Is it worth spending the money?

With our first property in the US. We had to carry out some small renovations to get it up to scratch in order to find a good tenants. Most of the renovations were only small, such as painting walls, repair some minor damage and clean up the property as it had been left vacant for a few months.

On the quote from the contractor was replacing the carpet with tiles. There is obviously a benefit with tiles compared to carpet with regards for an investment property, as tiles are typically more lasting and can be cleaned a lot easier. The existing carpet was slightly worn and had a few stains, but overall it was not in too bad a condition. The quote to replace with tiles was $2,900, we opted not to spend the extra money and just hired a good carpet cleaner for $200 to give all the carpet a thorough clean.

After the carpet cleaner did their work, the carpet was a lot cleaner, but there was still an issue of smell, aparently the old owner had animals, and the smell of dog was almost ingrown into the carpet. Having not being able to visit the property we only heard the issue from our agent, and we were told that although it was not great, it should not stop us getting a tenant.

When we started looking for a tenant, we received a positive response on the property generally, apart from the smell of the carpet. That was the deal breaker with the first few groups who were looking at the property. Due to this, we had to reduce our advertised rent from $800 per month to $700 per month. There was also the delay of approximately 1 month due to the vacant property which we had to deal with. I cannot say for certain that the property would have rented right away for $800 per month if we did replace the carpet with tiles, but I am confident that this would have been the case.

So if we did initially spend the money to replace the carpet, then we would have made back our money in a couple years. Not to mention, replacing the tiles would have also added value to the property, so any money spent on renovations for the property would have been instantly rewarded in a capital gain.

So although we still receive a decent return, it seems it may have been worthwhile replacing the carpet with tiles while we were renovating the property. I guess it is just important to know if improvements you plan on doing to the property, will really be worth it in the long term. Down the line we may plan on approaching our tenant about replacing the carpet with tiles, and perhaps negotiating a higher rent from them, so all may not be lost.

If you want more information from our experience, or any other comments. Feel free to email us at streamlineinvesting@gmail.com

Disclosure: The article is not to be taken as investment advice and the views expressed are opinions only.  Readers should seek advice from someone who claims to be qualified before considering allocating capital in any investment.