patrick.net

I live in the bay area. I am thinking of spending some money to fix up my rental. Let me explain. We pay 1350 per month for a 2/1 with about 1000 sqft. There are some nice perks for our place. Near the beach, nice storage, nice gym, below market rent for our area (-200 month). There are some significant downsides. The one that bothers me most is that almost no money is spent maintaining our place. Really, not much done to keep these places up. I HATE the carpet.

I am thinking of spending some money (~7,500) to repair a few things. Let me say the following.
-I have the landlord's permission to make repairs and improvements. I will get it in writing before I start.
-I have asked for a 3 year lease with no increase in rent and will have this signed before I do any work on the place.
-My planned improvements include: recessed lighting in the LR, replace ceiling fan in one room, add one in the master bedroom, replace carpets in LR and hall with laminate, replace carpet in bedrooms with carpet, add build in shelving in LR to maximize use of space.

I guess I would like feedback on my plan. Other information I could add is that I think I will be ready to purchase in 3 years. It could be sooner, but my pants aren't on fire. 3 years feels like a fine horizon. I am a saver. I typically save 25% of my income. The 7,500 will come from savings. I have perfect credit ~813 fico.

I did look for rentals that would be more comfortable/to my liking. I didn't see a huge improvement in those that are going for 1800 or so. I think I could get something I really like for about 2300 a month. My thinking is that would be ~1000 more a month, every month. That would add up quickly over a year. I am thinking that would be much more expensive over 3 years than just fixing this place. 36000 vs 7500. Even if I go over budget, to 10K.

Other things I will mention is that my neighbors have all been here for a long time. I live in a 4 plex. One guy has been here for 20 years. He is a great neighbor. The other two for 5 years each. I don't love one of the 5 year guys, but I can live with him. Worst case, I live here 6 months and then move someplace more expensive. I still hasn't been an enormous loss over what it would have cost for us to move to a nicer rental. Of course, I don't want that. I am just saying that I have thought it through.

The biggest liability I could see is if something goes wrong with one of the improvements I start. Like if there is a problem with the flooring. I am thinking that I will ask the landlord to sign off of each improvement as we go and for him to select or approve the service provider. For example, I am hoping to have home depot install the laminate. I want him to agree to the flooring and the installer.

Any thoughts or feedback appreciated.

bg