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Rehabbing Investment Property: How to Prioritize Your Spending

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If you have ever rehabbed an investment property, you probably understand how difficult it is to keep the project within budget.  Almost inevitably, something unexpected will come up that will result in a delay or unanticipated cost.  Although rehabbing a fixer upper home is an excellent investment strategy, your success will be contingent upon your ability to spend your rehab money wisely.  Read on for some insight in this regard.

First, it is important to remove any element of emotion from the project.  Emotion will cause you to spend more money than you need to.  Remember that you are not the one who will be living in the home, so just because you really like granite countertops does not mean you should install them in the property’s kitchen.  Always focus on inexpensive materials and fixtures in order to maximize your return on investment (ROI).

Second, try and funnel the bulk of your money to those items that will maximize the perceived value of the property.  Although this may sound self-explanatory, when you have 100 items to take care of it might be difficult to retain this level of focus.

In order to accomplish this goal, you must have an understanding of which home improvement projects will give you the biggest bang for your buck.  According to a survey from, out of all the possible home improvements, adding a deck has the largest impact on the property’s value, followed by adding a bathroom, remodeling a bathroom, adding an attic bedroom, replacing the siding, and replacing the windows.

Simply doing these things should help you keep your costs under control, and will also allow you to spend your rehab money as wisely as possible in order to maximize the perceived value of the property upon project completion.  This, in turn, will enable you to get top-dollar for the finished multi family property when you sell or refinance.

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