should I? 

That's my main question. I'm living in this house for a year now, lease is up next summer. I've been told I have the option to buy it, but it needs major updating. This house was built as what they call here in Houston, a spec home - meaning bare minimum necessities to get the house done. Standard windows, no tec shielding to conserve energy, basics in every bathroom and same in the kitchen, plus I think it may have some foundation issues. Home I was built in 2002 I believe. When I moved in, the landlord put in new wood floors all throughout the 1st floor. Nice but I know they didn't lay down any underlayment to protect from the cement right beneath it. I saw as they did it. 

Home has so much potential to be better. For starters an even paint job would be nice. Master bath can be redone so much better. Updates for all other baths and kitchen as well. Some new windows would be nice too. Since I'm in the home theater business, home has big potential to add home audio entertainment throughout. Granted I know that's not what sells homes, but I think it's a good incentive, especially since I get to do it all myself and enjoy it while I live here. 

Basically I figure this may be a good place to start at plus I'm living in it now. Take the time needed to do all the upgrades and enjoy it for some time before we sell and move out. 

Good idea? Or would I just be wasting my time? Advise? 

It would probably make a great rental as is. I wouldn't upgrade it unless you were going to flip it. It depends on the numbers on what it would cost for the foundation and if you could make a profit as a rental. You got to start somewhere,  do you homework, get your numbers together and fail forward fast. Nothing ventured nothing gained.

Perfect scenario for determining the ARV. Once determined, and you have the finances to perform the rehab, you know then what you will have into it. Then determine if flipping would produce a large enough reward to make it worth your while or, if you would rather gain smaller reward over a long period of time while still owning the Asset.

I've seen it listed between $150k and $218k. Looking at the other homes in the neighborhood I can see why. Figure I need to get a real assessment on it to fully determine that. Also figure $218 if they think it has the proper upgrades. 

Eric,

It obviously has potential to be worth the time/effort/money to flip, but I still think you need to underwrite it just like you would a new purchase that you don't already live in. What you can buy it for, plus estimated upgrades, subtract that from the ARV. If you can buy it at a cheap enough price then sure.

There is the benefit of already living there, you won't have to carry the cost of a mortgage/rental AND the debt on the rehab. Other than that I still think you need to run it as you normally would.

Couple of thoughts from a buy and hold investor that buys a lot of houses as a personal and turn them into a rental

1. Does the house need that much improvement or are you over improving it? I have seen a lot of "track" homes and they are all built based on what your describing. While upgrading is nice it usually doesn't add tens of thousands of dollars of value.

2. What you are describing for the home theater is over improving. It might be a tie breaker but won't do anything else?

3. What are the foundation issues? Even if this is fixed will it add stigma to the house?

We have bought cosmetic dumps before and fixed them up. I call this a slow flip because you buy the house live in it while you ar fixing it up. Than sell when your done. There are lots of pluses. I would recommend conventional 5%. You want to hold into it for at least a year for capital gain tax reasons.

Caution

Get a realtor to do a value who you trust and knows the area. I'm afraid what your describing isn't going to add as much value as you think it will. We bought a foreclosure and it was a mess. That doesn't sound like a "mess" it sounds like a rental not a personal property. I consider what your describing as "Prada" and "guchii" I have found many buyers like those touches but won't pay for it, if they do they only pay $10k or so.

hi Elizabeth,

House could definitely use the improvements. Everything here is standard. Laminate counters everywhere that I would consider updates. Baths and kitchen. Figured if I can update those too grannies and such, maybe it would be worth it. Master bath has room for improvement. A giant rub that overpowers in there. Small stand up shower feels really cramped in there. 

As for the home theater stuff, again more just an incentive as I know that's not what sells homes. I look at it more as my personal enjoyment till I sell it off that the next gets to enjoy if they do please. 

Foundation is the big one, this I know. What the extent is, I still haven't looked into it yet but I was talking with the landlord and she was saying it was worse. Just tells me that this was a known issue to them and they're neglecting it till the last minute. 

Honestly when I heard that, it sort of discouraged me from going forward with this project. Makes me think what else have they neglected. On the flip side of that, I figure it could be just as bad with any other home...at least here I can see from the inside seeing that I'm living in it. 

granite* not grannies. Gotta love auto correct...