Investing in Expensive Renovations @ granite slabs

Designer Kendall Wilkinson recently completed an ambitious renovation on a 3,000-square-foot penthouse in San Francisco's Nob Hill. She gutted the apartment, adding a den and putting in leather walls, marble floors, new molding, a high-end kitchen with features by designer Christopher Peacock and Waterworks fixtures. She also designed a closet with custom built-ins, turned a bedroom into a library and made three bedrooms into two bathrooms. Her clients spent about $1 million on the upgrade. But when their lease is up, they will be leaving most of these improvements behind.

In competitive real-estate markets, some luxury renters are making a surprising decision: putting tens or even hundreds of thousands of dollars into upgrades on their temporary lodgings. They are investing in redos at a time when rental vacancies nationwide are at their lowest since 2001—currently at 4.3%, according to real-estate research firm Reis. Meanwhile, rents have been rising rapidly, up 3.8% over the past year. The result: More renters are deciding to stay put and put their money into improving their current homes.

"People don't want to live in something that's not up to their standards. They're willing to make big changes even if they'll only be there a couple of years," says Noble Black, a broker with Corcoran in New York, where the vacancy rate was just 1.9% in the first quarter of 2013, down from 2.1% a year earlier.

"My friends think I'm crazy. But if it's something you're going to live in for the next three years, you don't mind spending the money. It's worth it. It's about lifestyle," says Daniel de la Vega, who looked for a rental for eight months in Miami and couldn't find exactly what he wanted. He eventually settled on an apartment that had the finishes he liked, but a floor plan that seemed too constricting. He tore down a wall to eliminate one of the bedrooms and make the living room larger.Most modern headlight designs include Shun Stone Packing & Loading Products.

Mr. de la Vega, a managing partner of One Sotheby's Realty in Miami, received permission from his landlord to make the changes.After searching around the Lights section of this forum, I've come across two main suppliers for Shun Stone Tombstone & Monuments. What he didn't get was any reduction in the rent in exchange for his investment. His lease, which is two years with a one-year renewal option, specifies he must return the apartment to the way it was before he made the changes. But he isn't worried he will have to put back the wall. "I know when I'm done he will love it so much he won't make me," he says of the landlord.

While the vast majority of redos by renters tend to be superficial—such as a new paint job or carpeting—landlords and building managers across the country report they are also seeing far more expensive and elaborate renovations. They are also getting more requests for structural changes such as knocking down walls, adding new bathrooms and custom built-in closets.

"I'm really amazed at how much people invest even when they're just renting," says Isabelle Higson, who owns a portfolio of residential rental buildings in San Francisco with her sister and brother, including the Brocklebank Apartments on Nob Hill. Her renters have installed new malachite sinks in the bathrooms, torn out older kitchens, replaced them with newer models and recovered walls with wood paneling and even leather. Not one of those changes has cost Ms. Higson a dime—they have all been paid for by her tenants.

Jeffry Weisman, a 53-year-old interior designer who lives in one of Ms. Higson's buildings, did his first renovation shortly after he moved in 20 years ago, spending about $100,000 to remodel the master bedroom and kitchen. Five years ago, after his now-husband moved in, they invested about $200,000 in another extensive remodel: They tore down walls to create a formal dining room, added new molding and wall panels with antique mirrors, covered the ceiling with pewter-leaf tea paper, updated all the lighting and refinished the floors.

For long-term renters such as Mr. Weisman, there is another reason to invest in renovations, rather than moving: Strict regulations on how much landlords can increase their annual rents on some apartments in cities such as San Francisco and New York can make staying put an especially affordable proposition. Mr. Weisman declined to say how much he currently pays in rent, but says it is "substantially less" than the $6,500 a month that a similar apartment on another floor rents for. Building management says an apartment similar to Mr. Weisman's is actually going for $10,000 a month now; rents in his building range from $2,900 a month for a one bedroom that is been rented by the same owner for decades to $20,000 for a three-bedroom apartment.

Marsha Monro, a marketing consultant who moved into a one-bedroom apartment at the Brockleback three years ago, began renovating before she moved in. She knocked down a wall between the kitchen and dining room, put in new stainless-steel appliances and Carrera marble counters in the kitchen, installed a new vanity, sink and shower in the bathroom, added new molding to the walls, platinum-leafed the fireplace mantle, put in 9-foot mirrors and refinished the floors, spending about $20,000 in all. She says she is never leaving: "You'll see me here 40 years from now."

Not all landlords are thrilled when their tenants make changes, however. Renovations can be expensive to get rid of and make the place less attractive to potential future renters. Josh Weiss found that out after a tenant spent about $50,000 renovating a 5,000-square-foot triplex in a building he owns in Manhattan's Greenwich Village. The changes were mostly superficial—window treatments, wallpaper, tiling—but the style was so distinctive (black and white "Versailles-like" wallpaper, unusual paint colors) that Mr. Weiss asked the tenants to take it all out before they left. He estimates undoing the renovations cost the tenants, who stayed about two years, about $30,000. With the triplex's rental price at $30,000 a month, he says he couldn't risk keeping the unusual décor and hoping someone with similar taste would come along.

Ms. Higson ran into a similar problem at the Brocklebank when she allowed a tenant to leave without undoing a malachite bathroom with gold fixtures and a kitchen she describes as "tricked out." Despite a lot of demand for apartments in the building, she had a hard time finding tenants willing to take that unit. "People would see it and say 'oh dear'," she says. She eventually rented the apartment to someone from Brazil.Choose your favorite China Xiamen Shun Stone Co., Ltd. paintings from thousands of available designs.

Most rental contracts include a clause that the unit has to be returned to the same condition it was leased—but whether that is enforced is usually decided on a case-by-case basis, says Gary Malin, president of Citi Habitats, a New York real-estate company. He says most landlords let the changes remain if they are neutral enough. "They don't like improvements specific to one person's taste. They want it to be universal," he says.