Here’s how you can spend your budget wisely when upgrading your new investment property.
You’ve just closed on a new investment property. Whether it’s a single-family house, apartment building, or commercial space, chances are, it needs some upgrades. But your budget won’t stretch forever, especially since you just spent a huge chunk of change purchasing the property. You face a dilemma: should I do renovations now, or wait until I have some cash flow? Should I replace things now, or wait until they break?
Usually, you can inspect a property and decide whether the roof, flooring, or other features need to be replaced. However, some things are pretty much non-negotiable—they need to be replaced in nearly every case, regardless of how well-maintained the building appears to be.
We’ve collected expertise from lots of rental property owners over the years, and we asked them the most important “non-negotiable” things to replace in a new rental property. Here are their answers.
This is the number-one thing that you ALWAYS need to replace when you purchase a property. It doesn’t matter if the locks are fully functional. Even if they’re shiny and new, you still don’t know who might have the keys to them. Just replace them.
Pro tip: you don’t have to toss the locks and buy new ones every time. If you own multiple properties, you may be able to trade locks between properties, as long as they’re still in good working order. Well-made, quality locks will last for many years, so you can get a lot of use and re-use out of them! If they seem to be worn, though, you will probably want to go ahead and replace them with new ones to avoid dealing with broken-lock issues at the most inopportune of times.
Smoke alarms are such a simple and inexpensive device, yet they’re one of the most important safety features in any home or building. Protect your tenants and your property by making sure all smoke alarms are well maintained and in working order at all times. When you buy a new property, you should go ahead and replace all the smoke alarms with a new set. That way, you won’t have to worry about their effectiveness.
In many areas, there are laws making landlords responsible for the maintenance of smoke alarms. For example, California landlords are required to install smoke alarms with non-removable batteries that are rated to last 10 years. This eliminates the possibility of tenants removing the batteries and thus removing an important line of defense against a fire. Other places have rules on the locations and number of smoke alarms required for any given property. Make sure to check your local smoke alarm rules!
There are two reasons to replace light bulbs in your new rental property.
The first reason is energy efficiency. There are many newer options for bulbs that are extremely energy-efficient and last for years! They cost more at the outset, but they pay for themselves in no time. In addition to energy savings, it’ll also save you time and money on maintenance, because your tenants won’t be calling you or your PM asking you to replace light bulbs all the time.
The second reason: Good lighting improves the atmosphere of any building. If the home, apartment, or commercial space is not well-lit, it can seem dreary and depressing. On the other hand, if the light is WAY too bright, it can decrease the welcoming atmosphere. The best lightbulbs are energy-efficient bulbs that are designed to mimic natural light. Commercial spaces will probably require brighter lighting, while homes will benefit from lighting that is adequate but not overpowering.
We were a little surprised to hear that toilets are one of the most important things to replace in every rental property, but it turns out there’s a good reason behind it: leaking toilets can be a HUGE money drain. If you don’t know how old a toilet is, it’s a good idea to be proactive and replace either the entire thing or just the toilet system inside.
It’s not just old toilets that have this problem, either. Newer (but cheap) toilets can also be prone to leaking. Reduce the chances of leaky toilets by going ahead and replacing the internal workings of toilets right away.
Bathroom, Kitchen, Basement Electrical Outlets
This might seem like a weird one, but hear us out. We all know that electricity and water don’t mix. That’s why bathrooms, kitchens, and basements should all have GFCI electrical outlets installed. These outlets will shut off automatically when electricity runs through unintended paths, like water. GFCI outlets are not only required by law in many places, but they are extremely important to the safety of your tenants. If you don’t have GFCI outlets in all the places where running water could be an issue, you need to install them.
They do cost a little more than a regular outlet, but they prevent electrocution— so it’s definitely an investment worth making. And you don’t need GFCI outlets everywhere—only near sinks, toilets, showers, and other places where water is involved.
Did you know that fire extinguishers have an expiration date? Depending on the model, it could last anywhere from 5 to 15 years. Maybe the property you purchased has fire extinguishers on site—but don’t count on them being effective. You usually have no idea how old they are, whether or not they’ve been used before, and whether they would actually do the job in an emergency. Do yourself a favor and have the extinguisher serviced or replaced.
This one isn’t totally non-negotiable like some of the others, but as a general rule, if the carpet isn’t brand-new (or close to it), you will want to replace it. No tenant is going to want to live (or work, if it’s a commercial property) in a place with worn and dingy old carpet. Even professional cleaning often can’t restore carpeting to its original quality.
New flooring can be a fairly low-cost way to greatly improve the quality of a space. If you don’t want to replace carpet with carpet (because let’s face it—new carpet would probably have to be replaced in a couple years anyway, depending on traffic and other considerations), look into replacing it with durable but affordable laminate or bamboo flooring instead.