How do you calculate whether a renovation is actually worth it?

Original post

I've got a rental coming up for turnover, and I'm trying to decide whether to put some money into updating it or just do the basic repairs and get it rented again.

The kitchen and bathrooms are pretty dated, but everything is functional. I've gotten a few rough estimates for updates, and now I'm trying to figure out if the potential increase in rent would actually justify the upfront cost.

For those of you who have done larger renovations, how do you calculate whether it's worth it? Do you look at ROI, the expected increase in monthly rent, how long you expect to hold the property, or something else?

I'm basically trying to figure out where the line is between "this should increase the property's value/income" and "I'm just spending money because I want it to look better." 

Would love to hear how other investors approach the numbers before committing to a renovation.

Reply by Josh Winders