I am looking for insight to better understand how much is the right amount of repair. My last deal I did I went way overboard with plumbing the whole house...
I went to see a house today that (NW Houston near Tomball and Spring) was built in 2005 and has never had any upgrades. The house was in good shape with the exception of the fact it needs new paint and floors. You could tell it was outdated but it was clean and in good condition. I wouldn't even have to paint the showers or tubs because they are clean.
The only major things were:
- Floors 9k
When you look at the comps they have granite counter tops, newer paint on cabinets, tile showers, new glass doors, new faucets and sinks, new ceiling fans, lights adding up to another 21k.
Obviously my challenge with only 2 deals complete is learning what I need to repair in order to sell on the back end of the deal. Knowing this should help me improve my offerings and do more deals.
If the house looks clean and livable do you upgrade the cosmetics when the comps show these cosmetics to be consistent? Do you have any tips on houses like this?
These expenses all look high to me but you don't mention the price of the house. I would expect them to be about 25-50% lower. Can you do some of the labor yourself? Painting especially is easy enough to do...just go slow along the trim and ceilings and you can do a great job.
Keep in mind that if you over improve, you won't see a penny in profit for years potentially. Keep an eye out for bargains. I just had new granite installed at 1/2 price because I chose a remnant slab. Remember that this is a rental, not your own house, so don't go overboard. Good luck!
@Aaron White I own a contracting company in Houston. It sounds like it doesn't look right compared to comps you are seeing. If you have a feeling that just doing a little bit of work may make a huge difference I would consider painting the cabinets, doing new countertops, and perhaps if needed some backsplash. None of these items are going to be terribly expensive and should be much less than the 21k you quoted. You've identified floors and paint which also give quite a bit of bang for your buck. One more item is adding in chrome appliances. They aren't that expensive and really make the kitchen pop.
Is this for a rental? For a rental, unless the floor is in bad shape (or has green shag carpet), I wouldn't change it. Paint is an easy thing to do, especially if you can paint it yourself.
Does the fence need to be completely replaced or do a few boards/sections need to be replaced?
If it is to flip, then it is a different story. What type of flooring is in the home now? Solid wood can be refinished. Things like door hardware can make a big difference on the appearance of the kitchen without breaking the bank.
Rent = clean, safe and 'tenant-hardened'. Flip = take it up a notch or three.
If you make improvements that bring your total cash investment on the property to at or above say, 80% of market value, where is your profit or equity?
This property I was looking at would be to flip. That being said even the rentals in this neighborhood have granite and upgraded plumbing for the most part.
So do most of you stick to the big things like painted cabinets, cabinet hardware and granite? If I dropped light fixtures, plumbing fixtures and a tile shower it would probably drop 6k out of my cosmetic budget.
I am looking at a 2400 sqft house.
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