Today, we’re going to talk about, should you renovate, spend money on renovating an investment property? The simple answer is you don’t want to overspend. If you find a great property and it looks like it’s in fantastic shape and you get an inspection, and you realize that all the mechanicals in the property are in great shape, then you probably don’t need to. But if that’s not the case, then you probably want to spend some money to renovate that property. Now the properties that I end up buying, I mostly pick them up and through all manner of disrepair. They’re going to need a whole makeover basically.
And that’s fine because now I’m adding value to that property. But maybe you don’t have the cash on hand, and you can’t really afford to do that. And that’s totally OK. But I want to give you my philosophy on why it’s so important to make sure that your property is in tip top shape and is going to last you a number of years. The goal on every property that I do is that I want it to be maintenance-free and not have to have expenses for 10 to 15 years. Now how do you get there? How do you stay maintenance-free and expenses-free for that long? Well, you want to repair and maintain the main mechanicals of a house. And what do I mean by that? Well, the main systems, the main mechanicals, and there are a number of them. And I’ll go through them here quickly. The roof, OK, if I buy a property and it still has 22 years of life left on it, I’m not going to replace that roof. That’s a waste of money. But if the roof needs repairing, I’m putting a new 30-year roof on that house. And it’s going to last me a long time.
The roof, you want to make sure your roof is protecting your investment and taken cared of. Number two, the windows, if their old, broken windows, I will replace those windows with new Pella windows or Anderson windows, those vinyl white windows. Lock in the heat. Keep everything airtight. Really protects the overall structure. So now I’ve got the roof. I’ve got the windows. What about the main systems in the house? These, again, are the things where you’re going to spend money, but they’re the most important factors in your property. A hot water heater, I’m going to put a new hot water heater in it if it needs it. A new furnace, definitely putting a new furnace into my property. There’s a reason that they come with a 10-year manufacturer’s warranty. They’re going to last about 10 years, 10 to maybe 15 years. So you’re going to want to plan for that. If you know it only has two years of life left on it when you’re checking it out, chances are you want to put in a new furnace. Just get it off of your plate and just do it. Your tenant will be happier. And you will be happy knowing you don’t have to take care of this for many, many years to come.
What about the plumbing? On a lot of our properties, if we want to replace the plumbing, we’ll put in PEX plumbing through the whole property. So we’ll tear out old galvanized pipe or PVC pipe and add that into the property so that we know we have that taken care of and protected for many, many years to come. Electrical, yes, we will update the electrical. If it’s that old knob and tube wiring, we’ll update that. We’ll put in 200-amp electrical panels in the property to protect the property. And that’s it. Those are our main systems that we want to take care of in the house. So roof, windows, electrical, plumbing, furnace, water heater, those six main things we want to take care of in the property. The other stuff is minimal and less expensive. So paint, carpet, dry wall, cabinets, flooring, that sort of stuff, of course, we’re going to update that when we’re doing a rehab. But where you really want to make sure that your investment is protected are in those mechanicals that we talked about. Those main six areas can really protect you for many, many years to come.
So if you’re looking at buying a rental property and you find one, and it has four of the six things that are in great shape, great. You probably don’t need to worry about those for a number of years. But if the roof needs fixing and the furnace needs updating, do it. Don’t skimp. Get out there, put the new furnace in, put the new roof on the property, and that way you’ll have peace of mind. And you can reduce your overall expenses for many years to come. I hope this was helpful. But that is why I would renovate an investment property in those key areas to make sure you’ve got a rock solid investment for many years to come.