High-end Renovations on BRRRR
Hey fellow BP members,
I've seen a lot of posts from buy-and-hold investors who talk about not doing high end finishes on a rental property. Though I am newer, this strategy is flawed in my eyes for several reasons:
-If you are hiring out contractors to do the work (which is generally the case), the cost is no greater when installing an expensive granite countertop versus a cheaper marble material
-The appraised ARV will be lower with lower-end finishes
-Your time return on investment is lower, because you still have the same scope of work (generally) for a lower profit
-Your exit strategy will be more difficult on lower-end finishes if you ever choose to sell in the future
These are probably obvious to anyone who argues not to go with high end finishes on rentals, so I really don't see the counterargument. My argument is that if you can do higher end finishes on a rental, why not? Not only will it commandeer a higher rent, but also rent quicker, which is an important and often overlooked metric. Maybe you can leave smaller details out, but planning a higher end rehab seems to be much more sensible in many cases. Obviously you need to be weary of the top-end rent that you could receive on a property in a particular market, but in most cities I feel that it is worth spending more on higher end finishes to really aim for that top-end ARV. Would like to hear other investors input on this topic.
Most Popular Reply
David Greene I think would agree with you to a point. This is market and sub-market dependent, but your arguments are valid generally speaking. You want to install quality, not necessarily "high-end" and not low-end either, but the right materials for the market in which you're operating to achieve both a premium in rent and rentability. A contractor typically will charge you similarly to install granite vs. laminate countertops, but will charge more to install tile vs. a tub surround. If you're comparing tile to tile - then yes, the labor is the same and often cheaper if you use higher quality tile because the breakage and additional labor won't be present.