I received a great question the other day from one of my readers:
I have a question for you – how do you determine the finish level of the flooring for your houses? I have a pretty good handle of the finish level for most of the house I am offering on, but I’m really stuck on the flooring. Carpet would be most economical and would be in line with most of the neighborhood. New, neutral carpeting would be ahead of most comps, which either have older carpeting or new but very taste-specific carpeting (off white with a bright red border?) But there’s a house, same neighborhood and similiar size, type, etc., that is on the market for about $40k more than I plan on listing my (hopefully) house at. It’s a rehab and flip too. This house has new hardwoods. I’m really not at all certain that the extra $40k is realistic in the neighborhood, but obviously, the floors really look fantastic. What would you do in that type of situation?
Before you consider the answer to this question, take a look at my latest article in the Education section of the site:
Making the Right Rehab Choices
Hopefully this will give some insight into how I make rehab decisions such as this the one posed above. So, what do you think the right answer is?
I’m guessing many of you — after reading that article — will say that it’s a good idea to put in hardwoods in order to keep up with the competition of the other house listed for sale in the neighborhood. But, remember one thing: it’s quite possible that at $40K more, this other house is not actually competition. For example, if reader’s house is listed at $120K and the other house is listed at $160K, it’s very unlikely that the two listings will attract the same set of buyers.
With that in mind, I believe the question-asker answered her own question when she said:
“New, neutral carpeting would be ahead of most comps, which either have older carpeting or new but very taste-specific carpeting”
And that would be my suggestion…put in new, neutral plush carpeting, save a few thousand dollars by not putting in hardwoods, and still have a house that’s nicer than the competition.
Btw, if you have any questions that you think I might be able to help with, don’t hesitate to send them along, either in a comment or an email…
LOL…I suppose I did answer my own question…just needed a kick in the pants to admit it. Now I just have to emotionally divorce myself from the pretty pretty hardwood pics.
I had already planned on upgrades in the kitchen/master bath. Both will be all new (though the layouts aren’t changing.) I found a place that does granite very inexpensively, and I think that will be my main “wow” factor in this house – granite in the kitchen and possibly the master bath. None of the other comps except the +$40k one have granite, and I would be that you’re right….that one is not going to attract the same buyers that I would be targeting. However, maybe I can attract one of their buyers, who will think that carpet for $40k less is a wonderful compromise.
I’m still considering whether or not to do the jetted tub in the master bath too. I’m thinking that if there isn’t a lot of extra electical/plumbing expense associated with it, I’ll do it. Have to ask the contracter about the cost difference.
In my experience, you’re right about women going for the kitchen and the bath. My husband and I had a terrible time finding a home we both liked. He prefers a more open layout; I’m a weirdo in that I kind of like to have really well-defined separate rooms. Our compromise – the open layout that had the kitchen and bath that I loved.
Thanks for the reassurance, and keep up the excellent work!
Interesting question. I almost always just put in carpet back in the good old days of increasing values. Today, we almost always install #2 red oak floor in at least the living room. We can install and finish for about .25 cents a square foot more than carpet. ($2.00 sqft, versus carpet at $1.75-1.80 sqft.) Since doing this and installing granite counters, we have not had a house on the market for more than 2 weeks. The granite tops cost us the same and sometimes less than laminate and look a million times better. I had to tool up for the granite tops, but they install quicker and easier than the laminate. We specialize in starter housing and most of my compeditors think we are nuts for what we put in the houses, but they sell much quicker and always, always,
always at the top of the market. I would never put in a jetted tub unless it was a much higher $$ house. Woman want a nice kitchen and the husbands generally want a garage.
We’re not doing too much granite…. as I haven’t found a supplier around me that can do it cheap enough…. however we are putting in stainless steel appliances in all our finished homes, even the lower end starter homes. The buyers really love them and we have been able to sell our finished houses very quickly.
We’re doing the same thing with stainless appliances…we have a deal with Home Depot where we’re getting a low-end (GE Hotpoint brand) Refrigerator, Oven, Microwave, Dishwasher, Washer and Dryer for a total price of $2000, including shipping!
Just goes to show that you don’t have to spend a lot to make a big impact. Plus, with the washer/dryer in there, our homes are completely move-in-ready for our buyers.
It’s funny how locale affects prices. We can get granite here for $30/sq ft installed. For a smaller kitchen, it’s an inexpensive “wow” factor.
But hardwoods are a huge additional expense here, especially since I don’t trust myself to install properly.
We are including appliances with ours too. Most homes here include all appliances – the ones that don’t are kind of considered “weird” or deficient.
Joy, here I can do granite tops for about $9 sq ft. We do a top mount sink. The hardwood floors are easy and cheap around $1.80 sq ft. I’ve only put stainless in one house, a house that really needed a shot of bling. I stick to standard white appliances, as I can purchase them for about $1100 for a four piece set, I can get stainless for around $1850. I never do A/C here in Colorado for starter homes, but will on anything about $225K. (I’m not doing any houses over $80K at this time.)
Jingle
Hey Jingle… WOW! Your granite and hardwood prices are amazing! Are you installing yourself, or do your prices include installation by contractors?
Holy cow Jingle! If you’re planning on a MN vacation anytime, bring me some granite. Is that slab or tile, or the kind you put on top of regular counters? Wow!
The house I was looking at wasn’t a starter home – more like your established family home – nice but no McMansion. However, I got beat on the offer by someone that offered all cash, no inspection, close in 5 days. I couldn’t compete with that.
So, it’s back to the drawing board for me. The REO market here is super competitive right now. I’m thinking of getting a rental property or two first, and selling them in a year or two instead of trying an immediate flip. Might also consider a lease/purchase. We’ll see. The day job is cramping my property-hunting time, but it’s a necessity for now. 😛
Joy, the tops are prefab 2cm slaps. We do any cutting on site ourselves. Here is my picture sight. Look around in some of the older sets, there are photos of us midway through the fabrication. It use to take me a full day to cut and install. I can do a kitchen in about 2 hours these days. http://www.flickr.com/photos/jingle6655616/
Carol, We do most of the work in house. I’m mostly a one man show, and have a couple of employees that help me out, but are unskilled. I tend to do one project at a time, though at this time I have 3. The more projects, the more I will bring in outside help with stuff I don’t like to do like roofing. I average 7 projects a year, and try to spend the winter in Mexico. I hate cold weather!