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Condo, Can I Get Renovations Done While Renters Are Living In It?

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Condo, Can I Get Renovations Done While Renters Are Living In It?

So I'm in a bit of a dilemma. My condo is my primary residence but it will shortly become my rental. The condo needs some renovations, which cannot be done at the moment (not allowed - we aren't allowing visitors during construction). I'm afraid that I am going to move out and still need the work to be done.
Is it too much to expect renters to put up with it? Obviously this would not be a "surprise" situation, I would make it VERY clear that work would be done.

- All new kitchen cabinets
- Bathroom renovation x 2 - tiling, new sink/cabinet, no floor work
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My vote is for yes, it is too much for a tenant to have to live through, unless they agree to be compensated.

It will be much easier for everyone involved if there aren’t tenants living there as you plan on renovating the 3 main areas of what is probably already a small living space.

Surely you plan on doing all of this at once as it would be silly to do this reno in sections. Where do you expect them to wash dishes/cook, shower and store their belongings and building materials while all of this is going on?
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If this is a rental, do you need the renos? I mean when it's an income property it becomes very much a ROI conversation and not a personal preference conversation.
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Red_Army wrote: My vote is for yes, it is too much for a tenant to have to live through, unless they agree to be compensated.

It will be much easier for everyone involved if there aren’t tenants living there as you plan on renovating the 3 main areas of what is probably already a small living space.

Surely you plan on doing all of this at once as it would be silly to do this reno in sections. Where do you expect them to wash dishes/cook, shower and store their belongings and building materials while all of this is going on?
Would have done it in sections so people are not tripping over one another to be honest, yes.

What are the occupants going to do with their stuff, that's a fair point.
grumble wrote: If this is a rental, do you need the renos? I mean when it's an income property it becomes very much a ROI conversation and not a personal preference conversation.
Yes, it needs to be done. My kitchen cabinets are all falling apart - doors fly off, drawers are broken

Bathrooms are just dated, not "necessary"
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DaVibe wrote: Would have done it in sections so people are not tripping over one another to be honest, yes.

What are the occupants going to do with their stuff, that's a fair point.
Yes, it needs to be done. My kitchen cabinets are all falling apart - doors fly off, drawers are broken

Bathrooms are just dated, not "necessary"
Just like grumble said, it's all about ROI. Replace the door fronts in the kitchen and anything in the bathrooms I would leave unless you think you'll get a bump in rent. Unless you're elevating the appearance you probably won't so keep it minimal - when the tenant leaves you'd be surprised at the amount of turn costs you may have so don't put in anything that will cost a lot to fix in 12-24 months.
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Hang on here. You don't want contractors coming in to the place now since you are not comfortable due to the current situation (understandable), but you expect the tenant to be comfortable with contractors?
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EP32k2 wrote: Hang on here. You don't want contractors coming in to the place now since you are not comfortable due to the current situation (understandable), but you expect the tenant to be comfortable with contractors?
I think the condo board isnt allowing it.

Agree with others... reno before you get a tenant
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Hang on here. You don't want contractors coming in to the place now since you are not comfortable due to the current situation (understandable), but you expect the tenant to be comfortable with contractors?
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Put yourself as the tenant, are your ok with this renos? You get the answer.
...
[OP]
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Well, the condition the condo is currently in, it can't be rented or I am going to be taking a significant drop in asking price.

The work can't get done right now - it's not allowed.

I'm not going to hold off on moving if I see the right place, only because my condo isn't done.

Just bad timing ...

Anywho thanks for the feedback people!
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DaVibe wrote:
Yes, it needs to be done. My kitchen cabinets are all falling apart - doors fly off, drawers are broken

Bathrooms are just dated, not "necessary"
If you're renting, then just fix the fronts with new hinges and new drawer slides. You can DIY that. Forget the bathrooms entirely if it's just a facelift. You probably won't get your money back in increased rent and resale w/ time value of the reno money and the loss of rent from the vacancy during the renos (especially since tenants will damage the place), and all that matters is how much money you're getting.

It can be really hard for people who own a property who have no rental experience to undergo the proper mental shift to being a landlord. Any money you put into that condo is a failure unless you're getting more than that money back. If you're getting a meaningful increase in rent and you think it'll spike resale price then great, but otherwise forget it.

Here's a hypothetical example:

Cost of kitchen: 20k (assuming small kitchen with no layout change, new cabinets, countertop, sink, faucets, etc)
Cost of two bathrooms: 20k
Cost of three months vacancy 5k (assuming 1,660/month)
You're in 45k in costs, in today's dollars.

Rent bump 100/month (1.2k/year)
Resale increase 25k in five years, today's dollars.

Assume a discount rate of 8% in real dollars (required rate of return on the renos), five year horizon. Using excel, =PV(8%,5,-1200,-25000), 21.8k.
You've spent 45k, and you've gotten back 22k, you're out 23k by doing these renos on an absolute basis.

Assuming that the cost of making the reno 'presentable' is 2k (DIY fix of kitchen stuff, whatever), you're net losing 21k.

You generally have to assume a pretty meaningful rent increase and/or resale price increase to justify optional renos to rentals.
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IMG_20200706_111540.jpg
IMG_20200706_111601.jpg
.
Broken drawers / falling apart

IMG_20200706_111622.jpg
.
Wear and tear, needs new door

IMG_20200706_111626.jpg
.
No longer up to code

IMG_20200706_111629.jpg
.
Looks like heck

IMG_20200706_111649.jpg
.
Broken, dated. This bathroom also needs shower tiles (they are only half way up)
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grumble wrote: If you're renting, then just fix the fronts with new hinges and new drawer slides. You can DIY that. Forget the bathrooms entirely if it's just a facelift. You probably won't get your money back in increased rent and resale w/ time value of the reno money and the loss of rent from the vacancy during the renos (especially since tenants will damage the place), and all that matters is how much money you're getting.

It can be really hard for people who own a property who have no rental experience to undergo the proper mental shift to being a landlord. Any money you put into that condo is a failure unless you're getting more than that money back. If you're getting a meaningful increase in rent and you think it'll spike resale price then great, but otherwise forget it.

Here's a hypothetical example:

Cost of kitchen: 20k (assuming small kitchen with no layout change, new cabinets, countertop, sink, faucets, etc)
Cost of two bathrooms: 20k
Cost of three months vacancy 5k (assuming 1,660/month)
You're in 45k in costs, in today's dollars.

Rent bump 100/month (1.2k/year)
Resale increase 25k in five years, today's dollars.

Assume a discount rate of 8% in real dollars (required rate of return on the renos), five year horizon. Using excel, =PV(8%,5,-1200,-25000), 21.8k.
You've spent 45k, and you've gotten back 22k, you're out 23k by doing these renos on an absolute basis.

Assuming that the cost of making the reno 'presentable' is 2k (DIY fix of kitchen stuff, whatever), you're net losing 21k.

You generally have to assume a pretty meaningful rent increase and/or resale price increase to justify optional renos to rentals.
But what I would say to that is, if and when the unit is to be sold, these renovations need to be done. Every dollar I put in, I would get back in my resale price, I can almost guarantee that based on listings sold in my building and how the units are presenting themselves.
So in this case, you would do minor repairs and do the major repairs when I'm ready to sell, since the renters are going to damage things anyways.

I was just hoping to do the "one and done" solution since these repairs are so major in my mind / overhaul.
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Looking at the pictures, I would get the reno done. But I would try and sell the place instead of renting it.

Experts are all saying that we are heading towards a recession due to Covid. They expect real estate to drop 18%. I would get rid of it today and use that money towards my mortgage. If you are fortunate enough to be mortgage free, then invest the money in the market long term.
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Wow. I see why you don’t want to live there. Gross.
I’d just treat it like a house you want to flip, get in, pretty it up, and flip it. You don’t appear organized or knowledgeable (yet) enough to be a landlord.

Good luck though, you did the right thing by reaching out.
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DaVibe wrote: IMG_20200706_111540.jpgIMG_20200706_111601.jpg.
Broken drawers / falling apart


IMG_20200706_111622.jpg.
Wear and tear, needs new door


IMG_20200706_111626.jpg.
No longer up to code


IMG_20200706_111629.jpg.
Looks like heck


IMG_20200706_111649.jpg.
Broken, dated. This bathroom also needs shower tiles (they are only half way up)
For renting the only issues I see are with the pics of the cabinet fronts and the shower door. I would fix the cabinets by wood filling where the cabinet door screws in, and then glue/nail the broken drawer pull. Shower door you need to rip out the rotten material, build it back up, paint, and caulk.

The above repairs are probably $200 max if you DIY it. That's the kind of repairs you should be doing as a landlord. The only way you'll get renovation money back is if you completely redo the entire condo so all rooms 'feel the same'. Renoing just the kitchen as an example won't get you the full lift in rent versus doing all major rooms to the same spec/quality. Also, being in a condo tower you need the common areas / amenity spaces to even support the lift in rent. No one pays for a luxury condo in a dated tower with old common areas.

Agree with the others you can reno it to flip it instead but renters will destroy what you put in so keep that in mind (not all of them but most).
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Gee wrote: Looking at the pictures, I would get the reno done. But I would try and sell the place instead of renting it.

Experts are all saying that we are heading towards a recession due to Covid. They expect real estate to drop 18%. I would get rid of it today and use that money towards my mortgage. If you are fortunate enough to be mortgage free, then invest the money in the market long term.
Stuff gonna get real fast in real estate come September when evictions are back on the table.
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Jerico wrote: Stuff gonna get real fast in real estate come September when evictions are back on the table.
You think so?

I've been in the market for a home pre-COVID and we are still looking. We've come pretty close to pulling the trigger lately, just waiting for the right place to come along really, trying not to settle.
But then in the back of our minds, it's like who knows what's about to happen ...
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DaVibe wrote: You think so?

I've been in the market for a home pre-COVID and we are still looking. We've come pretty close to pulling the trigger lately, just waiting for the right place to come along really, trying not to settle.
But then in the back of our minds, it's like who knows what's about to happen ...
I think that once the fed stops propping up the stock market regardless of who wins in November we are going to see an epic meltdown. All those Robinhood guys driving up stocks like Hertz (that is bankrupt) are going to lose their cash fast and we will see a 2007 level meltdown when they need to sell at any cost to cover mortgage/rent. I think the stock market driving itself up endlessly is driving real estate purchases across North America, and that will all end. Massive unemployment across the world right now and the US only seems to be sinking deeper.

The Great Recession took 16 months I think to go from “hmmm... this doesnt look good” to blue chip stocks dropping 60-75% of their value.

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