Deciding when to Rehab

[Ryan Scaife]

I recently closed on a contract on a half duplex in a solid appreciating market. My plan is to stabilize the side I purchased with cosmetic rehab (flooring, paint, cabinetry) before working with the owner of the other side to purchase it and do the same. I got the property for under market value so I believe there is potential to BRRRR this property.

On the day of closing I did a walk through and met the tenants of the other side. I noticed a stench of marijuana smoke on a shared back porch, and that they leave their property looking less ideal from the outside that will impact the outlook on my property with potential tenants.

It has me questioning how I should approach my property. I could wait to do my renovations and just lay down new flooring for now and advertise for rent while waiting to purchase the other side, but that could hurt my appraisal, and refinance amount. However, with the current tenant situation I fear that by increasing the quality of the property right now may not get me the higher rents needed to justify until the tenant situation next door is resolved.

Looking for advice on how to navigate the situation.

[Travis Main]

Hey Ryan, 

This is a tough situation. Do you have a timeline of when you would like to purchase the other unit? If you are months out from that transaction I would advise rehabbing the unit you currently own now and tryng to maximize the rental income until you're ready to purchase the other unit. The purchase of the unit is going to be sooner a few months, you could wait to rehab both at the same time which could potentially help reduce the costs of the rehab. 

Did you purchase the property in cash or are you using financing?