Investment Property What to Repair when Flipping a Rehab Investment
finds a good deal on a property that needs repair, fixes the issues,
and resells the home at its retail value for a (hopefully) substantial
profit. As with anything, rehabbers come in all shapes and varieties,
and the degree to which they are involved in repairing the property
varies accordingly. Some will make minimal repairs, spending practically
no money at all, while others may spend $50,000 updating systems, installing
hardware, and so forth. So how does the investor know how much
effort to put into repairs?
The
answer is not a simple one. Generally speaking, it will depend
on the neighborhood in which the property is located. The rule
of thumb is: don’t try to make it the nicest home in the neighborhood;
just be sure it fits in, and give it the best presentation you can.
In other words, if you are in a neighborhood where none of the houses
have a garage, don’t spend thousands of dollars building one.
Someone looking at a home in that neighborhood is probably not looking
for a garage. On the other hand, if all the homes in the neighborhood
have central air conditioning, and yours has an old plug-in unit hanging
out of the window, you need to consider the cost of having the air conditioning
updated.
There
are cost-effective ways to make any property more presentable, regardless
of the neighborhood (in some they are required for success, in others
just a bonus). Landscaping is the big one. Generally, you
can do this yourself or with the help of very cheap labor, and it is
nothing more than mowing a yard, planting some flowers, and maybe installing
a fence around a yard. Obviously, you can only do so much with
every property, but landscaping is typically inexpensive and makes an
enormous impact on the first impression your property delivers.
Other cheap updates, such as repainting, installing ceiling fans and
light switches, cleaning, are all ways of increasing the value of your
property without really increasing the cost. A ceiling fan may
only cost you $30 to buy and install, but someone will be willing to
pay $1,000 more for a home with fans in every room. That’s good
business.
While
this is by no means a comprehensive list of what to repair and not repair
when fixing and flipping a property, the message to take away is to
make enough improvements that your property is at-or-above average for
the neighborhood. It doesn’t have to be the nicest outlier,
and it should never be the worst. Meet the standards of the neighborhood,
and provide a neat and clean presentation, and your property will be
competitive in the retail market.
InvestmentPropertyMadeEasy.com
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