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Updated over 6 years ago on . Most recent reply

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Daniel Guerra
  • Investor
  • Greater Chicago Area and Northwest Indiana
42
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138
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BRRRR Strategy Question (Rehabbing for Renters or an Appraisal)

Daniel Guerra
  • Investor
  • Greater Chicago Area and Northwest Indiana
Posted

Should you rehab a property to be tenant proof (lower quality materials) 

OR

Rehab a property for the highest possible appraisal (higher quality materials)?

I'm guessing the answer is somewhat in between.  Thanks!

Most Popular Reply

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130
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Jack Inman
  • Attorney
  • Memphis, Tn
104
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130
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Jack Inman
  • Attorney
  • Memphis, Tn
Replied

Most of the appraisers that I've dealt with don't do a very thorough interior inspection of the property. It may be very different in your area, but in my area, it usually makes more financial sense to rehab only with the tenants in mind. 

A general rule of thumb is that it's not worth renovating a rental property to a standard that is above the surrounding neighborhood. Going beyond the neighborhood standard usually brings about only a marginal increase in value. So, match the surrounding properties; if granite counter tops are standard for the area then install granite counter tops. If it's a formica kind of neighborhood then just do formica counter tops etc.

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