How to stop over improving my rentals?
A bit of a psychological problem, I guess, but I hope someone here can relate!
I am closing on my third property.
I got better at finding off market deals, have a decent marketing budget, am buying this one at 50% of ARV all in. Great!
But, here’s my problem. I buy single family in A and B areas. The tenants are great, no hood/section 8.
Every time, I want to put in better materials than the property might need.
Example - LVP install is $1.50 a foot, material is $2-3 a foot. $2 LVP looks bad, $3 LVP looks much better, so I overspend $900 on a 2/1 850 sq ft house.
I replace the outlets adding ground, I put in a nice sink for $200 instead of a crappy cheap one for $80.
My logic is that if I want good tenants, I want them to like the property.
I used to rent so I know I don’t want a house where everything looks like it was bought on clearance.
But as a result, I might be spending 15-20% more on materials than I should.
Typically, most of rehab costs are labor anyway. Say, $20K labor and $10-12K materials.
In your experience, am I making a mistake or is it worth making your rentals stand out?
We’re talking about $1600-3000 rentals in the Midwest with average household income of $60-70K in the city and $100K in areas where I buy.