Looking for guidance on my first renovation house.
I just bought a 3/2 1200 sqft home in Greenville, SC. I was able to get a good price on it and am now trying to figure out how much to put into it.
It needs:
13 Windows
HVAC work(Cool works great, heat doesn't. Maybe its the furnace?)
New Paint
New flooring(LVP or hardwoods are underneath. What do you recommend?)
Decks
Master Bathroom
Kitchen appliances and cabinets to be repainted.
What order should I do this? How much should I be putting into it for it to be a rental.
@Zach Fulton It depends how bad a shape each of those items currently are; typically you want to focus on keeping the elements out first so that your interior doesn't get affected. With this said and based on the info provided and your list; this would likely be a good order:
Windows
Furnace (possibly, get a someone to check it out be prepared to pay $3,000-$5,000 if new is needed)
Master Bathroom
Paint (do this before flooring and you wont have to worry about protecting it)
Flooring (LVP all day; go for 12-22mil if you can, its only a bit more but will take abuse much better)
Deck
How much should you put into it? Well, this also depends what you plan on doing with the property, are you flipping, are you holding for a bit, are you holding forever... these would all affect what you would do and how much you would spend HOWEVER, being and investor I also like to take the approach of increased ROI value based as close to a two (2) year payback as possible (not always possible) .... For Example: If spending $20,000 on a renovation would likely increase the rent amount by $200/mo. ($2,400 yr.) -- then it would take you just over eight (8) years to get it paid back but that is a return of 12% -- so it depends. Other factors which are not easily mathematically calculated is that a nice place will likely have less vacancy, less maintenance calls, is more 'rentable' (faster) and decreases liability... so in the back of your mind you should keep this formula in mind but a 12% is not too bad. I hope this helps.
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@Zach Fulton the answer to this question is always the same - what do your comps tell you? Meaning, what's the ARV of the property? If you have to put $50k into a property and it only goes up $20k...then what's the point? And your comps will tell you this. The comps will also tell you about under and over improving your property. If all of the comps around have granite countertops and you don't - that means you won't get the right value. Same with putting in granite countertops when no comps have it. Don't over-improve the property either. It works both ways. Keep in mind that replacing windows will net nearly $0 on your property value. It stinks that it's like that...but many times we skip that entirely because there's not enough net benefit in doing so.
I can't tell what type of a loan you used to purchase this home but most of us use 75% of the ARV when BUYING and REHABING the property. Meaning, we don't go above 75% for BOTH of those steps. The reason is because we can't get any money over that back when we REFINANCE. So make sure you know the terms of your REFINANCE lender and that will tell you what your maximum amount will be.
I hope all of that makes sense how I described it. Feel free to ask anything else if you need. Thanks!
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How do you know if it is a good deal if you do not know what the rehab cost is? Get three different bids from contractors and start shopping the work. Do not only look for price, look for communication, referrals, and knowledge. Make sure you walk the property with all of them while they are giving the bid & scope of work.
Others have shared some great insights already. One thing I would say about the flooring is that if you go LVP over the hardwoods underneath they handle the wear and tear of renters better, are easier to replace, are trendy, and if you decide to sell in the future the original hardwoods are still underneath and in good condition which could make the home more appealing to some.
@Jonathan Anderson AKA the Go-To Greenville Investor's Resource, what are your thoughts?
@Zach Fulton can you share the listing link? Ricardo's priority list is pretty accurate the a normal slow renovation but it depends on the overall condition.
Do you plan to complete a live in flip over a year? Do you want to wrap up everything on your list in 2 months and start renting? Your end goal would help to determine how to handle everything.
Quote from @Michael Peters:Sure, https://www.zillow.com/homes/1...
@Zach Fulton can you share the listing link? Ricardo's priority list is pretty accurate the a normal slow renovation but it depends on the overall condition.
Do you plan to complete a live in flip over a year? Do you want to wrap up everything on your list in 2 months and start renting? Your end goal would help to determine how to handle everything.
Im not sure why zillow took down the pictures.
I would like to complete in 2 months and rent it out. My end goal is to hold it and not sell. I have a strategy that could work well with renting rooms out because I'm very connected with some local schools. I can do a lot of the work myself, but I may not have the time this summer.
I always advise my investor clients (and myself) that the rehab costs are part of the "price". Right now you have a house that you can't sell or rent. Only after putting MORE money and time into it will it give back. GREENVILLE is a great market. It's where I live and work ( agent with investor clients). I try to help my clients determine what the rent would be and what improvements would need to be made to get that rent BEFORE we go to contract.
I am hoping that your "great price" will allow you to get what needs to be done, done and your rent will be a good return. Welcome to investing in the SC UPSTATE!
Yeah summer life can make a quick rehab difficult if you are doing all the work yourself. With the timeline I would follow Ricardo's priority list. It sounds like you are trying to balance the vacancy with repair costs and plan to do much of the work yourself. Does it need everything above to get the property into a cashflow position, attract quality tenants and start renting? Its really easy to keep adding on projects that could drag on for extra months. Items like the deck can be saved until after a tenant moves in if you need some wiggle room.
Would guess you would be looking at 40K to do all that work depending on fit and finish and quality of contractor.