Bread & Butter – Part II: Kitchens

We all know that kitchens have the ability to make or break a home sale. If you tune into any of the popular HGTV shows, it seems the kitchen is the main focus of the vast majority of major renovations. Its true: A Kitchen does go a long way in selling a buyer on a potential home purchase. Its also true that a modern kitchen remodel can be extremely expensive; but it doesn’t have to be.

A common pitfall for any new rehab investor is to spend too much on a kitchen remodel. Its very easy to allow yourself to be sold on cabinet and countertop upgrades without thinking twice. The cost of included appliances can also skyrocket if you’re not careful. It certainly takes many rehabs and a good deal of experience to gain a strong grasp on the optimal way to spend money in your kitchen. The below guide should illustrates basic guidelines to follow to ensure you don’t over spend in your kitchen.

Remember, the kitchen is just one piece of an entire home. Although it is arguably the most important room, a luxury kitchen will not sell your house if the other rooms and finishes are not comparable. You want to be diligent about renovating your kitchen to meet the same standard as the rest of the home.

Kitchen Cabinets & Hardware – New, Solid and Functional

The cost of your kitchen cabinets will certainly depend on the overall size of your kitchen. This comes down to the simple reality that each individual cabinet has an associated cost. Adding islands, pantries, corners or peninsulas will definitely make your kitchen more expensive that if you were able to get away with a simple “L” design. However, the above features of a kitchen layout are very valuable to perspective buyers.

The best way to optimize the price you pay for kitchen cabinets is to cultivate a strong relationship with a kitchen & bath company. These companies will often come out to your property to discuss the pros and cons of various layout options. They will also draw up one or more layout options. These drawings include the 2-Dimensional technical drawings as well as 3-Dimensional renderings to provide a realistic view of the how the kitchen will look upon completion. The layout and design services is almost always free of charge (If you find a company charging for this, find someone new. Even Lowes and Home Depot have free services for kitchen design).

When discussing options with your kitchen designer, make sure they understand your overall goals and your budget constraints. For the average rehab project, we do not recommend going with top of the line cabinets. You are almost guaranteed not to get a return on your investment for these upgrades. Its very possible to get great looking cabinets for a fair price. Your designer probably works with landlords and other rehabbers. They should understand your objective to purchase solid, functioning and affordable kitchen cabinets. As long as the cabinets are new and installed correctly, your buyers will love them.

Do whatever you can to “bring your cabinets to the ceiling”. Depending on the ceiling height in your kitchen, you can either get cabinets to go all the way to the ceiling or use crown molding to get it as close as possible. Bring your cabinets to the ceiling will portray a finished and high end look.

We typically purchase our cabinet hardware from Lowes. Your kitchen design will undoubtedly try to sell hardware from their showroom. We found hardware from the big box stores to be way cheaper and more than comparable on the quality. Do not be cheap and ignore cabinet hardware. For less than $100, you will make your kitchen 10x more appealing to prospective buyers by installing hardware. Cabinets without hardware are viewed by prospective buyers as unfinished and cheap. We prefer to go with handles instead of knobs. This is more of a personal preference, but we’ve found that handles seem to convey a higher end finish.

Countertops – Affordable Granite vs Formica

We almost always use granite in our rehab projects. However, this is one area that will depend on your market and neighborhood. In some lower end markets, its acceptable to install formica countertops. However, be careful when choosing formica: Its often not much more expensive to install a lower end granite countertop. If you can get away with the price increase, granite countertops in a commonly formica neighborhood can change the perception of the entire house.

The price of granite countertops varies greatly. However, the differences between low and high end granite are rarely noticeable to a prospective buyer. We have found success installing a neutral color of lower end granite. $45-$55 per square foot is a great price for granite and installation. R

Appliances – Stainless at a Minimum

Home buyers value new stainless appliances. Make every effort to go with low to mid grade stainless appliances as opposed to white or black options. We always include the basic four appliances in every rehab budget: Refrigerator, Oven/ Range, Microwave, Dishwasher.

It is true that some buyers will want to bring in their own appliances that they already own or are planning to buy. This is why its okay to make your appliances negotiable in the final sale price. Have your realtor set the sales price as if the appliances are not included with a remark such as: “Appliances Negotiable”. This allows you to be flexible based on the potential buyer’s preferences. The majority of buyers will want to keep the appliances: They are new and they remove the hassle of having to purchase and move appliances themselves. If this is the case, you are able to negotiate for a higher price. If the buyer doesn’t want them, don’t worry about it! You already accounted for the appliances in your budget. You can try to resell them or store them for a future project.

We typically find the big box stores to have the lowest prices when it comes to appliances. They also tend to include free services like delivery and haul away. These stores also run great deals on appliances. If you’re rehab falls close to Black Friday or Cyber Monday, you’re sure to find a great deal.

Ignoring appliances is a big mistake. We see purchasing appliances as the bare minimum when it comes to “staging” your home. Ignoring appliances will leave your kitchen bare and unfinished. Home buyers may think you ran out of money and question what other areas of the house you may have “skimped” on. Appliances give your finished product a polished look.

Refrigerator

We try not to exceed $1,000 when shopping for a refrigerator. We’ve found that you can get a decent, full sized stainless refrigerator that fits this budget. You should try your best to find a refrigerator that includes an ice maker and water dispenser.

Oven/ Range

Unless performing a unique, high end rehab, you should be shopping for a free standing, gas, stainless oven/ range. You should be able to find a solid product for $500-$600. Electric ranges are perceived as cheap and sometimes dangerous. They are cheaper, but the $100-$200 savings will not be worth the complaints you receive from prospective buyers.

Dishwasher

You don’t need to be fancy when shopping for a dishwasher. Go for the lowest priced stainless dishwasher you can find. Some of the cheaper options may include small areas of black plastic. If it fits your budget, try to get the next step up for a fully stainless look. You should be able to get a decent dishwasher for around $300-$400.

Microwave

Do whatever you can to configure your kitchen to account for an Over the Range (OTR) Microwave. The OTR microwave plays nicely with your range and helps to give the kitchen a finished and complete look. If possible, try to match the brands of your range and microwave. This is not a must-have, but its nice to convey consistency. A decent stainless OTR microwave will cost $200-$400.

Flooring

As mentioned in Your Bread & Butter – Part I: Flooring, we prefer to run hardwood throughout the entire first floor; including the kitchen. However, large (18″x18″) tiles or rectangular tiles will work just fine. One obvious consideration for Kitchen flooring is water resistance. Certainly avoid anything that cannot take the wear and tear of drips and spills.

Following the above guide will certainly lead incoming home buyers to be impressed with your rehab. The fact that your kitchen is new, fresh and modern will go a long way in getting your expected ARV.