Making an informed decision regarding whether to replace existing windows in your rental property can be one of the most expensive decisions you make as a landlord.
What are your goals? Do you want to save money on utilities (energy efficiency), improve your tenants’ quality of life, increase your property’s value over time, or address aging window frames that may have become unsafe?
This article will discuss some of the reasons you may want to replace the windows in your rental property, along with the true cost of those replacements. We will also look at different scenarios when replacing the windows would be a good idea and when it just doesn’t make sense.
Common Motivations to Replace Windows in a Rental
Most landlords will replace their existing windows for one of four major reasons. To help you determine whether window replacements fit your needs, let’s briefly discuss energy efficiency, curb appeal, tenant comfort, and increased property value.
Energy Efficiency
Older windows can be quite leaky, resulting in wasted heating dollars during the winter months and wasted cooling dollars during the summer.
If you do pay for heat, replacing old single-pane windows with newer double or triple-pane windows, equipped with low-e coatings, should lower your energy bills and give your rental units a “green” edge to them.
But remember, the savings from replacing older windows may take several years to realize. Therefore, you’ll need to crunch the numbers before deciding on a course of action. Don’t forget to check into what local rebates might be available to offset some of the expense.
Curb Appeal
Your potential renters will likely view your vacant unit through online listings and real estate websites. In many cases, this is all they see. As such, having new windows installed will give your property an instant cosmetic facelift and give it an improved appearance over its competitors.
The visual upgrade provided by installing new windows should also result in reduced vacancy times, which will allow you to rent the property at a slightly higher price than you could have otherwise.
Additionally, if your existing windows appear worn, peeling, or are simply dated, installation of new ones should provide a strong first impression to attract high-quality renters.
Tenant Comfort
Your renters will certainly notice if there are excessive drafts coming from your windows or if they’re difficult to operate. If you find yourself constantly getting complaints from renters regarding cold spots in the winter months or difficulty opening windows for ventilation purposes, then your rental income will surely suffer.
By replacing your existing windows, you eliminate the above-mentioned issues of frustration and possibly improve the likelihood of retaining your current renters. Retained renters typically equate to reduced turnover costs; happy renters tend to treat properties better (less damage), therefore lowering maintenance costs associated with property management.
Before making this decision, you can use AI tools to envision what the new home design will look like, saving you time and potential regrets.
Property Value
Replacing your old windows constitutes a capital improvement that can increase the appraised value of your investment. When upgrading to energy-efficient windows, appraisers recognize this as a positive attribute and will reflect it in the appraised value of the property.
Although you won’t necessarily get back every dollar spent on new windows right away, you are strengthening your asset’s long-term equity position. This factor becomes increasingly important when considering refinancing options or selling your property. Modern windows are considered a desirable amenity to buyers and will facilitate a faster sale.
True Cost of Window Replacement
The market price of a new window doesn’t always reflect the full cost. You have to consider several factors, from installation quotes to unexpected structural work. To make things easier for you, here’s what you need to budget for:
Upfront Installation Expenses
In general, you should expect to pay between $400 and $1,200 per window for a standard window replacement, with total costs averaging around $7,400.
As far as materials go, vinyl frames are the most common and affordable option for investment properties. However, full-frame replacement (as opposed to a pocket replacement), which requires that the surrounding frame be replaced because it has rotted, will cost you much more than a pocket replacement that slides into your existing frame.
Window prices vary widely depending on window size, style, and installation complexity. In some cases, you could purchase a single window for less than $300; in others, the price could exceed $2,500.
Hidden Costs
Once a contractor removes the old windows, they often find rotting wood framing, water damage, and/or mold that can increase the cost of a single window by several hundred dollars. The disposal fee for removing the old windows ranges from $40 to $80. Custom-sized windows that do not fit standard openings can also increase costs by up to $50 to $200 per window.
Depending on local regulations, permits can add $50 to $300 to each window. Finish work, such as painting, caulking, and trim repairs, is usually not included in the original estimate. It is always best to ensure that the contractor provides a written scope of work that clearly defines what is NOT included.
Financing and Budget Concerns
Since there is no way to obtain a federal tax credit based on energy efficiency for investment properties, you will have to explore other options for financing. If you take a Home Equity Line of Credit (HELOC) from your main residence, you will likely get the lowest interest rate available today. Rates from recent years ranged from 7.75% to 9.00%.
A HELOC on your rental property is very difficult to get approved for, and if you do get approval, it comes with even stiffer restrictions than those found in a HELOC taken from your main residence. For smaller jobs, contractors’ financing programs or personal loans can help fill the financial gaps.
A good rule of thumb is to save at least 15-25% of your estimated total job price in case something unforeseen happens during construction, so it does not delay your completion date.
When Window Replacement May Not Be Worth It?
Replacing windows doesn’t make sense in every case. In reality, the long-term financial benefits of replacing windows can actually yield a much higher return on investment over time. Here are some examples in which you need to reconsider whether it’s necessary to replace your windows.
Your Current Windows Are Still Functional
If your windows function (open, close & lock) without damage (rot or broken glass), it would probably be excessive to spend a lot of money on new ones. Most older wood windows with new glazing and weather stripping operate virtually as well as mid-grade replacements.
Restoring old windows professionally (sanding them down, painting & sealing) can run a small fraction of the cost of purchasing new ones. Do not allow yourself to be persuaded into tearing out an entire window just because it looks worn. Instead, caulk around gaps in the frame, add storm windows, and see immediate improvements in energy efficiency.
You’re in a Low-Rent Market
If you’re renting in a neighborhood that has price ceilings set by local demand, there is no way you’ll be able to raise rents enough to recoup the cost of premium windows. Tenants who live in this type of housing want clean, functional houses rather than upscale finishing touches.
While spending $8000 on windows could result in a possible $25/month rent increase, the payback period would extend far beyond 25 years. Before making upgrades that tenants may not appreciate, talk to a local property manager in Northern Virginia about what types of renovations tenants expect from their rentals.
The Payback Period Is Too Long
While paying utility bills, also determine how long you have to wait until your energy savings will equate to the amount you paid for your original investment. If you purchase $10,000 worth of windows and realize that each month you will save $40 on heating or cooling costs, then it will require approximately 20 years for you to earn back your money.
For those owners who intend to keep their properties for less than 10 years, money is usually best used on other projects, such as kitchen remodeling or updating bathrooms. Both kitchen and bath remodels tend to immediately increase both rental income and occupancy due to an increase in functionality.
Alternative Solutions Solve the Problem for Less
The majority of potential “window” problems can actually be corrected (at lower cost) without replacing your windows. The most common reason for drafts is not that your windows have failed; it’s due to caulk or weatherstripping that has been damaged by the elements or improperly installed on the frame.
While fading furniture is difficult to prevent completely, you could apply a UV-blocking film directly onto your current windows. If condensation develops between the two panes of glass in one of your single-glazed units, it means one of the seals is broken; however, replacing only the unit is much easier and less expensive than replacing the entire window.
Conclusion
Replacing rental windows will require weighing the initial costs against the long-term benefits.
If your rental units are functioning and you cannot raise rents to reflect your area’s competitive market, there are several alternatives that offer a greater financial return than replacing the windows. However, when the financials work out, installing replacement windows may increase tenant comfort and property value, and curb appeal.
Before making this decision, consult an experienced property manager in Northern Virginia to provide valuable insight into what local renters expect.
