When is it smart to buy cheap floors for a rental?

SPEND DOWN OR SPEND UP

 

We all hate the day as it approaches. We’re losing a tenant and it’s time to “turn” one of our units. With nearly every turn comes the inevitable outlay of money. Getting the house back into rentalable condition for the next tenant is vital to keeping cash flow coming.

Unfortunately for us, flooring at our rentals tends to get beat up as much as any other item in our properties, if not more. It’s unfortunate because replacing flooring can be quite expensive.

Our instinct is to run out and find the cheapest floor we can find. Spending thousands on flooring is disruptive to our cash flow and hurts the overall profitability of our investment in the short run. So, it’s natural to replace flooring with the cheapest material we can find with the assumption that we’re going to have to replace the floors again soon anyway.

There are certainly some cases where this makes sense. Many real estate investors are planning an exit of the property within 12 to 24 months. In this case, buying the cheapest material is recommended. Save the cash flow and kick the flooring can down the road to the next owner. However, for those planning to hold properties in perpetuity, it might be time to consider some other options.

​

 

DIVE INTO THE MATH

If we take a dive into the math, it might actually make sense to spend a little more upfront for a better, longer lasting product.

Let’s say for argument’s sake that the average tenant remains in a unit for two years. Two years is more than enough time for a tenant to destroy carpet or tear up a cheap LVP product, forcing you to replace the flooring. Using rough numbers, let’s say each flooring replacement cost is $3000.

Example 1000 sf Unit

Material: $1500 ($1.50/sf x 1000sf)
Installation: $1500 ($1.50/sf x 1000sf)
Total Cost: $3,000


If you hold this unit for 12 years, you would replace the flooring 6 times, spending $18,000 total across your ownership if you continue to use the cheapest flooring option.

Now let’s look at the math in the scenario that we upgrade the flooring to a more durable luxury vinyl product that lasts three turns instead of one.

Example 1000 sf Unit

Material: $2500 ($2.50/sf x 1000sf)
Installation: $1500 ($1.50/sf x 1000sf)
Total Cost: $4,000

Replacement cost for the initial floor is now higher at $4000, however, in this case you only need to replace the flooring twice, for a total outlay of $8000. That’s a $10,000 savings over the life of ownership. Even if the flooring only lasts 2 turns, you still save $6000 with a total outlay of $12,000.

 

CONCLUSION

The natural tendency is to want to spend less when it’s time to turn the property and replace the flooring. But if you’re in the property for the long haul, fight your instinct to save money now and at least consider upgrading to a better quality product that won’t require replacement every couple years. The math says it’s the right choice and it might save you thousands over the course of ownership.

​

Vinyl Plank 4 Less is the perfect partner for your rental property flooring needs.  If you're thinking short term, we offer low cost waterproof LVP that will help you save upfront.  If you decide long-term is your strategy, we have amazingly durable American-made flooring that can last multiple turns under normal conditions.