Finding uncommon value in rehabs

Rehabbing & House Flipping
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Finding uncommon value in rehabs

Glenn Espinosa
Rehabber · Alexandria, VA · Member since 2011 · 446 posts · 171 votes

While deployed with the military, I've spent this time reading and researching new ways to grow my rehab business upon my return. I've typically followed a similar formula to Jscott's in that I want to have a better house than the competition (eg. upgraded finishes, etc.) priced below the competition. In doing this I've accepted a lower profit margin while simultaneously enjoying very short market time and faster turnover of capital.

This formula has worked for me and I don't plan to stop anytime soon. I am, however, looking into the future and am hoping to corner my market in a rehab niche per se. The ideas I've been looking into include:

A) Going semi green (at minimal cost) and reaping the marketing benefits. I'll focus on cost effective solutions such as opening up south facing windows, installing rain barrels, predigging a garden bed, water saving toilets/faucets, tankless water heaters. etc.

B) Adding value by developing inlaw suites and basement apartments. This will allow me to attract buyers who wouldn't normally be approved for the home without the rental income factor.

C) Senior citizen friendly homes. Homes strictly rehabbed to maximize the safety of senior citizen who chose to age at home. I am thinking about marketing this to seniors looking to downsize into a safer home as well as children who want to move their parents into these type of homes. The main renovations would include wider entryways, non slip baths with handle bars, kitchen designs that minimize reaching, etc. This one seems like a stretch because the market for this type of house would be limited. Is there even a viable market for this?

I know these ideas are still highly dependant on the situation be it the house layout, location, cost analysis, etc. but in general how do these ideas sound? Far fetched? Viable? These are just a few thoughts that have ran through my mind the past few months while on this deployment. Any thoughts and/or further ideas are greatly appreciated!

Thanks

Glenn

(Double post, I posted the original in the wrong forum, please delete)

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  • Kyle Meyers
    Residential Landlord · Indianapolis, IN · Member since 2010 · 592 posts · 138 votes
    13y

    I think these are good ideas, but I wouldn't go too far on any one of them. You want to have your buyers pool remain large. I think you can implement a lot of your ideas without eliminating buyers though.

    For green housing, installing water saving fixtures, tankless water heaters, and energy efficient appliances will appeal to many buyers, including more eco-minded buyers, without scaring many off. I think rain barrels would keep some people from buying.

    I don't think many banks will consider potential future income from a rental suite to approve a borrower, so the added apartment may not help you that way. It could help get a buyer who likes the idea of owning their own home and a rental to help with their expenses. If you can find a way to add a suite in a way that the owner could use it as their own space and integrate it into the main unit, that may work, but the costs will still likely outweigh the benefits.

    Senior housing could be a tough market because if the senior needs assistance, they will likely be searching for a facility that specializes in that, and if they don't need assistance, they probably will not be as hooked by your senior housing benefits. Keeping seniors in mind while deciding what work you do and considering different options to keep your rehabs senior friendly could open up your market to include these buyers, but I am not sure there is enough of a market for them to make it worth it to design your rehab solely for seniors.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y

    If your buyer demographic and market values support it, these sorts of things are awesome. But, if they don't, you're just throwing your money away.

    Make sure you have a good handle on what your buyers need and what they're willing to pay for that need...that will give you your answer.

    I know that's vague, but without knowing more about your market, your buyers, your price point, etc, it's hard to comment specifically on the ideas.

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  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    13y

    One of the really difficult things about rehabbing is not fully being able to determine which improvements, upgrades, etc most contributed to the sale prices/timeline. It is very easy to make a profit and step back and say "that worked really well" and continue to do the exact same thing when you could be maximizing profits by trying to determine which of changes were most effective. I think you have some great ideas, it is just a matter of whether the market supports all or some of them and to what degree.

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