Rehabs alone do not accomplish value.

[Jorge Vazquez]

Rehabs alone do not accomplish value.

Regarding rehabs, I've found that only some items add more value than they cost. The market discounts the price of the rehab. In my experience, for almost all items, whether it's a new roof, granite countertops, or flooring, the increase in the value of the home will be less than the money spent on the rehab. For example, if you buy new appliances for $3,000, the added value might only be $2,000. If you add new floors for $7,000, the added value might only be $5,000. These values change based on comparable sales in each neighborhood, and therefore it's hard to put a nationwide number on the amount you may lose by doing the rehab.
Discounts create profits. Rehabs cost money. In almost every case, profits are made because the property is purchased at a steeper discount than the cost needed to fix it up. You need to get a deal at the time of the purchase to make money on the flip.
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