Highest Value Increasing Repairs
Investor · Tampa · Member since 2020 · 24 posts · 7 votes
Hello BP community,
I'd love to hear from experienced investors on which repairs have historically increased their home's value the most. Obviously, there are many factors involved in this and it is difficult to distinguish exactly which repairs increased value by however much. But I'm sure experienced investors have an understanding of repairs which have always offered a good return.
If possible include the materials and or pictures of repairs.
Rehabbing kitchens and baths give you your best return. One return we don’t hear enough about is if you can find a two bedroom home with over 1000 square feet; it will have potential to convert to a three bedroom it’s a guaranteed $15,000 value increase.
@Moritz Bode My advice would be to tour some homes in the local area and see what is listing and getting the most interest. You could also contact an appraiser to walk the home with you as well.
If I had to pick one thing, I'd say flooring - specifically a hardwood-type flooring, including the bedrooms.
Hey Solomon, I appreciate the help. When contacting an appraiser do they break down their appraisal and show which factors added however much value?
If I had to pick one thing, I'd say flooring - specifically a hardwood-type flooring, including the bedrooms.
Hey Sue, I figured flooring would be one of the top just because it is something all rehab's will enhance or replace. I know there are several types of hardwood flooring, is there any you recommend?
If I had to pick one thing, I'd say flooring - specifically a hardwood-type flooring, including the bedrooms.
Hey Sue, I figured flooring would be one of the top just because it is something all rehab's will enhance or replace. I know there are several types of hardwood flooring, is there any you recommend?
I don't know what to recommend. There is another thread going where flooring is being discussed, but I can't remember which one it is. But, there are a lot of really knowledgeable people here who can give you advice on that. I just know as a PM that tenants always wanted hardwood floors. And I'm including anything that's even similar. Basically, they hate carpet and a lot of people don't like tile and linoleum can chip and not be a color that people like, etc.
I'm shopping for property to buy in the next year and I just cry when I see great hardwood-type flooring in the living area and some carpet I hate in the bedrooms. Oh, and I really don't like the new popular gray-ish colored hardwood-type flooring. It's going to get dated quickly. I think you're better off to just go with a traditional brown color that doesn't go out of style.
@Moritz Bode each appraisal will have a line by line break down that many would be happy to explain, it may cost you some money to get them out there for a real appraisal, but if they do that, it would a "like-new condition" report. You can always call and ask for desk appraisal.
If I had to pick one thing, I'd say flooring - specifically a hardwood-type flooring, including the bedrooms.
Hey Sue, I figured flooring would be one of the top just because it is something all rehab's will enhance or replace. I know there are several types of hardwood flooring, is there any you recommend?
I don't know what to recommend. There is another thread going where flooring is being discussed, but I can't remember which one it is. But, there are a lot of really knowledgeable people here who can give you advice on that. I just know as a PM that tenants always wanted hardwood floors. And I'm including anything that's even similar. Basically, they hate carpet and a lot of people don't like tile and linoleum can chip and not be a color that people like, etc.
I'm shopping for property to buy in the next year and I just cry when I see great hardwood-type flooring in the living area and some carpet I hate in the bedrooms. Oh, and I really don't like the new popular gray-ish colored hardwood-type flooring. It's going to get dated quickly. I think you're better off to just go with a traditional brown color that doesn't go out of style.
Awesome, I'll keep a lookout for that flooring discussion. I've never been a carpet fan and definitely agree with the gray-is color of hardwood floors. Appreciate all your feedback and time Sue.
That's good to know as I start my real estate journey. Was never fully aware of the appraisal process.
Thank you
Rehabbing kitchens and baths give you your best return. One return we don’t hear enough about is if you can find a two bedroom home with over 1000 square feet; it will have potential to convert to a three bedroom it’s a guaranteed $15,000 value increase.
Rehabbing kitchens and baths give you your best return. One return we don’t hear enough about is if you can find a two bedroom home with over 1000 square feet; it will have potential to convert to a three bedroom it’s a guaranteed $15,000 value increase.
Hey Kenneth, thanks for the feedback. Is the return also significant enough if a bedroom or bathroom need to be completely redone? Also, do you recommend increasing heated area to accommodate a third bedroom by converting areas such as patios?
Bathrooms will give you a good return. Bedrooms will get your money back, but not much more, but you still need to update them. It will be an opportunity loss if you don’t update the bedroom. I would only add a bedroom by converting square footage within the building. Stay away from additions. It just cost to much.
@Moritz Bode
LVT (luxury vinyl tile) is the way to go for rentals. It gives you the look of wood with the durability and cleanliness of vinyl. We use the water resistant type that has a hard PVC backing and the planks lock together. Had a leak in water system after installing floor, the place flooded and we just shop vacuumed it out. No harm done. It comes in a wide variety of wood tones and now they’re starting to make it available with stone looks as well. We buy it at Lumber Liquidators for about $1.60/square foot and install it ourselves (husband and I). I think LL offers installation for about $2/sq. Ft. It’s not very difficult to do at all. There are glue down systems as well but those are thinner and you have to worry about having a level surface before installing.
@Moritz Bode
LVT (luxury vinyl tile) is the way to go for rentals. It gives you the look of wood with the durability and cleanliness of vinyl. We use the water resistant type that has a hard PVC backing and the planks lock together. Had a leak in water system after installing floor, the place flooded and we just shop vacuumed it out. No harm done. It comes in a wide variety of wood tones and now they’re starting to make it available with stone looks as well. We buy it at Lumber Liquidators for about $1.60/square foot and install it ourselves (husband and I). I think LL offers installation for about $2/sq. Ft. It’s not very difficult to do at all. There are glue down systems as well but those are thinner and you have to worry about having a level surface before installing.
Hey Marie, thanks for the feedback. I wouldn't be comfortable installing flooring myself. If it's at $2/sq. ft. to have installed then I wouldn't have a problem investing in that. Which style of LVT seems to have the best feedback from buyers?
Figuring the highest value increasing repairs can only be done case by case. It all depends on the sub-market and the existing improvements. Sometimes the highest value increasing repair is to not make any repairs. Sometimes it only pays to repair one component if other components are also repaired. What you need is intimate market knowledge specific to the particular property, not some fantasy magical universal mathematical formula to apply to all property components in all properties.
The value of real estate is a function of the whole. The value of real estate is not a sum of components.
What you need to do is look at other homes in your market and see what others have done and what they end up getting for their property, both low and high ends of the spectrum. In this way, you can establish what you might expect to get if you do nothing, and what you might expect to get if you do everything. Establishing what you can expect to get somewhere in the middle is a crap shoot, and it actually comes down to the individual buyer, not some formula. It's about establishing what is typical and generating a strategy based on that, with the understanding that the world of real estate is not typical and always variable.
This is why realtors generally recommend you repair what is broken, because all buyers dislike things that are broken. This is why they will recommend neutral paint and finishes, as these offend the least amount of people. This why they do not recommend you repair a property with your own tastes, as your taste may not be (and usually isn't) universal.
Trying to understand all of this component by component is the wrong approach. You have to assess each property as a function of the whole.
For instance, if you have disgusting carpeting, it might pay to replace it. However, if the rest of the house is a ****-hole too, why bother? All you did is put lipstick on a pig. But if the rest of the house is nice and the only thing that stands out is that disgusting carpeting, it is likely a good investment to replace it.
Last and not least, sometimes the "value added" does not come back in dollars, but rather comes back in marketing time. This idea lends itself to the fact that all real estate can probably sell for more if it listed it long enough. This is why all appraisals are contingent on a marketing time frame for instance "$100k with an exposure time of 3 months".
@Moritz Bode
If I had to pick one it would be the siding. If the exterior has curb appeal that's ideal in any market to any buyer.
@Moritz Bode
If I had to pick one it would be the siding. If the exterior has curb appeal that's ideal in any market to any buyer.
Hey Jacob, thanks for your feedback. I guess that goes along with first impressions matter. Is there anything in particular you can add? Maybe your siding enhancement you always go with.
Figuring the highest value increasing repairs can only be done case by case. It all depends on the sub-market and the existing improvements. Sometimes the highest value increasing repair is to not make any repairs. Sometimes it only pays to repair one component if other components are also repaired. What you need is intimate market knowledge specific to the particular property, not some fantasy magical universal mathematical formula to apply to all property components in all properties.
The value of real estate is a function of the whole. The value of real estate is not a sum of components.
What you need to do is look at other homes in your market and see what others have done and what they end up getting for their property, both low and high ends of the spectrum. In this way, you can establish what you might expect to get if you do nothing, and what you might expect to get if you do everything. Establishing what you can expect to get somewhere in the middle is a crap shoot, and it actually comes down to the individual buyer, not some formula. It's about establishing what is typical and generating a strategy based on that, with the understanding that the world of real estate is not typical and always variable.
This is why realtors generally recommend you repair what is broken, because all buyers dislike things that are broken. This is why they will recommend neutral paint and finishes, as these offend the least amount of people. This why they do not recommend you repair a property with your own tastes, as your taste may not be (and usually isn't) universal.
Trying to understand all of this component by component is the wrong approach. You have to assess each property as a function of the whole.
For instance, if you have disgusting carpeting, it might pay to replace it. However, if the rest of the house is a ****-hole too, why bother? All you did is put lipstick on a pig. But if the rest of the house is nice and the only thing that stands out is that disgusting carpeting, it is likely a good investment to replace it.
Last and not least, sometimes the "value added" does not come back in dollars, but rather comes back in marketing time. This idea lends itself to the fact that all real estate can probably sell for more if it listed it long enough. This is why all appraisals are contingent on a marketing time frame for instance "$100k with an exposure time of 3 months".
Hey Merritt, thanks for the detailed information that I'll need to digest. It's obviously a very analytical approach but a lot of good stuff to think of. I especially liked the "putting lipstick on a pig" comparison. When comparing a property to others in that market, is it important to match their repairs or a little better/a little worse?
@Moritz Bode No worries at all, we all had to learn it someday.
@Moritz Bode Moritz, I would agree with several of the points made here -
@Account Closed is correct in making the point that each rehab will be market dependent - for example you don't put hardwood floors throughout a $150K rental but you definitely do in a $750K. This will be about tastes and preferences in your market. The easiest way to find out is call your local property rental manager and ask them - in your price range what is popular right now for fixtures and flooring.
@Marie D. is absolutely right about LVT it's very popular and a dream for rentals.
@Kenneth Garrett is right too overall rehabbing bathrooms and kitchens will raise your usage value higher than almost anything else apart from extra square footage or if you have limited space and too few bathrooms putting an extra bath in if you don't have enough room for an extra bedroom is a good choice as long as it doesn't contribute to any functional obsolescence ( that is as long as putting a bathroom in won't make the rest of the rooms too small for them to be usable)
I would not agree with siding unless the exterior really needs a facelift and then I would just repair and paint unless you need to weather protect. In my experience ( and I am in your area) the more updated and current your offering is the more desirable and that will always give you an edge in any market. The key to know where to draw the line is with your upgrades is to know your market. Go and look at the houses that are currently listed in your ARV zone. Study the Realtor listings and note down the advantages of the home that the Realtor or agent is listing - you will see a pattern - Realtors know what sells in that price point and you can glean a lot of helpful information about marketing from being familiar with them.
The other thing that I would say is try to get a feel for the materials used in the higher end homes and include at least one of those if you can - feature walls, subway tile, a granite island top if you don't want to kit out the whole kitchen etc. Just choose one of these features It will raise it from the bog standard and when it's your property against another bog standard every advantage will affect how the renter chooses.
Hope that helps.
@Moritz Bode following this and just landed first deal great numbers in Bethlehem Pa. my question pertains to the siding? I have a few cracked pieces (almost unnoticeable) and some small holes on my rowhome. This summer I will power wash and paint the foundation cement out front as it’s chipping away. But what do I do with those few pieces as I know I’ll never get the color right due to sunlight and fading ? Thx!
@Moritz Bode Moritz, I would agree with several of the points made here -
@Account Closed is correct in making the point that each rehab will be market dependent - for example you don't put hardwood floors throughout a $150K rental but you definitely do in a $750K. This will be about tastes and preferences in your market. The easiest way to find out is call your local property rental manager and ask them - in your price range what is popular right now for fixtures and flooring.
@Marie D. is absolutely right about LVT it's very popular and a dream for rentals.
@Kenneth Garrett is right too overall rehabbing bathrooms and kitchens will raise your usage value higher than almost anything else apart from extra square footage or if you have limited space and too few bathrooms putting an extra bath in if you don't have enough room for an extra bedroom is a good choice as long as it doesn't contribute to any functional obsolescence ( that is as long as putting a bathroom in won't make the rest of the rooms too small for them to be usable)
I would not agree with siding unless the exterior really needs a facelift and then I would just repair and paint unless you need to weather protect. In my experience ( and I am in your area) the more updated and current your offering is the more desirable and that will always give you an edge in any market. The key to know where to draw the line is with your upgrades is to know your market. Go and look at the houses that are currently listed in your ARV zone. Study the Realtor listings and note down the advantages of the home that the Realtor or agent is listing - you will see a pattern - Realtors know what sells in that price point and you can glean a lot of helpful information about marketing from being familiar with them.
The other thing that I would say is try to get a feel for the materials used in the higher end homes and include at least one of those if you can - feature walls, subway tile, a granite island top if you don't want to kit out the whole kitchen etc. Just choose one of these features It will raise it from the bog standard and when it's your property against another bog standard every advantage will affect how the renter chooses.
Hope that helps.
Hey Jed, awesome bit of information there. Really helped me clarify and get a second opinion.
I'm looking more for fix and flip opportunities, not necessarily rent after rehab. Is there a different approach for my strategy?
Lvp or lvt is hands down my favorite. That and a fresh coat of paint can change a house from a crappy outdated house into a modern home.
The fact is that most renters, and I would say most people as well, unless they are in the design or construction business, can't differentiate between real wood and a laminate or LVT. You want to choose a product that will look good for a long time and will hold up to abuse. The technology for these products has improved greatly and they come with 20, 30, 50 and some even a lifetime guarantee. If you take some time to go to the store and touch these products, you'll start getting better at differentiating between them. What you want to make sure is that there is no particle board in the composition, which is what makes up most laminate flooring. The particle board backing will expand and distort your floor the moment water seeps in, even if just from too-damp mopping over time. You want to choose from the products that say waterproof. Here's the latest one we're installing:
https://www.lumberliquidators.com/ll/c/pad-Dewy-Meadow-Oak-Engineered-Vinyl-Plank-Flooring-CoreLuxe-RVP4DMO/10045396
This one even comes with built-in padding on the back. Hope that helps. Go to the stores and talk to the folks there. They'll tell you which products landlords are using. First question they ask us is whether we're looking for something for our home or a rental.
Another thing that makes a big difference is replacing baseboards. If the home has typical builder 4" baseboard and it has been beaten up over time, paint, flooring and new baseboards make a great impression. New LED fixtures can also brighten the place. I usually get them on ebay.
The fact is that most renters, and I would say most people as well, unless they are in the design or construction business, can't differentiate between real wood and a laminate or LVT. You want to choose a product that will look good for a long time and will hold up to abuse. The technology for these products has improved greatly and they come with 20, 30, 50 and some even a lifetime guarantee. If you take some time to go to the store and touch these products, you'll start getting better at differentiating between them. What you want to make sure is that there is no particle board in the composition, which is what makes up most laminate flooring. The particle board backing will expand and distort your floor the moment water seeps in, even if just from too-damp mopping over time. You want to choose from the products that say waterproof. Here's the latest one we're installing:
https://www.lumberliquidators.com/ll/c/pad-Dewy-Meadow-Oak-Engineered-Vinyl-Plank-Flooring-CoreLuxe-RVP4DMO/10045396
This one even comes with built-in padding on the back. Hope that helps. Go to the stores and talk to the folks there. They'll tell you which products landlords are using. First question they ask us is whether we're looking for something for our home or a rental.
Hey Marie, thank you for your feedback. I appreciate you adding links for me to visualize these things. Cosmetic enhancements always seem necessary in the conditions I am buying houses. Therefor, I will probably always have to do floors, baseboards, paint, and light fixtures. What sort of lighting fixtures do you recommend from eBay?