Property renovations, don’t overdo the repairs

I read an article in The Wall Street Journal titled “Worried Sellers Splurge on Home Renovations.” The gist of it is this: We’re in a bear market, and sellers afraid their homes are languishing unsold are spending tens of thousands of dollars on renovations and improvements to make them “sellable.” They are installing granite counter tops and state of the art stainless steel appliances and in my humble opinion spending WAY more than they should in many cases.

Yes, we are currently in a buyer’s market cycle. But that doesn’t mean we have to break the bank on repairs. With the record number of homes in foreclosure, the investor uncomfortable engaging in large rehab projects can find REOs on the market that need very little renovation that can be purchased at substantially below value. . These are properties that only need cosmetic improvements. Very often, $15,000 to $20,000 in renovations will bring these properties back to top condition.

(Please note: We’re making a couple of assumptions here. One is that you’re hiring people to do the work and not doing it yourself. The other is that the property is in a middle- to upper-middle-class neighborhood. The approach I’m about to review will not reduce demand for high-priced luxury homes.)

New paint and flooring do wonders. Paint the walls a neutral color and paint the trim a contrasting neutral color. Replace worn or outdated carpeting with a lighter-colored, neutral construction-grade variety with an 8- or 10-pound pad. It looks good, feels good underfoot because of the heavy padding, and is reasonably priced. Replace worn vinyl flooring in bathrooms and kitchen. There is a new rubber backed vinyl on the market that I have used that lays right over old vinyl flooring. This saves a great deal of labor and material expense because there is no need to remove the old flooring and no luan underlayment is necessary to prepare the new flooring. Cheap laminate flooring serves the same purpose.

Replace worn-out kitchen and bathroom countertops with laminate countertops with wood trim. For just a few hundred dollars, you can have them custom made for the room’s design. Today’s new laminates come in a variety of faux marble and granite finishes that look great, not tacky. No, they’re not real, but spending a few hundred dollars on laminate countertops is much better than spending $5000 to $10,000 on real stone.

Most of the time, vintage kitchen cabinets are solidly built, just dark and outdated. My first preference would be to paint them a light color and replace the hardware. Be sure to hire a professional to spray paint the cabinets and doors to give them a smooth, glossy finish. If they are not in good enough condition to paint, repaint them.

Replace worn-out or outdated lighting, door hardware and plumbing fixtures with new builders-grade materials. Install new matching appliances. Don’t go crazy buying a $5,000 Viking range when a $900 Frigidaire will do just fine in its place. Remove outdated window treatments and replace them with inexpensive blinds. Believe it or not, you can buy disposable vertical blinds at big box home improvement stores that are cut to size with a utility knife and attached with self-adhesive tape. It sounds cheesy, but I’ve used them. They look great and are only about $5 each.

Use the same philosophy on the exterior of the property. Trim or remove overgrown, overgrown shrubs. Replace it where necessary with inexpensive varieties. Roughen and paint the trim around exterior doors and windows. If your home has aluminum siding that is rusty but in good condition, consider having it professionally painted. It will cost thousands of dollars less than replacing it with vinyl and it will look great when it’s done. Don’t do something “unique” on the exterior to make it “stand out” from the other houses in the neighborhood. Although it is important that the house have its own personality, it is equally important, if not more so, that it conforms to the established norms of the neighborhood. Going against those rules to give “personality” to the house will be a net negative.

What we’re doing here, instead of spending tens of thousands of dollars on one-off renovations like a total kitchen remodel or new vinyl siding, is a whole property remodel. We want to give it a clean, fresh, and overall well-cared-for appearance.

If you buy the property at the right price, you can afford to make the improvements I just mentioned and still put the property on the market at or just below competing properties on the market. The first impression you make on your buyer is the most important. If it’s positive, you’ll have an advantage over your competition…

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