Ask Phyllis!

Maximizing Your Rental

Dear Phyllis,
I have been reading your real estate column since you wrote for the Glendale Newspress. You don’t receive a lot of questions from real estate investors, so my question is pertaining to a new topic. One of my rentals has been occupied for more than fifteen years by the same tenant who will soon be moving. I will not consider selling because of tax consequences. I have a property manager who manages all of my rentals so the process is simple enough. Since you have been in the business for a long time, I assume you are familiar with investment property. My three bedroom, two bathroom rental has a pool and a view and is in an excellent location in the hills of La Crescenta. The downside is that the kitchen and bathrooms are very outdated. My tenant didn’t cook, so he didn’t care. My property manager recommended that I remodel the kitchen and baths in order to maximize my investment. I have the money to do so, but am reluctant to invest that kind of money in a rental. What is your opinion? Thanks Gladys

Dear Gladys,

Without seeing your home, I can only offer some vague advice. But I hope you find it helpful.

The rental real estate market in La Crescenta is very hot. Because of the size of your home and the excellent schools in La Crescenta your likely renter will be a family seeking the school district. Likely both bathrooms could be spruced up for a minimal amount of money.

Kitchens are important features for most families. The simplest way for you to decide, is to have your property manager tell you the amount you could rent the home for with a minimal investment (such as paint and flooring). Then the increased rental price with a bigger renovation. How long will it take you to recapture your investment? I don’t need to remind you that owning property requires constant upkeep.

If you do opt for the bigger renovation, you will most likely be getting a better caliber of tenant. Rents have dramatically increased throughout Los Angeles County. I feel it would be a shame for you not to maximize your rental investment. Best of luck to you with either direction you take.