Cosmetic vs Full Gut Signs
Investor · Chicago, IL · Member since 2015 · 18 posts · 7 votes
Cosmetic vs Full Gut Signs
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Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
1yIt depends on how well the building has been maintained. Try to get as much information from the seller/listing agent as you can regarding the plumbing, HVAC, electrical, roof, exterior maintenance, etc. Getting a home inspection should also help you see if there are problems with the major building systems.
Homes built before the 1950s, especially those with balloon framing, knob-and-tube wiring, or galvanized plumbing, often require full guts. If the home has been updated in phases over the years, you might be able to get away with a partial update.
You'll want to lean on a great contractor for more expertise though. Maybe connect with @Jonathan Klemm?
I generally agree with the advice to start with smaller projects. Start cosmetic and then take on bigger rehabs.
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- Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes1y
It depends on how well the building has been maintained. Try to get as much information from the seller/listing agent as you can regarding the plumbing, HVAC, electrical, roof, exterior maintenance, etc. Getting a home inspection should also help you see if there are problems with the major building systems.
Homes built before the 1950s, especially those with balloon framing, knob-and-tube wiring, or galvanized plumbing, often require full guts. If the home has been updated in phases over the years, you might be able to get away with a partial update.
You'll want to lean on a great contractor for more expertise though. Maybe connect with @Jonathan Klemm?
I generally agree with the advice to start with smaller projects. Start cosmetic and then take on bigger rehabs.
- Investor · Chicago, IL · Member since 2015 · 18 posts · 7 votes1y
@Paul De Luca Thanks Paul! This is exactly the kind of info I was looking for. I'll definitely set my sights on deals built after 1950s-60s. Thank you, I appreciate your insight.
- Property Manager · Member since 2022 · 28 posts · 24 votes1y
Great question! This is how I always look at the deal:
1. Age/ Condition of Major Systems
- Electrical: Check for knob-and-tube wiring, aluminum wiring, or outdated panels (less than 100 amps).
- Plumbing: Galvanized pipes, old cast iron, or polybutylene pipes are red flags.
- HVAC: Systems over 15–20 years old may require replacement soon. These systems can last longer, but the no heat calls in the middle of winter are never fun!
If more than 30–40% of a major system needs replacement, it’s often more cost-effective to upgrade it all at once.2. Layout and Structural Modifications
- Are you removing walls? Structural changes usually require permits and can quickly escalate from cosmetic to full gut.
- Floor plan inefficiency? Rearranging kitchens or bathrooms often reveals plumbing and electrical work behind walls.
If you’re moving walls or reconfiguring layouts, I would do a full gut3. Subfloor and Framing Issues
- Uneven or bouncy floors? Subfloor replacement may require opening walls and ceilings.
- Sagging or shifting support beams? Indicates structural rehab, not cosmetic.
If you open up a section and find widespread rot or framing issues, assume it's a full gut. Just had this happen actually, ha!5. Environmental issues
- Asbestos: Often found in popcorn ceilings, old floor tiles, or pipe insulation.
- Lead Paint: Pre-1978 homes are likely to have lead-based paint.
Remediation costs can turn a cosmetic rehab into a full gut if multiple areas are affected. Licensed Asbestos contractors are expensive!6. Cost vs. Value of Upgrades
- Cosmetic rehabs: Focus on paint, fixtures, cabinetry, and surfaces.
- Full gut rehabs: Often double or triple the cost due to behind-the-wall issues.
If behind-the-wall expenses (mechanicals, structural, insulation) exceed 50% of your total budget, it’s essentially a full gut.So let’s say you’re evaluating a 4-unit building from 1920. The kitchens and baths are outdated but functional. However:
- 75% of the electrical needs upgrading.
- The plumbing is a mix of galvanized and copper.
- The subfloor is uneven in multiple units.
This would likely lean towards a full gut or a heavier renovation rather than cosmetic because the systems are beyond their useful life.
- 1yTj FlorosPro MemberReal Estate Agent · Chicago · Member since 2025 · 95 posts · 74 votes
Quote from @Toure Smith:
Hi team!
How are you all evaluating whether or not a rehab is cosmetic (updating beds, bathrooms, and kitchens) vs a full gut besides obvoius signs (plumbing/electrical issues, structural issues, subfloor issues, etc.)?
Many lenders aren’t comfortable with me taking on a heavy rehab and suggest small rehabs to start. I’m not trying to cut any corners or put lipstick on a pig. Thanks!
I just finished up a gut rehab on a 3-flat. The building like most in Chicago was about 120 years old. When you do a walk-through or an inspection you can see if you need to do a full gut based on what you are seeing in person. Galvanized steel water lines probably means everything behind those walls has not been touched/updated in 50-70 years and will need to be updated $$$$. Also sometimes what you want to do with a project will determine your level of rehab. Lets say you want to add HVAC and rip out the old radiators, unless the electrical has been updated, you are probably going to need to add a 200 AMP service, so your plan of putting in central air now means you have to update all the electrical if you are pulling permits.
- Real Estate Agent · Chicago · Member since 2021 · 168 posts · 62 votes1y
Good question, Toure! If major systems (roof, HVAC, windows) and hidden issues pop up, it’s leaning toward a full gut. Light rehabs are a smart start—less risk, more learning. Happy to chat more! #LETSGO
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes1y
What's up @Toure Smith! You got some really great advice above from @Paul De Luca & @Daniel Baker & @Tj Floros!
One of the biggest things I look for that no one mentioned is whether or not the building is "functionally obsolete," meaning the building layout isn't practical for today's expectations (i.e., super tiny bedrooms, stairwells in horrible locations, etc.). If it's deemed functionally obsolete, I wouldn't even consider a cosmetic rehab - which I see many new people trying to do and then get screwed on the back end ARV
Oftentimes, the "cosmetic" renovations have MORE VARIABLES than a full renovation and can make things more challenging!
After working through every type of renovation myself (Alone), I highly recommend finding a potential partner who has done a couple of projects before - I promise it will eliminate a lot of unneeded stress.
Chicago has a ton of great in person networking events where you can meet wonderful potential partners...here is some of the upcoming ones list on BP: https://www.biggerpockets.com/forums/521-real-estate-events-...
Quality Builders4.966 Reviews - Investor · Chicago, IL · Member since 2015 · 18 posts · 7 votes1y
Man! You guys are great! Thank you so much! I've added each of the tips and red flags to my notes. Thanks again.
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