How to NOT Over-Improve Your Properties: 3 Key Levels of Rehab Finish

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I love beautiful homes. Seriously, you know when you walk into a house that is incredibly decorated and boasts charm, beauty, great function and ingenuity. Maybe it’s one of those houses from MTV cribs. Whatever it may be, you like it.

In part I first wanted to become a real estate investor because, let’s be honest… homes are awesome!

And after all, if the people on HGTV can rehab a massive house in just 30 minutes on television, by God, I’m sure I can figure it out. 🙂

So you finally get your first property, and you know exactly what you are doing. Between the candy bars and the soda in the checkout aisle at the grocery store, you spot several magazines that have your dream house on them, and you proceed to purchase not just one, but five different magazines so you don’t miss one you love. And one by one, picture by picture, and page by page, you perfectly cut them out with X-Acto knife precision and create an elaborate display of your future property renovation.

You then spend hours, days, and maybe weeks picking out the finishes to your pad. Perfect in room colors, maybe one color for each room, matching but not the same, of course. And then you spend the next three weeks in Home Depot, Lowes, and every tile, cabinet, and granite shop you can find — just to make sure you have the style and every possible corresponding color combination worked out.

This is fun stuff… but definitely not practical. And it might not be very useful, either.

Before you start your next renovation project, you need to think through what you are working on, and what purpose whatever you are putting in is serving.

We have several different levels of finishes inside our projects.

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3 Key Levels of Rehab Finish

Tenant Finish

Inside our rental properties, we use the same color, the same tile, the same vinyl floor, the same toilet, and sink and faucet every time (assuming the items are still available). All the electrical plugs and switches are replaced, windows repaired or replaced, a new roof if necessary, and we make sure that the items that hit us later (like cleaning out the main plumbing line or checking HVAC and having it serviced) are done before the tenant moves in.

Related: The 5 Things You Will Probably Forget When Rehabbing a House Flip

We spend money on the fixtures that will last, but are basic. No fancy toilets or special bathroom vanities. It doesn’t pay to spend more here. It does pay to have good quality faucets (don’t confuse with expensive) and toilet, as well as carpet that will last if you are putting that in (we redo hardwoods everywhere if we can).

Tenant finish is about making the property safe, presentable, and at a quality that shows the tenants what we expect, but also is on the value side of the available options.

Quality Rehab

We pride ourselves on performing amazing rehabs. Even the house we just listed for $69k on the MLS is still VERY nice inside. New hardwoods that shine, paint inside and out, faucets, vanities, floor vents, etc. But we didn’t put granite in there., Or a fancy faucet either. I found an incredible deal on a stainless steel stove and bought it for less than $400 with free delivery. Done deal. We made sure everything was done correctly, to code. Electrical is updated where it needed to be. And we put new fixtures, ceiling fans, light fixtures, etc.

We have all one color on the walls. Everything inside and out shows well. Another house we did was at a bit of a higher price point, and we were able to save the cabinets, put in 2 cm granite, a tiled backsplash, modern colors, and new vents, plugs, and outlet covers.

It’s amazing how much the small things, like well-caulked windows before paint and getting the plugs and switches updated, make everything look better. Don’t scrimp on little things that could make a big impact on how the property presents itself.

Another place you can save is on light fixtures. Yes, I found one for our Woodland flip (two story, 4 bedroom 2.5 bathrooms, built in the late 1990’s) that I loved for $400, but I also found a very cool one for less than half of that. Guess which one I bought? You guessed it… and it still looks awesome.

Higher End Rehab

We have two projects now that I would call a higher end project. Both properties were built in the ’50s-’60s range and needed a lot of attention to windows, wood rot, some framing, updating electrical and plumbing, updated HVAC, and more. We work with a supremely talented designer who helps us make sure our finishes are on point, as well as every detail from the tile on backsplashes to interior and exterior colors. She is very helpful and an amazing resource.

We also do nearly everything lighting-wise in the main living spaces with can lights. I am not big into the pendant lighting (we use it, but very sparingly). I like clean lines; I’d call my taste classic contemporary. We like the grey/beige colors. White cabinets are hugely popular right now, and cool touches really make spaces pop.

Related: How to Estimate Rehab Costs with No Construction Background

One of the ways we do that is with the tile selections and patterns. You can easily make something look more custom with brick set patterns or even with other, more complicated patterns. Just make sure your tile setter knows what the heck they are doing! We’ve also used mosaic tiles in the showers or on bathroom floor, but we don’t just use the 3 inch line around the shower; we use larger sections of it to make a more dramatic line up a wall or inside corners or a large shower. We have a massive and very awesome shower in the master of one of properties… that is more than 6 feet by 5 feet! It’s amazing. We did a pebble floor in that one.

The Takeaway

Don’t be afraid to keep it simple. Let the quality of the work drive what you are selling, especially in the rehab houses going to end buyers. Keep the rehabs nice, but don’t go overboard with the rental make-readies. Keep them safe, clean and not easy to break.

Go with your gut. Make the right decisions. And don’t be afraid to bring in people who are talented at what they do, whether that be a second opinion for a contractor, designer, or landscaper. And go into the project knowing you will need to make decisions along the way. It ALWAYS happens!

What are the best decisions you have made during a project that paid off in the end? What were some decisions that you made that you had to go back and fix?

Leave a comment below, and let’s talk!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.

12 Comments

  1. Nice overview of different rehab levels to ensure you are not overdoing it. The HGTV effect often makes people think they can have those $400 faucets and still stay under budget with their redo. Keeping it simple can be hard for those with no construction experience, as they can easily fall into the shiny object syndrome. Have a set list of upgrade items for each price point is definitely the way to go!

  2. David Semer

    @Nathan Brooks I like the way you broke the different level of rehabs. If the rehab is for a rental what you do there. As oppose what you will do if it going to be sold for retail client. I continue to ask this same question as what I can do make it best product. One tip I got from other investors and have always done to save money for retail sales is not put in a refrigerator (i thought it was crazy) I do though always put in the rest of the appliance package (always stainless steel). I have seen everybody has a different opinion on what type of refrigerator to get. (French doors, freezer on the bottom) This has not been an issue either were they said like the place but I need a refrigerator. Thanks for the great article to start the week.

  3. Nathan, your timing is excellent.
    As I was reading your post I was right at that point of time where it is time to make the final decisions on what to replace,what to redo and what to hire done. It struck me that you were absolutely right. In some situations redoing the smaller ticket items will add more to the overall than marble staircases to the master with its fiberglass tub and shower. You’re awesome man, and not just because you made my decision time a little more relaxed.

  4. Cydni Anderson

    This made me smile, because I used to be that person walking the store aisles! Now I’m partially disabled so a trip to Lowes is more challenging than in the past.

    But I’m still a HGTV junkie. 🙂 Love everything about making something run down look new again.

    Thanks for the breakdown, it is much appreciated. I’m actually going to save this, as I think it will be helpful in future endeavors.

    Cheers,
    Cydni

  5. David duCille

    first and foremost, everything new looks great, regardless of quality so yes, you can get away with putting a lot of cheap materials in flips. With that said, I’ve seen cheap WORKSMANSHIP and it really sticks out like a sore thumb. When you are selling a “flip” people expect it to be like new so when baseboards aren’t caulked right and tiles aren’t set properly it can be a big turn off. I am a buy and hold investor so I tend to always overbuild for 2 main reasons. 1. exit strategy, I want to have the nicest home in the area in case I need to sell quick, I want to know I can move it. 2. durability. I put granite and real wood cabinets in my property that is in the ghetto because I want to know that it can take a beating and not crumble.

    When you present the higher end stuff to tenants and give them a face to tie the rent payment too as opposed to some LLC, I think it also helps them to take a greater sense of pride in where they are living and make them more inclined to keep it nice.

  6. David duCille

    I will also add that you need to know your market and your audience. My ghetto rental, I put granite and stainless in partly because granite is very cheap where I live and because for what I paid for the property it wasn’t going to alter the budget that much. (25k for property, 35k for rehab. if I went with white appliances and formica I would have spent 33,500 on the rehab. The floor plan of the living space was somewhat awkward on this property so I wanted the kitchen to really pop and make it a reason why anyone would rent or buy it down the road and even in the ghetto people want nice things, hence 20 inch chrome rims on shitboxes!

    My latest buy and hold is very small on sq footage so again I’m spending more money on things that create a wow factor. Granite and stainless are no longer high end in my opinion, they are becoming standard and expected. High end is now quartz counters and custom cabinets with paneled appliances and a 36 inch range. I’m also dealing with Single family homes where people want to make it feel like a home. My tenants can lie to friends and tell them they bought the houses we rent because they are that good and they are willing to pay top rental dollar for them.

  7. Alex Craig

    I have found that adding the extras to rental properties (vanities, new counter tops, decorative light fixtures, nicer mirrors, nicer fans, nicer faucets, ceramic tile, vinyl plank flooring in high traffic areas, etc) really help in renting out the property out fast. I would assume all markets are different, but in markets where hedge funds came to town and bought up a lot of homes, doing these little things puts your property above the competition. Like I tell my clients, just like you want your house you are selling for retail purposed to be the nicest on the block, now you want your rental home to be the nicest on the block. It cost a little extra, about $5,000 per property, but in the long run, I think it is well worth it.

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