The Secret to Real Rehab Profits

Posted on December 5, 2014 by

Want to recover the most for your remodeling dollar at resale? Keep it simple, pay to have it done right and don’t over improve. Moderately priced materials and finishes are a smarter bet than top-of-the-line treatments. Use quality, but the least ornate options. The simplest but most ideal forms of renovations you can do add the largest bang for the buck.

You will find, in a neighborhood of $100,000 homes, adding a $50,000 kitchen may give you the edge over the competition at resale, but it probably won’t boost the sale price much. Those who use REIAComps along with getting advice from the Valuation Support Desk have the edge knowing the right improvements to make in most any market area across the country. The complete control and feeling of confidence REIAComps users have over their deals is priceless.

At InvestorCompsOnline, the developer of REIAComps, from 2010-2014 smart investors who use a valuation first approach to investing, doing projects nationwide (no do-it-yourself), have attained excellent ROI at resale. When it came to adding the most dollar value at resale, here are the “Secret Six” which proved time and again to be the best areas in a home to address.

Drum roll please….in reverse order working towards the best renovation options, Upscale Owners Suite Addition comes in sixth. Focusing on the interests of the actual buyer, making them feel good when they lay their head down at night, is hard to mess up.

Two Story Addition come in fifth. Adding much needed extra SF plus attractive elevation, gables and dormers will take you far. Next a more Moderate Owners Suite Addition comes in fourth. In the same category as kitchen and bathroom remodels, a Moderate Owners Suite addition will add to resale value.

Getting to the last few secret touches, an Upscale Kitchen Remodel finishes 3rd, Buyers love stylish kitchens and bathrooms. So it is safe to say kitchen and bathroom remodels are the typical candidates for adding value. A good Family Room Addition finished second. Please do not let the name “family room addition” trick you up. Families, couples and singles who don’t have one, want a family room, great room, den or entertainment area off the kitchen where they can watch TV and hang out.

But be smart, since this is an addition, I suggest combining it with another project, like a kitchen renovation, to get the most for your remodeling dollar. Besides, if you do it all at once, you’re going to save some money while increasing the potential ROI at resale.

Being creative while renovating never hurt anybody. If you want a similar effect for less, consider repurposing existing space rather than building an addition. Depending on the existing floor plan and the age of your house, you could use a formal dining room or old-fashioned living room.

Topping the list is a Basement Remodel. The resale value of a finished basement depends largely on your neighborhood, area and region.

In some areas of the country like Wisconsin, finished basements aren’t a big addition to home value. Thus, the question of finished or unfinished is more a matter of personal preference than home value.

In other areas, like metro Atlanta, GA it can add value or even sway the sale. My own professional basement remodel to an Atlanta Townhome finished off 600+/- SF of living space adding seven to eight times in value over the cost of materials and labor.

Put these “Secrets to Rehab Profits” to work in your real estate business making more on every new deal. Tracking sales actively to determine which area to renovate gives you the upper hand in your market area. Lastly, always use REIAComps to determine the best Acquisition Price and ARV for every deal you look at. Don’t for one moment let someone tell you the value of a deal. Let REIAComps show you for yourself.

Mark JacksonMark Jackson is an appraiser, real estate investor and property valuation specialist who teaches others to get more out of their real estate investing business. In 1999, Mark founded an appraisal company and soon found his true gift was analyzing property values for real estate investors. Since 2000, has closed millions of dollars’ worth of his own domestic and international real estate transactions. Mark’s passions are: faith, family, golf and real estate.

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