First Deal- Rehab or Turnkey?

[Mike Moe]

Hi All!

I'm just getting my feet wet in the real estate investing space, and am hoping to get some advice from you all on my first deal.

The only experience I have in purchasing a home, is my main home I purchased a few years ago. For my first investment deal, is it best to avoid a rehab project and go with a decent turnkey property? I’m attracted to the idea of being able to rehab and potentially create some equity, but unsure if having to rehab my first property is the best idea.

For a little more context, my first property will be a STR. Thanks in advance for the info!

[David Faulkner]

I would say start with a "cosmetic fixer" that has good bones for all the major systems ... good roof, good structure, good electric, good plumbing, good heating ... however, all the cosmetic stuff is ugly, smelly, dirty, and dated. This is paint, flooring, trim, minor bath and kitchen updates, countertops, backsplashes, vanities, toilets, etc. Basically, anything that is important and expensive to fix, but is behind walls or easily overlooked by less educated buyers you want to be good, but all the cosmetic stuff that is less money and effort to fix, but that buyers see and care about and therefore adds lots of value, needs rehab. As a bonus, you can fairly easily do most cosmetic stuff yourself with little training, only some sweat and research ... this not only saves you money, but gives you hands on experience to intelligently price contract out later if you need or choose to. You won't learn all of that stuff with a turnkey. Later on when you get more experience under your belt, you can take on bigger projects with more extensive updates to the infrastructure of the home, but in the meantime cosmetic fixers are a great way to start, get some hands on experience (even if you contract out some or all of it but stay involved throughout the process), and earn a bit of sweat equity.