Is There Such a Thing as "Too Much" Rehab for McKinney Investment Properties?

People are fond of saying, “You get out what you put in.” While this is generally true, you have to be careful when applying this wisdom to a rehab. It’s possible to put considerable funds—and time—but not get it all back  from your investment properties. On the other hand, when you strike the right balance, what you get out is worth even more than money: satisfaction.

Some of the best property investment deals in McKinney start with rehab. Buyers can be finicky, and they can hyper-focus on something they see as a deal-breaker—which causes the price of a property to plummet. However, if you can jump in with a relatively small investment, you can transform those deal-breakers into deal-makers.

The key is to choose which rehab battles to fight. Here are some things you need to keep in mind when deciding what to tackle during a rehab!

Focus on What Tenants Value Most

Most of all, tenants in McKinney want a reliable, sturdy, and attractive home. Prioritizing these three attributes will give you the value you’re seeking.

• Reliable: Anything associated with the utilities of a home needs to be in tip-top shape. The plumbing should be both functional and dependable. Toilets that clog and drains that don’t drain—or anything that emits an odor—need to be addressed. This includes the plumbing for gas or oil as well. Likewise, all electrical components need to function flawlessly.
• Sturdy: In addition to having a strong, plumb frame, the home should have doors and windows that open and close with ease. The floors should be even, feel solid, and be devoid of soft spots and dips.
• Attractive: Before painting, make sure chips and holes are correctly filled in. If the kitchen is outdated, a modest re-facing of the cabinets can bring it into the 21st century. Refresh the kitchen and bathrooms with classy tile in neutral hues. Subtle color schemes will help the home complement future renter’s decorative decisions.

Avoid These Rehab Traps!

• Over-spending on luxury: Name brand faucets, exotic hardwoods, and top of the line appliances look great—but can you recoup the cost? Leaning more toward the practical side of the spectrum can help your McKinney investment home earn both money and the respect of your tenants.
• Being overly optimistic: Some homes are so fraught with problems, they’re beyond saving—at least not if you want to make a profit. Real estate investors in McKinney are known for having an eye for potential. However, these kinds of homes are money traps—not money trees.

While nearly any frame can be embellished into a stunning home, the cost required to make a frumpy frog into a pristine prince may price the house out of the market.

It would be better to focus on minor upgrades that carry a more modest price tag. Often, you can still add a lot to a home’s value by targeting the essentials.

Prepare for Your Rehab Using Local Rental Rates

The most crucial factor is neither the skill of those doing the rehab nor the creative eye of the investor; it’s the market. The McKinney market is finicky—but investors are left with no choice but to respect it. Here is how to properly consider the market before jumping into a rehab:

1. Contact a property management company in McKinney. Have them do a localized rental analysis; this will tell you how much the property can rent for.
2. Calculate how much it will cost to rehab the property. You should use a contractor with experience in the kind of rehab you are considering: many will do a rough estimate for free.
3. Take that number and add 10%. This will give you a margin for error.
4. Decide how many months you are willing to be underwater on the home.
5. Add up the auxiliary expenses and factor them in. This will include the cost of the upkeep of the home, regular repairs, and maintenance—as well as the opportunity cost associated with how long you have to wait for new renters.
6. If the numbers add up, make a move. If not, walk away satisfied you learned what you needed to decide on a potential property.

Consider the Needs of Your Future Tenants

When people are shopping for a place to live, they often dream; not of moving into the perfect home, but of moving in and making the home complete. Your objective should be to rehab a distressed home only up to the point where this creative process is possible—and only if a rehab for the property in question is feasible. There’s no need to build a tenant's dream for them—you just need to focus on building your McKinney property investment portfolio!

In a way, the saying is true: You do get what you put in. When it comes to rehabbing a home, what you put in should be careful calculations, pragmatic planning, and sober, well-informed decision-making.

At RentHub Property Management, we know your ultimate goal is to generate long-lasting, stable wealth. This is why we work with investors like you looking to grow your properties the right way. When you work with an expert property manager in McKinney, the process of plucking a perfect property is easier than ever—you can step in and invest without fear. This is the fastest way to build your portfolio—and avoid a risky "money pit!”

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