If you’re like many people in the real estate investing business – particularly if you’re new – you’re wondering if there’s such a thing as “too nice” when it comes to upgrading a rental property or a flip. Could a property be too good for the current market? Here’s what you need to know.
Is There Such a Thing as “Too Nice” for an Investment Property?
First things first: In real estate investing, as with most other industries, you have to know your audience. That means you need to know your prospective buyers or tenants, the neighborhood you’re working in, and the price ranges of homes in the community (whether they’re for sale or they’re being used as rental properties).
Much like artwork, it’s definitely possible to “overdo” home upgrades. Naturally, if you’ve purchased a luxury home and you’re fixing it up to flip it, you can (and should) go all-out on high-end appliances, custom finishes and other features. However, if you’ve purchased a regular house – whether it’s a duplex, triplex, fourplex or single-family home, you can afford to rein it in so that the home matches others nearby.
Is it Hard to Sell the Nicest House on the Block?
Typically, selling the nicest house on the block presents unique challenges. First, you’re going to have a higher asking price than others in the area – and though that doesn’t necessarily mean you won’t sell the property, it does mean that you’re going to be up against some pretty stiff competition. For example, if you’re trying to sell a home with high-end cabinets, crown molding and expensive chandeliers at a price point that’s $25,000 more than everything else in the neighborhood, people may skip over yours in favor of the cheaper one up the street.
Additionally, when you have the costliest home for sale in the neighborhood, you have to ask yourself whether the neighborhood supports the price. Your REALTOR® can help you settle on the right asking price – but you need to bear in mind that making major investments in a house to sell it for more than other, similar homes in the area may be a mistake.
The Nice + Functional Rule
When you’re flipping a property or making upgrades and repairs to sell one you’ve owned for some time, use the Nice + Functional rule. The materials and appliances you use in the property should be nice enough that they’re not falling apart after a few years of regular use – but they generally don’t have to be luxurious.
Remember, high-end materials won’t add much value to a mid-grade property, so they’re typically not worth the investment you’ll make.
What Upgrades Should You Make?
The best way to figure out what upgrades you should make if you’re selling a property is to talk to your REALTOR. Your real estate agent will let you know what’s selling in the neighborhood, what buyers are looking for and not finding, and what can bring you the biggest return on investment.
Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.
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