Rehabbing: When To Improve Or Over Improve

Deciding on how much to spend on improvements when rehabbing is often one of the most difficult parts of real estate investing. Do you do the bare minimum to make the home livable, do you only tackle those items which provide the maximum returns or are there times when ‘over-improving’ can pay off?

Those new to real estate investing often warned about the dangers of over improving their rehabs and putting money into items that won’t increase the home’s value and won’t make any difference to appraisals. Of course you want to keep your profit margins as high as possible and you certainly don’t want to end up losing money but there may be a few times when it is definitely worth going a little above and beyond.

If you are regularly real estate investing in one area and you should have a good idea of what level of style and quality is expected in a home. Certainly there may be no sense installing lavish marble staircases and kitchen counter-tops when buyers won’t care about it and certainly won’t pay more for it. However a few upgrades here and there can have a huge, positive impact on your bottom line.

Great examples of this are putting in slightly better counter-tops and flooring. If you keep your eye out for sales you can stock up on great looking materials for not much more than the bare basics. Adding new fixtures to cabinets and doors can make a huge visual difference to perceived value for just a few dollars. Investing an extra hundred dollars in a designer sink for the master bath, a great looking mailbox or a few extra plants for curb appeal can do wonders not just for your bottom line but for your real estate investing company’s reputation.

Flipping houses quickly today obviously requires your property to stand out as the best of the bunch. Do your math. Doesn’t a couple hundred extra dollars invested in improvements in exchange for a better quality tenant or selling your properties 3 months sooner pay off?

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