Rehab Advice
How much is too much? I bought a rancher for $130,000 that was built in '63. No A/C, original windows and cosmetically very dated and a mess. I have already replaced all kitchen appliances which were the originals- teal blue- and the countertops that matched. I'm currently putting in a new kitchen floor w/self-adhesive tiles. I ripped up the carpeting and now have beat up hard wood floors underneath which need to be refinished/carpeted over. I had to replace the cabinet and vanity in the 1/2 bath and now do I do the master bath as well? It's functional but ugly w/yellow and black tiles... Also, do I replace windows or just have it painted which is my current plan? What about the A/C- I plan to rent it so do go w/o and ad it later down the road before I sell? I feel like the whole thing inside should at least be updated to ask a higher rent, am I wrong? Do I provide washer/dryer or let the tenant bring there own??? Sorry, I have a million questions.
First off, Congratulations!
Good move on the kitchen and the tiling.
A question before suggesting how much to do - What are the comps in the area? You don't want to be spending more than what the area will support (as I am sure you already know).
Having just finished a rehab in Upper Marlboro, I would definitely suggest refinishing the hardwood floors! If you have already done the 1/2 bath, you should do some work on the master as well.
If you are wanting to just sell then I would suggest updating as many varied things as possible for minimal cost. If you are renting or lease/optioning the place then put in what needs to make it presentable, rent it out then fix up down the road.
If you would like clarification on anything, let me know.
Lethe
dsharon,
I do not rent my rehab projects, but nonetheless, your post brings some questions to mind.
Did you devise a plan for the property before you bought it? How much money did you allocate for repairs? What is market rent in the area? What is the after repair value (ARV) of the house? What is the current value of the house? What condition are other houses in that are for rent in the area? What repairs will be required to get your house in the same condition as other rentals in the area? Do other rental houses in the area have new windows, or just repainted original windows? What appliances are other rentals in the are providing?
As I see it, the other rentals in the area represent your compitition when it comes time to rent your house out, and also represent a good starting point. Find out what condition your house needs to be in to get market rent. Decide if you want to do extra repairs in an attempt to get above market rent.
And one last very important question... How are you going to get your money back that you're spending to acquire and repair the property, and any equity in the house?
I think by getting the answers to these questions, you'll have the answers to YOUR questions.
Good luck!
[addsig]
I have a lot of questions to repond to so bear w/me... The market value of the house after rehab-190,000-210,000 depending on how much work I do to it. As it was when I bought it, I'm not sure, maybe 150k- it wasn't on the market but vacant and I approached the owner w/my offer. As for other rentals, that's tough too because where mine is located is a couple of miles over the county line which makes a difference in rental rates, the county it's in being lower then the other...but the location is very accessible to the other. I have been in other's and I think to get it 'clean' I need to do the updating I'm doing. My plan to recoup expenses- to re-appraise after rehabbing and open a home equity line of credit on the rental- put all my expenses currently on my home's home equity line and credit card- on it with interest only payments for 30 yrs to keep my payment low. With my mortagage payments currently at 1037, I thought my credit line payment could be 150-200/mnth and I may be able to get 1450 for rent if I do everything right. I would still have a positive cash flow and the long term equity I will build on a house this size and in such a desirable area will be the biggest plus. My original budget for repair- 10-15K, could end up being 15-20k, still not bad for a rehab, right? Feel free to correct any of my thoughts if my 'plan' isn't that great, this is my first one...
I forgot one- the comps in the area....in this county anywhere from 180,000-250,000 for a rancher with 1+ acres- it really depends on the condition. One thing...there's a split foyer, built in '99 three houses away that just went on the market for 275K- granted its newer but its a 3bdm, 2 bth as well on a smaller lot....does this help?
dsharon,
You bought for $130,000. How much did you have to put as your down payment?
What loan to value (LTV) equity line of credit will you be able to get on the rental?
Jamie
[addsig]
I put 5% down. Unless my broker is wrong he claims he can get me 90% LTV on a credit line for the rental...I sure hope he's right since for now I have no 'plan B' as far as where to put all the debt from rehabbing this place.
Now I am a new member too, but I felt like putting in my $.02 . It seems after reading your post and replies that you are a bit thin here.
What is your tax? I ran the numbers for even as low as $1000 per year 5%vac 750 insurance and still came up with about negative 100$ per month.At 3000 per year tax you are looking at neg 260 per month.
If you were to consider L/O the property you could recoup some of your rehab money go to a positive cashflow, and still have a nice back end profit.
Just a thought..
Bri
I've run the #'s a million times and I'm not making much as I have it figured now...the taxes and ins. you figured were high but I don't have the actual #'s in front of me. I did however, find a person interested in a lease/option...problem solved.
Glad you have figured it out..=O)
You can't beat the talent on this site.. There are soooo many masters , and they will always help
Bri