Determinants of the rental housing landlord's renovation decision

Abstract

Determinants of the rental housing landlord's decision to renovate are investigated using the Property Owners and Managers Survey conducted by the U.S. Census Bureau in 1995. Relationships are examined between the probability of renovation and the financial, managerial, structural, ownership and tenant characteristics provided by the survey. Four renovation types are examined, kitchen replacement, bathroom renovation, plumbing upgrade and heating system upgrade. Multivariate analysis is used to estimate the relative effects of above characteristics on the likelihood of renovation. Several relationships are found to be important. Recently purchased properties were more likely to be renovated than others. Employment of a property manager decreased likelihood of renovation. Profitable properties appear less likely to be renovated than others. Probability of renovation is affected by, but does not increase directly with, size or age. Further research incorporating both these characteristics and property and neighborhood conditions is recommended.