How about...

Question

this? We have the opportunity to purchase a house in need of some serious TLC for an exceptional price. It's in a residential spot in town, close to everything, and the comps. in the area show this house could (when rehabbed) sell for a fairly nice profit. BUT...

would it be wise to remodel the house and sell it outright, or remodel the house and rent it out? We are awaiting the realtor info for this house and will take our contractor when we schedule an appointment to see it (and a home inspection). It needs a new roof and a bit of cosmetic work, but the house seems stable (we'll find out for sure in a bit).

I suppose, if you were in this position, what would make you decide to rent it out versus sell it? I'm thinking selling because we would be able to cash in on the profits and keep it for our next deal. Any input is appreciated.

Matt H · Answer

Ya, never ever remodel a rental. Do not do anything to it, other than maybe paint the walls which is the cheapest way to freshen up the inside. But I wouldn't do anything to it if you're gonna rent it. Tenants never care. If it's not them wrecking the place it's their friends and relatives coming over that will. Only rehab if you're gonna flip it, then you need to rehab, and just do carpet and paint, nothign else.

Michael Rossi · Answer

Parrotletlover,

Real estate investing is ALL about the numbers.  What are the numbers on this deal both ways?

I would try to decide what you will do before you start the rehab.  I would not rehab a rental to the same standard as a property to be sold.  They are totally different animals.

Good Luck,

Mike

Richard Warren · Answer

There is no easy answer, everyone’s situation is different.  What are your real estate goals?  If you are looking to build a portfolio of rental properties you may want to hold it.  You can always pull cash out by refinancing if it will still have good cash flow.  If you need the money you can fix and flip.  Be aware of taxes as well, a flip would be ordinary income for tax purposes.

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