Return on investment is how you navigate the game. know your numbers #realestate #tips #investment

26 Aug 2023 · 1 min

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Steve D Valentine discusses evaluating return on investment when deciding whether to perform a $70,000 (stated elsewhere as $75,000 in a comparative line) full renovation on a rental property versus doing minimal repairs. The speaker compares rent uplift — an extra $300/month (from $1,800 to $2,100) — against the large upfront renovation cost, concluding the remodel does not provide a sufficient return, so they will do only minor renovations and keep the property as-is.

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Return on investment is really important when you are making decisions on renovating rentals. So this particular rental we walked into, and we're trying to determine whether or not we do a $70,000 renovation, like redoing the awesome kitchens behind us, or do we just keep it and do the bare minimum on it. Now, the house is still in good shape. It's not dysfunctional and we're not being bad landlords, but it's just whether or not we're going to get the return on investment. So the cost is an extra $300 a month that we would get out of rent if we actually renovated this. So it's $2,100 versus $1,800 a month. So the choice is put $500 into it and rent it for one, $800 a month versus putting $75,000 into it and renting for $21,000 a month. There's not a significant enough return on investment to do the remodel. And the house is really still in really good shape. So we are going to go through and just do the minor renovations on it, keep it as a rental and keep moving.