If I stuck with the original plan, we'd have been right on the money. But as mentioned, we signed a lease option with a guy willing to split any additional repairs 50/50.
So if this guy buys the place, we're still ahead of the game by saving realtor commssions and getting full market value. If he does not buy it, we a) are keeping his 2k down payment (which will effectively reduce our additional input above the original 6k to zero) b) have a better house than we would have originally gotten for our 5k of improvements (and 1k of incidentals).
Your total out of pocket cost for the renovation was $8000, correct? Then the tenant kicked in another $2000 cash for additional improvements, which brought the total rehab amount to $10,000. So this guy gave you a minimum of $4000 in cash up front ($2K improvements, $2K deposit) to rent/lease the house?
So we replaced 4 extra doors, added a new vanity top in both baths, upgraded to better faucets and fixtures, added extra shutoffs for plumbing, nicer closet shelving, nicer light fixtures and fans, better carpet, nicer tile, better door handles etc etc.
The house could have easily been done for 5k....less actually.....dont forget that i did all the work myself.
I certainly agree that you could have done a rehab for less than $5K. But my point is that a renovation must bring the house up to a certain level/condition to ensure that it is...
- acceptable & appealing to renters/buyers
- allows the property to command prevailing market rental rates
- puts its appraised value in line with other comparable homes that have been updated.
While you can certainly get by with a bare-bones renovation, will anyone be willing to pay you current market rent to live there? It appears you had to perform a substantial amount of additional improvements (which doubled your original budget) to make the property acceptable for this tenant. Fortunately, he was willing to share the cost of making these changes.
Many of the "additional" rehab items listed above seem to be the bare minimum that should be in a newly renovated house to begin with. Your initial plan was to just caulk/paint the bathrooms, which were horribly outdated, well-worn, and appeared non-functional. Unless this place is in the ghetto, there are probably VERY FEW prospective tenants that would have found this acceptable (as you ended up nearly fully rehabbing them).