I have found some properties that I believe are good candidates for rehabbing. Most are 2 or 3 bedroom homes, less than 2000 sq ft and about 30 years old. Also I plan to hold most only 2 - 5 years. I have 4 questions:
Are there any tools available to get a good estimate for potential repair cost?
How do you determine the amount of money to invest in a rehab that is in a neighborhood transitioning from bad to good?
If I wanted to provide an incentive in rehab which would provide the best return on investment (upgraded kitchen, bathroom, brick exterior or upgraded landscape?
What is return on equity?
Are there any tools available to get a good estimate for potential repair cost?
Bring the contractor who will be doing the work when you do a walk through. This is by far the most accurate way to determine costs for anyone starting out.
How do you determine the amount of money to invest in a rehab that is in a neighborhood transitioning from bad to good?
I would spend the required money to get the property into the “good” spectrum. It’s better for business to be partially responsible for the positive transition. You will get your money back from a higher quality renovation in this case.
If I wanted to provide an incentive in rehab which would provide the best return on investment (upgraded kitchen, bathroom, brick exterior or upgraded landscape?
You will have to determine this by the other properties in the neighborhood. Landscaping will have the least impact in the fall/ winter. Kitchens and baths are always a safe bet. Brick veneer in some places will be more cost effective than the whole house or entire front of the house and still will add that high quality look. Vinyl and brick (in the right places) are usually the best way to go.
What is return on equity?
Just as the name implies, it’s your return from your equity in a percent. For a rehab, a better measurement will be ‘return on investment’.
Thank you for your response and insight. I will take your advice.