Don’t get Stuck in the Over-Improving Pit
Investors cannot approach their rehab properties the same way they could a few years back. Times have changed, at least in the short-term, and in order to thrive in 2009 you will have to be smart and play your cards right. In other words, forget the luxuries and fix the basics as cheaply as possible. In today’s real estate market, putting tens of thousands of dollars into renovations will not get you thousands more in your asking price.
In a market where foreclosures and distressed properties are at an all-time high, investors need to realize that they are competing with very low cost properties. There are more buyers looking for a great deal than there are buyers looking for luxury homes. Homes are selling for much less than just a few years ago, so investing a ton of money into a property will not get you a better asking price, at least not this year, or the next. Granite countertops and stainless steel appliances used to guarantee a great sale. Unfortunately, those times have changed. Consumers are overwhelmed with debt and consumer confidence is extremely low. Buyers are looking for the lowest price, period.
If you have purchased a rehab property and want to sell it quickly, the key is to improve wisely. You can give the kitchen a makeover with a new faucet, by staining or painting cabinetry and by changing the cabinet hardware. A new tile floor can be installed rather cheaply if you don’t overindulge. When it comes to kitchens, you may want to stay away from properties that need a complete renovation. But if you must make improvements or start from scratch, just stay away from marble, granite and other luxury materials. That is of course, unless you get them dirt cheap or free.
