Home > Blogs > Tellis Coleman > Tellis Coleman's (hifshon) Blog

You May Want to Rethink Before You Make That Upgrade.

By Tellis Coleman

Real Estate Agent with Coleman Real Estate LLC

June 15, 2007 12:59 PM

As Real Estate developers my wife and I have learned the hard way in making a choice to upgrade, refurbish or refinish. The thing with upgrading is you may have to upgrade other things. We recently had windows replaced on a hundred year old property we own. Although they look awesome, the newness of the windows makes them look out of place. It's not a big deal in our case because it's a rental for now and we have time to make the updates before we sell. However, I know a few folk that did just what I did. The difference is they were doing it on properties that they planned on holding only for a few months (quick flips).

Here are 3 things to ponder before you decide to upgrade.

If it's functional and can be painted or stained.

If it has a desirable original quality.

If you can upgrade features without upgrading the whole. Hardware and fixtures for instance.

I have seen people start off on the right foot by buying 10% plus below market value only to blow it on bad design strategies.

That's all for now.

Comments(4)

Comment

Show All Comments

Sort:

Carol Smith

Casmi Photography - Mebane, NC

bungalow Excellent points. And well taken advice.

We recently purchased our fourth property. A 2 bedroom bungalow on a crawl with a 2 car garage. In a desirable part of town with property values that hold steady in pretty much any market.

We paid less than 1/3 of the appraised price. Our rehab budget is a max of $8,000. This includes windows, floor coverings, bathroom remodel, and total kitchen rehab. We will be doing 90% of the work ourselves. Only thing that gets farmed out is tile work and windows. Interior doors will get a new face, bathroom vanity/top, tub and exhaust fan will be reused. Kitchen will receive new cabinets, but we will reuse the stainless sink and faucet. My biggest question is about the hot water tank - but since there are no utilities on yet we can't fully evaluate that.

It's a cute place - and our plan is to use it as a rental for 5 years then sell. Even after the rehab we will not be at 50% of appraised value in regard to our expenses.

Jun 15, 2007 04:07 PM

Ken Kirkpatrick

Kirkpatrick, Sale & Rental Management - Killeen, TX

very good information to the beginner. Just remember that when starting in the investment of properties one should consult others in the local business in the local market place, doing any type of refurbishment one should keep the emotions out of the decision process and make a financial choice, show me the money.

Jun 15, 2007 11:36 PM

Tellis Coleman

Coleman Real Estate LLC - Colorado Springs, CO

Carol- That is a nice little cottage you got there. When you are doing a lot of the work yourself $8000 can go a long way. That is what baffles me about those HGTV and Discovery Home shows. Those guys can have a budget of $50,000 and still go over budget. The biggest job that I farm out is the windows and second to that is carpet. When we purchased the building all three units were rented to we do the renovations as tenants move out which gives us the benefit of not having to do it all at once.

Ken- You said it. If there is any one thing that my wife and I bump heads about it is about her wanting to do too much. She's a great partner but sometimes her big heart and emotions obscures the overall goal.

Jun 16, 2007 01:20 AM

Tellis,

We will farm out the windows and the tile in the bath. Other than that it's just me and the hubby.

As for carpet - yes, when we do carpet a unit I farm that out. But this little house is getting laminate flooring in all but the bath and kitchen. They will get a faux slate laminate that is darned near indestructible. I can get a good quality laminate by Mohawk (30 yr warranty) for $1.00/sq ft and the installation is a no brainer. We have done it to several of our properties with wonderful results.

The $8,000 figure is a high one, but I like to leave myself a cushion. If I come in under that, then it's time for a real nice dinner! :)

Jun 16, 2007 01:28 AM

Comments(4)

Tellis Coleman

Recent Posts