Value Add vs turn key or light cosmetic rehab

[Quentin Mitchell]

There are positives and negatives of both systems

Value Add

Positives:

1. Cheaper acquisition price

2. Greater ability to force appreciation.

3. You get to pick the maintenance that you do, and you know what major mechanicals issues if any could go wrong or have been fixed.

4. It gives you less risk or error because you know exactly what issues you have from rehabbing the place.

5. You get to pick your own tenants.

Negatives:

1. It takes longer to get your money back.

2. Rehabs can get costly.

3. If you are a beginning investor the process can be overwhelming.

Turn-Key or light cosmetic rehab:

Positives

1. Faster return on your money (tenants already in place or can get tenants quicker because of light or no rehab)

2. Easier for the part-time or out of state investor.

3. A good way to get started in real estate, to learn the ropes.

Negatives:

1. Less room to force value.

2. Unknown things that could be wrong.

3. Do not get to pick out your own tenants.

Everyone else feel free to chime out add, take out comment, want to see what other people have to say about this.