell. Would that make sense for us to do? What I would do is sign a lease that gets us in the area until towards the end of 2021. We would list the current place for sale in Spring 2021 hoping for a quick sale and top dollar, then we'd have until near the end of the year to look for something else and possibly a pretty good deal especially towards the end of the year.

BNgarden

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Re: Renovations and improvements before selling?
« Reply #36 on: June 30, 2020, 03:38:58 PM »
I see. What was the order of steps generally speaking?
We decluttered and packed away things, removing some furniture to a storage unit, then the realtor took photos, THEN we made the offer on the place and had 3 weeks to get a firm sale before our offer expired.  The seller of our new place could inform us if they got a better offer and we would have had 24 hours to complete our purchase if that happened.

But, we were listing in early spring (late March?), the seller of the new to us condo had a realtor who worked at the same firm with our realtor, and knew both that the offer was coming as well as that we were serious buyers (with a very saleable place on our end).  Plus their place had been on the market for at least 8 months (with a Christmas hiatus) before we put our offer in.  So not analogous to any market you're involved in, I think.

jeromedawg

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Re: Renovations and improvements before selling?
« Reply #37 on: June 30, 2020, 03:58:34 PM »
I see. What was the order of steps generally speaking?
We decluttered and packed away things, removing some furniture to a storage unit, then the realtor took photos, THEN we made the offer on the place and had 3 weeks to get a firm sale before our offer expired.  The seller of our new place could inform us if they got a better offer and we would have had 24 hours to complete our purchase if that happened.

But, we were listing in early spring (late March?), the seller of the new to us condo had a realtor who worked at the same firm with our realtor, and knew both that the offer was coming as well as that we were serious buyers (with a very saleable place on our end).  Plus their place had been on the market for at least 8 months (with a Christmas hiatus) before we put our offer in.  So not analogous to any market you're involved in, I think.


Thanks for the details. That gives a pretty good idea of how it could work. But yea, seems like YMMV based on the market/area/location.

BTW: do you think it's worth spending time cleaning and recoloring the grout for the existing tiling we have in the bathrooms, entries, fireplace, and kitchen? It's all the same tiling and I actually bought a colored tile sealant (in gray) for some tiles that fell off the fireplace that I recently glued back on. I can't tell what the original colors are of the grout on the floor tiles but I'm wondering if I could just apply this same gray grout coloring to all the grout lines in all the places I mentioned. Or if it's even worth doing that - I would think it might help make things look nicer though.