Remodelling to maximize properety value for refinance

[Mary White]

We just purchased a 4-plex with a bad roof and one moldy unit for $116,500. We have a new roof scheduled to be installed in 3 weeks, but need to make some big decision on the other renovations. Each unit needs new paint, flooring and exterior doors. We're planning to put in Vinyl Plank Flooring ourselves and paint ourselves. The kitchens and bathrooms are in good condition, but they're out of date. If we leave them alone then we have the cash to remodel 3 of the units quickly and have them rented as soon as the roof is fixed. The 4th unit will take longer as we need to demo the living room, bathroom and bedrooms completely and rebuild it all. Should I worry about updating the windows, doors and kitchens or rent the units out quickly? We are concerned that we'll run out of cash and have to wait until next Spring to finish Unit #4. How much value does new windows and doors add or can this wait until Spring?

Purchase Price: $116,500 all in our own cash, no lending costs

Roof Replacement: $23,000

Flooring Replacement: $6000

Door Replacement: $4000 (all 4 units)

Interior and Exterior Paint: $750

Minor Siding Repairs: $2000

Demo Costs: $1000 (just dump charges as we're doing it ourselves)

Windows: $8000 (all 4 units)

Unit #4 Remodel: $10,000

Utility Carrying Cost: $150/mo

Insurance: $250/ quarter

Current Cash on Hand: $42,000

With 3 units rented we will have $2300 in cash flow/month to save up for Unit #4. If we skip the doors and windows then we can get Unit #4 rented this Summer increasing cash flow to $3000/mo. Would you potentially sacrifice the future appraisal of the property by not upgrading kitchens, windows and doors to get the property rented faster? We are set to refinance and take cash out in December/January of this year, but cannot do everything by then. Would you wait to refinance until everything is completely done?

The comps for this property are selling for $325,000-$350,000. We want to take back out 75% to really go after our investing. This is our first BRRRR and I welcome any advice you guys have.

[Mindy Jensen]

@Mary White , I agree that the roof is way too high. Some companies have so much work that they will throw a ridiculous price out there, and if you'll pay it, they'll do the work. A solid gold roof wouldn't cost $23,000. (OK, maybe it would.)

$1000 doors? That seems high, too.

I'd skip the window replacement for years. No one rents a place because it has brand new windows. (Thanks, @JD Martin . I totally stole that from our conversation.)

I suggest that you get a new roof, then remediate the mold.
Next, start rehabbing the exterior and interior common areas so it looks nice for the new tenants, while working toward getting at least one unit completely rehabbed so you can start bringing in some funds.

You say the kitchens and baths are in good condition but out of date, can you quickly spruce them up to make them look better? Like paint the cabinets and install new counters?

If money gets tight, can you take out a HELOC? Does your own home have equity you can tap into?

Definitely get another roofing quote.