How and When to Add Value

[Ian Zuber]

Hey, BiggerPockets community! I am proud to say that with a lot of advice and guidance, I finally purchased my first property. It is a duplex in a very nice Pittsburgh suburb close to hospitals, nightlife, shopping, and recreation areas. I'm very excited to dive into my first investment and do whatever it takes for it to reach its maximum potential. One thing that I am having trouble trying to analyze is how to tell when a renovation project is worth it. The house was built in the 1920's so there is a lot that could be done to make it more marketable and look/feel nicer but I don't want to go over the top when the money could be used better elsewhere. I'd love any opinions, resources, or advice!

[Kyle Ebersole]

Congrats on your first one Ian! My first property was also a duplex that needed renovating, its a great place to start! What everyone is saying here is spot on, check the comps and go off what the area is telling you to do. Are you trying to hit the rental prices that have new kitchens and granite, or the rental prices that paint cabinets and install formica? Good questions to ask yourself as you work through it! 

Another question that you should ask yourself.. how long are you planning on holding this property for? Here is why I ask.. As I said earlier, I bought a duplex that needed renovated as my first property as well. It was built in 1900. I never want to sell this property, got it at a 2.9% interest rate, so its going to hopefully be apart of my portfolio for ever. With that perspective, I put some more into the property than I would've otherwise. I installed all new electric, majority new plumbing, split the utilities for both units, new panels, updated the exterior, etc. Reason I did this is two fold. One, yes it increases my rents, value of the property and return I get on it. But secondly, I want to keep it as maintenance free as possible, especially since I know I'll be holding it for a very long time. It was also vacant when I bought it so no better time to tear open some walls and replace stuff. Heck of a lot easier to do it now than when tenants are in the property! 

Just a few thoughts to think over if you are holding it for a long time. Again, congrats brother!