If You Had $20K To Rehap/reno A House, How Would You Spend It?
This was the challenge posed to the Apprentices of the comb-over show. If you had in your power $20,000 to improve the resale value of a decent not-that-much-wrong-with-it home (general wear and tear), what would you do? Basically, what is the most cost effective way to improve the value of a home?
They took the easy way out on the show by hiring general contractors (big mistake) to determine this for them. The team that lost went further and made a 4-bdrm into a 3-bdrm.
The things I had in mind was repaint, recarpet and retile, and spend some money on upgrading the washrooms and kitchen cupboards).[ Edited by torontoinvestor on Date 11/05/2004 ]
In general, I would look at upgrades to kitchen, bathroom, and improving curb appeal.
I enjoyed watching this episode of The Apprentice, and recalled fond memories (NOT) of handymen I have used in the past.
All the things that you guys talked about already. Also changing light fixtures and faucets. They are very cheap and nice looking.
I didn't see the show this week, but I assume the purpose of the rehab was to increase the value? If it had a basement, I would add a bedroom to the basement and possibly a second bath or half bath. Increases livable sq/ft and increases appraisal
[addsig]
I was surprised that the general concensus was that it was a mistake to turn that 4th B/R into an upstairs Bath. I thought that was a good move. So, was that a mistake or was it that they did not complete it and make it nice?
And, do you think they should have spent a few hundred on making the front yard 'pop'?
20K - bath, carpet/laminate, lighting, landscaping, paint, front door, paint cabinets, countertop, open up kitchen/dining w/island.
$2000 on out side landscaping - curb appeal.
$3000 in the bathroom
$10,000 in the kitchen
$5000 to bring the entire interior up to quality, including paint, carpet, doors, ect...
Then I would have cried because I lost money just like they did. Did anybody listen to the numbers?
Winner raised the appraisal $40,000, subtract the $20,000 invested in materials, left $20,000 in profit, now take out holding costs and selling costs - no way it is going on the MLS with that profit, take out your labor and what did they really end up with?
So the moral to the story was...they were looking to increase the VALUE!. Not make a profit. Obviously, these houses weren't undervalued before they started. They were worth 390K before they started. Let's not confuse a reality TV show with reality. 20K gets lots of paint, flooring, some nice kitchen upgrades, some nice bath changes, some landscaping work, new front door, lighting. The bottom line is, each and every house will be unique as to what 20K in upgrades will permit you to do that will substantially increase it's ARV.
Hey,
Generally, if a house is in good condition, improvements will NOT return more than they cost.
As rehabbers, we make money because we buy crap houses, at deep discounts, and return they to good condition.
Anyone who buys "nice houses" at FMV and tries to increase them to exceptional houses, will get a quick trip to the poor house.