To Rehab or Not To Rehab?

[Satya Nagarajan]

Hey everyone,

Let me preface this by saying that I'm brand new to real estate investing. I haven't done any deals yet, and am in the process of raising money to invest in real estate in the next couple of years. I'm learning a lot about REI in the meantime. My parents, however, have a duplex in Muscatine, IA that they've been renting out for about 8 years now. It has been renting quite well, but the living room has some awful color schemes - we're talking dark green carpet and pink walls! The house overall is in pretty good shape though. I'm curious about the possibility of painting the walls to a more neutral color and replacing the carpet with possibly hardwood floor. The two options then are to sell it or continue renting it at a higher rate. How do I determine if the value of the house will appreciate enough to make the rehab worthwhile? Also, if we continue to rent it out, how do I determine how much more rent I can ask for? What key metrics can I look at to determine whether or not this will be a worthwhile investment? Any help would be greatly appreciated!

-Satya