How much do I put into my rehab?

Question

Hey BP family,

I just closed on my first single family rental with duplex potential, I need some advice on how "nice" updated to make it knowing that tannates are probably going to use and abuse it. Does anyone have an general ideas/rules they follow on how nice to make it for renters? This is my first deal so trying to manage costs as well!

thanks a ton!

Ryan Husser · Answer

@Gavin DeHaai I have not honestly. It is tough because a rehab could be paint and carpet and cosmetics and be like $10k or whatever. On the flip side you could need a new roof or have foundation issues and now it is $60k-70k. So it is not as cut and dry as the 1% rule for example. I would say with your bids and quotes stay within 5-10% of their proposed budget when all is said and done. Rehabs are very case by case, but if you find a 'general rule' please send it my way as I am always looking for new methods and ideas!

Gavin DeHaai · Answer

@Ryan Husser

thank you so much! i have been looking into these options and doing most myself as well as getting a couple quotes for bigger projects.

as far as money, do you or anyone use a general rule of **don't put more than x% of purchase price costs into the house** if that makes sense?

Ryan Husser · Answer

Hi Gavin!

Congrats on your first duplex, that is super exciting! For the rehab process I would always recommend a fresh coat of paint and new carpet or laminate flooring that is inexpensive but durable. My favorite is the fake wood flooring that you can usually find at Home Depot or Lowes at reasonable price.

Otherwise you should focus most of your budget on the kitchens and bathrooms. Pinterest has great design ideas for cabinets, shelving, backsplash tile, etc. Renters will be drawn to these areas first when looking at the property and the pictures online.

From a budgeting perspective, always estimate on the conservative side of things. There will be delays, unexpected costs, etc. Being tight on cash is never a good feeling when it comes to a major rehab. Lastly, make sure you vet your contractors as this can quickly become your biggest headache. You always want to go with someone who is licensed and insured to manage the project if you are not doing it yourself. It will be more expensive, but it is better than being scammed. Shop around, get multiple bids and hold them accountable for sticking to the deadline. BP has a ton of books and articles that will guide you through this process.

Hopefully this helps, but let me know if you have any other questions!