The first rule of
remodeling for investment is this: You are not going
to live in this house. Your sole interest is getting
the best price for the house in the shortest amount
of time. Or, if you're planning to rent it out, you
want to sign a lease and stop paying the mortgage yourself.
So, every time
you find yourself lingering over granite countertops,
crown molding and $10 drawer pulls that look like little
forks, knives and spoons, ask yourself, "Will it
increase the value of the unit? Will it help sell or
rent the unit faster or for a higher price?" If
not, put it down and back away. This is about making
money, not making a personal design statement.
What's more, there
are rules for resales and rules for rentals.
You might legitimately
agonize over stainless-steel appliances on a resale
house because they're considered an upgrade by today's
buyer -- the new appliances could increase the sales
price or reduce the selling time, both of which will
add to your bottom line. You
wouldn't think of putting them in a rental unit, though,
unless you're in a high-end market that is willing to
pay extra for style points. Otherwise, they're too expensive,
it would take too long to recoup the investment and
they're going to get beaten up by tenants. Black appliances
are just as elegant and won't show dirt, grime and fingerprints
nearly as much.
So whether you are
planning to rent out a property or resell it, you need
to invest your rehab dollars wisely.
First, curb appeal
counts. All of the experts will tell you the same thing:
People buy and rent properties from the outside in.
If you can't get them out of their cars, they can't
see what's inside. That translates into giving the front
door and the exterior a fresh coat of paint, or pressure
washing brick or vinyl siding, and replacing any damaged
wood, broken windows or screens. Clean up the landscaping
by removing any dead trees and trimming or taking out
overgrown shrubs. Obviously, any junk or clutter in
the yard has to go.
"A fresh, clean,
light, airy appearance is critical for both renter and
buyer," says James Randel, author of "Confessions
of a Real Estate Entrepreneur."
"I bought a property
when I first started that was just so frigging dark
and dreary, we cut in a new big picture window and took
down a tree that was blocking all the light," Randel
says. "With a $1,000 expenditure, the sun just
flowed into the house. It was like a whole new house.
The value went from $100,000 to $180,000."
But don't think curb
appeal stops at the front door, says Robert Irwin, a
Los Angeles-based real estate investor and author of
eight books, including "Find It, Buy It, Fix It."
"When they open
that front door, the first impression is critical, too,"
Inside the house, you'll
get the biggest bang for the buck in four places --
the kitchen, the master bedroom, the master bath and
the front entryway.
"If you're going
to put some money in, put it there," Irwin says.
A fresh coat of paint
in a neutral color is standard advice for any house
that's on the market; the pros also recommend ripping
out old carpet, no matter how well it's been maintained.
For rental units, many investors opt for laminate hardwood
or tile floors for the ease of upkeep.
Posted: April 12, 2006