Update The Kitchen? Redo The Bathroom? Why We Decided Not To Renovate Our Florida Condo

A few months ago, we moved into one of our Florida rentals and have made Florida our primary residence as of 2020. The rental needed a lot of work, as we had a tenant in place for six years. A longtime tenant is great financially because there is no lost rent due to vacancy or turnover costs in-between move-ins. However, when you do turn over the unit, there is a lot of deferred maintenance that you now have to do.

At the time we turned over this unit, we considered selling it. Therefore, we didn’t want to make big updates to the kitchen or bathrooms because the unit was functional as is, and we wouldn’t recoup the cost of those renovations. Besides, we figured the new owners would prefer to make their own fixes, and we priced the unit accordingly (i.e., comparable to unrenovated units). We even got an offer shortly after putting it on the market!

We decided not to sell for two reasons. First of all, the tax hit we would take was significant – we bought in 2013 when the market was still low, and since then the unit appreciated over 80%, and the full profit is subject to capital gains tax. Second and more importantly, we realized we wanted to live in that area and in this unit. Our other rentals are three bedrooms, so bigger than what we need right now. Our other vacant rental is further from the beach than we would like. So this particular rental made sense for us to move into given our living priorities.

As a bonus, if we took over this rental as a primary residence, the tax hit would diminish over time because primary residences are exempt from capital gains tax up to $500,000 when you sell. I write “diminish over time” because the exemption for us would be proportionate to the time we rent v. reside in the unit. We had rented the unit for six years, so if we live here for one year, then we save 1/7 of the tax; if we live here two years, we save 2/7, and so on.

So here we are, living in our former rental unit, with its functional but outdated décor. The kitchen has the artificial countertops (i.e., not granite, quartz or stone), particle-board cabinets and your basic white appliances. The master bath has clean but old tile, an ugly vanity and a roomy shower with no shelves and just the basic showerhead. We’d rather have continuous hardwood floors throughout rather than carpet in the bedroom. The second bathroom could also be updated….

The best part of renovating is that you get to enjoy the results, so I don’t want to wait too long

We waited too long to renovate the bathroom in our New York City apartment, and when we finally did it three years after we moved in, I realized we could have had three more years of enjoyment. We knew we were going to do it eventually. There is never a good time for the disruption a renovation brings. We should have renovated sooner.

We did renovate our New York City kitchen right away. This was our first renovation project ever. It took several months, so not too long, and we outsourced everything so we weren’t doing the physical labor. But it was still coordination, inconvenience and almost $25,000 spent (and we did a 6×10 galley kitchen with no structural changes!). I still marvel at our new kitchen – I love it SO much – but it turned us off on the bathroom renovation unfortunately.

I don’t want to make the same mistake with our Florida condo and wait too long to make renovations we know that we want. Before we actually moved in, I expected we would live in the place for a few weeks to confirm what we wanted and then plan for a renovation. Upon actually moving in and living here, however, we have changed our minds.

Renovating is still costly, disruptive and doesn’t always pay

The numbers on renovating the Florida condo are not as clear as our place in New York. The NY place is still in use full-time by our older daughter and part-time by us for multiple trips back north for work and play. It was in far worse shape upon move-in than our Florida condo is now. So the ROI on renovating our New York apartment was obvious and high. Our personal satisfaction skyrocketed after the renovation, and we absolutely would have had to renovate both the bathroom and kitchen if we ever wanted to sell.

However, the Florida condo is perfectly habitable as is. We replaced the shower-head and put a pressure-mounted shelf in the shower, and now I have no complaints. The bathroom is not a sanctuary, but it’s so much roomier than our New York one that it is still a treat. $70 at Bed, Bath & Beyond is enough for now to avoid a $10,000 renovation.

Renovations also make those spaces unusable for some period of time. Our New York City kitchen renovation rendered the room unusable for weeks. Our bathroom renovation took 2 weeks when the job turned out to be more complicated than originally planned. Both projects required significant adjustments to daily living.

I have already cooked many of my favorite meals in the kitchen with no problem, except some awkwardness from not being used to the layout. Updating an otherwise functional kitchen would pay off only in personal satisfaction. An upscale kitchen renovation is actually top of the list for renovations that do NOT recoup their value upon resale. (Adding mountain stone veneer to the home exterior does pay off apparently, but we’re definitely not doing that!)

Our priorities are different right now

We are deliberate and intentional with our money, and we want to spend it in a way that is aligned with our priorities. We’re busy rolling out passion projects and integrating into our new community and don’t want to divert limited time and energy, as these activities gain momentum. Our number one priority is to travel more, which means we won’t be here full-time. We have a long travel bucket list and don’t want to miss a trip because we’re stuck at home overseeing contractors.

As it turns out, I got an unexpected invitation to coach at a media conference in Singapore the first week of March. Neither Scott nor I have been, and Singapore is a top destination on our wish list. Since we don’t have to be here, we can jump on the opportunity to check Singapore off our list. My expenses are covered, and my consulting fee more than covers the cost of bringing Scott along. Now that we know we’ll be in Singapore, I have already reached out to people I know there to schedule more meetings and possibly more consulting (setting up opportunistic meetings while you travel is a good business-building habit!).

Maybe we’ll get do one or more renovation projects later this year. Or maybe more travel will arise and we’ll find that the condo works perfectly well for the amount of time we use it. Or maybe as we get more tuned into Florida for work and life, we find that one of our other rentals makes more sense (unlikely but we did pick another rental to take over before this one and then changed our mind).

Renovations would diminish freedom and flexibility for us

We’re excited to be empty-nesters with more freedom and flexibility with our time, activities and location. We would rather take full advantage of that than whatever aesthetic pleasure the renovations might bring.

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Do you think we made the right choice? Would you renovate as soon as possible after move-in, or wait?