Maximizing a Rehab loan appraisal
I'm buying a foreclosure for $84K, ARV should be $125-$130K based on comps, maybe a little higher based on quality and condition. 3/2.5/2 1720 Sq Ft, 1988 construction.
The loan package consists of a 6 month IO construction/rehab loan where they will loan me 75% of estimated ARV now, then refi into a 30 yr fixed when work is complete.
The ARV is determined by the appraiser based on comps and based on a list of improvements that I intend to make. My lender told me to just create a room by room list of specific improvements that I will make. Once I provide that list, I must improve to that level or BETTER.
So my question is, what exactly should I improve and to what extent and what should I leave as-is? IOW, which items affect the appraisal the most? This is a very middle class neighborhood, some houses are well kept up and some haven't been remodeled since construction 20-25 years ago. I'd expect no one else to have granite countertops - so that would be an over-improvement, right?
My current improvement plan is:
new roof - its really old and several shigles are gone
new flooring throughout - currently concrete
new paint in and out - 50% brick/siding ext
repair siding on chimney - has rotted away due to water damage
new water heater
new AC/Furnace
repair sheetrock water damage from plumbing leak
replace kitchen appliances
landscaping
replace garage door - wood rot
optional items would include:
replacing various fixtures - which ones?
new kitchen countertops - currently formica - use newer formica? something else cheap?
replace 2nd bath tile (dirty) with bathtub insert
replace master shower (currently cultured marble?? - dated looking) with fiberglass insert
there is a jaccuzzi tub in master as well - not sure if it works - would it hurt value if I pulled it out and put in shelving?
pouring a 12x8 concrete patio in back - currently it is a wood deck raised 4 inches off the ground under a covered porch. Does not look new.
So basically, what improvements/materials give the most bang for the buck in this type of neighborhood? I can link to pictures if that helps.
The goal is to sell as a lease/purchase with a backup plan of keeping as a longer term rental. So I will have this for a couple years, maybe longer.