17,000 Dollars for an Addition and Repairs to a Rental Property?

Here’s the situation. We have a duplex that is 100% occupied. Now, it has an interesting design, and when I say interesting, I mean that it was designed poorly. It is a one story duplex that has pitched roofs over the outside half of the units, with a flat roof through the middle. What has happened is that the flat roof does not have a proper drip edge in the back where the water drains, and therefore the Masonite on the rear exterior of the building has rotted out.

Now, we had it in the plans to repair this issue…at some point. But, due to the insurance company finding out about the rotted exterior, they have issued a warning letter stating that we must do something about the exterior of the building or they will cancel the insurance on the property. So we have been working to secure a quote to fix the damages. But…

With the issue being forced by the insurance company, we see an opportunity to increase the value, and perhaps the rent that we can charge. There is a porch in the back of the complex that has exterior walls on three sides, and already has the full pier and beam foundation ready to go underneath it. So we are thinking about demolishing the deck, and adding a laundry room to each of the rental units. As they currently do not have a laundry room, it would be of importance to a renter to have this luxury, and with the added square footage, we might be able to charge more rent.

Problems with the repairs

Part of the plan to fix the issue at hand was to finish out the pitched roof with trusses, thus completing the pitched roof and doing away with the flat roof over the middle. The problem is, we when priced the additional roof, two laundry rooms, and replacing all of the exterior Masonite with Hardy Planks, the total came out to over $17,000. That is big money when you might only add $25-50 per month in additional rent from each unit.

An alternate solution

As we thought more and more about doing this, is seems clear that $17 k is just too much to spend on a property of this nature. Yeah, we are making good money on the place, but adding that much in capital expenditures just doesn’t make sense. So I think we are still going to entertain the idea of adding the laundry rooms, but I think we will forget about building up the roof for a complete gabled roof. I think we will opt to extend the flat roof over the laundry rooms, and see if when can substantially knock the price down.  More to come as the investigation and pricing continues.

Do you have an opinion? Leave it below. What do you think should be done in this case?

3 thoughts on “17,000 Dollars for an Addition and Repairs to a Rental Property?

  1. Every investment has it”s unforseen problems. Especially with real estate. I’m not a big real estate man myself, but I was woundering have you put any thought on how much that $17,000 of work would raise the property value.

    If the duplex is worth $20,000 more because of that it might be worth it.

    http://www.stocks-simplified.com

  2. Yes I believe that the increase in value would be greater than the additional investment into the property. However, our goal with this property is for it to be a long term rental property. We feel that adding a laundry room to each side of the duplex will help to increase the amount of rent we can charge. If it only increases the value, then we have shot ourselves in the foot, because the taxes will increase, thereby lowering our rate of return.

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