How far should I go in rehabbing my BRRRR method property?

Question

I have decided that I absolutely want to get involved in real estate. My family is pretty involved in it and I seem to have a good mind for it. I bought my first house at 23 with plans of rehabbing it within 2 years, refinancing it and renting it out in the future after I move out. It's a single family house located in the suburbs of Philadelphia. Since moving into the home I've added a large full bathroom and remodeled the master bedroom. My question is one that I have had trouble being answered and I'm hoping that anyone who has had experience with this method can answer. I have a very strict timeline with this house as I would like to purchase a second home early next year. I'm planning on having a decent amount of money for my next and last project before refinancing (about $7-$8k). I can either rehab the first floor bathroom, which desperately needs to be done or rehab the kitchen. The obvious thing to do would be to tackle the kitchen, however my dilemma is knowing I will not have the money to do a total rehab of the kitchen. For example, the windows are very drafty and there is no insulation, the electric should be redone, the flooring needs to be addressed, etc. The neighborhood is decent but it's the kind of neighborhood that you would not get the return on something like granite counter tops.

After that long prelude, my question is what finishes/amenities should I think about including in the kitchen and what steps should I take to maximize my value? I want to maximize the value of the house but also making it renter friendly; and by that I mean inexpensive to maintain and repair. Should I include a backsplash? Should I completely rip up the flooring and install tile or just update the laminate over top of the existing laminate? I have existing butcher block counters in good shape, should I leave them or refinish them or replace them? I have the room to add cabinets and a peninsula, should I consider that? I have no idea what would maximize my value while also being renter friendly. What does everyone do when updating a kitchen in a BRRRR method property?

John Leavelle · Answer

Howdy @Scott Boroi

This is a Buy and Hold property, correct? It is currently your property. You will not be selling any time in the near future. Then treat it as a Rental property. I like laminate flooring throughout the property. Not Hardwood, not ceramic tiles, and definitely not carpet. You want finishes that can take the abuse of renters and not be too expensive to repair or replace when needed.

When you do decide it is time to sell you will do some additional rehabbing anyway at that time to get it looking good for prospective buyers. That is when you can upgrade some of the finishes.

Scott Boroi · Answer

Thank you for your reply! That info definitely helped. I just don't want to put too many high end amenities in the house just for value purposes to have it later destroyed by renters. I'm trying to figure out that sweet spot in between. Maybe I have the same problem as everyone else but am I going to get the value out of tearing the walls down to insulate and replacing windows? Or should I focus on just painting and redoing the cabinets? That's where I get lost. I know what the responsible choice is but it's just going to be a rental property so I'm sure it doesn't matter all that much.

Arpan Patel · Answer

Depends on the area and comps. What are the other higher priced homes that sold in your area and around the same parameters of your home doing to get top dollar? Then try and do something similar and you should have a strong case for any refinance rebuddle. I hope that helped

How far should I go in rehabbing my BRRRR method property?

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