Does a new roof over-improve this house?
Bought my first house a few weeks ago planning to buy & hold it. The original budget was 14k. It would've been a marginal flip (I projected I would've made only $9k if I flipped it today), but the rental rates are strong in that area and I projected a 31.5% COC% on a rental.
Unfortunately, things went off the rails before the renovation has even started. My estimates for the new roof ended up being way off. I had budgeted 4k for the roof (estimated by my contractor friend who owns 30 houses of his own and has re-done several roofs), but bids are coming in, in the 7500-9500 range which is remarkable for an 1100 SF house (2 weeks later, I'm still getting new bids). The problem is the roof over the carport and back addition were both flat, so they were prone to major ponding. I wanted to rebuild them on a pitch using a TPO tapering system so the water would trickle off the roof. Even my contractor friend was stunned at how pricey this is turning out to be.
The problem I have now is that I feel this tapering system is probably a negative investment from an investors standpoint. I feel buyers/renters won't care that I put all this extra money in just to make the roof pitched. They'll care that it's new, but they won't pay any extra just because I paid to have it pitched (given that most roofs are already built with a pitch). To a buyer/renter, a new roof is a new roof whether it costs 4k or it costs twice that. There's nothing in the sales comps that suggests the ARV of the value would go up a tapered roof.
The larger issue looming would then be the rest of the scope of work. To save some money for the roof overages, the biggest ticket items I have that could be cut to save money are things that buyers/renters really would care about. I could save $3000 just by not re-painting the entire house inside and out (the house was painted 3 years ago and is "okay"; I would just only paint the bad areas) and leaving the crappy kitchen countertop and kitchen cabinets. Of course, these are things that renters/buyers actually care about more than a roof and thus if I cut them, then this new $8k roof could end up lowering my ARV/rental rate as opposed to raising it! If I keep all of them, it might at best keep the rates the same as I had projected but now I'm sinking an extra $5k of my money into an abyss. That's over a full year of net rents to get that back for something that might add nothing to ARV!
Do you think that this TPO system for the roof is in fact an over-improvement or am I wrong? If I do go ahead and do it, do I just suck it up, leave everything in the SOW, and just take the loss on the roof project?
Edit: Just to clarify something. If I rebuild the roof without the tapering (leaving the carport roof flat and thus still prone to the long-term effects of ponding), it would save something like $600-1k off bids. It's unlikely ponding would become a major concern on a new flat roof for 10 more years but would obviously depreciate faster (the tapering system has a 20-25 year shelf life).