There are numerous ways to view a rehab. One in particular, is from the vantage of our our own taste, our own interests, and our own living preferences.
When rehabbing a house many people think of what they would want the house to have if they were to live in it.
Instead, we should not go overboard with customization in order to appeal to a broader base.
Another viewpoint is “how can I make my house the nicest house in this neighborhood and in all the surrounding neighborhoods?”
These people tend to believe that the more money they pump into a house, the more money they will get out of it. That is only true to a certain extent.
At some point, we can overspend and no matter how much money we have invested in the extra details, the value of the house is tied to many other factors including one of the most important – comps in close proximity to our investment house.
Many people view rehabbing in these first two perspectives, but there is an additional way to view the rehab, and it’s the suggested way. First we think in terms of what needs to be done on our property to make the margin we need for our particular exit strategy.
Is the home being purchased to rent or to flip? Each exit strategy requires a distinct rehab criteria.
Both strategies have the same or similar end goals: we want to maximize our return.
The truth is we will often invest in homes that we would never live in even if they were rehabs done to our liking.
We must make a philosophical and financial decision as an investor and keep our emotions out of the decision-making.
This is the difficult part of the process, taking our personal preferences out of play. Not allowing our personal likes and dislikes to dictate what we believe others should like as well.
Instead we should let our emotions be taken care of when we see the finished product being accepted on the market and the title check or rent checks being cashed at the bank.