When buying distressed property to flip, deciding how much to offer is your first step. You then contact a real estate agent to help determine how much your property will sell for once the rehab work is complete as well as how long it will take to sell your project.

Yet in between those two is the rehab work itself. As you consider a real estate investment, it’s an open canvas. You’re in  charge of what to remodel as well as how much to remodel. How much is too much?

upgrading real estate investmentsSay you find a three bedroom house that’s been in a bank’s REO inventory for a couple of months. You visit the home and see that it definitely needs both a kitchen and master bath upgrade. The home has carpeting throughout and could use new flooring. You can remodel the kitchen and bath and put in new flooring but to what degree?

A real estate agent will tell you that upgraded kitchens and baths are an appealing feature. Yet you do have some choices. You run some numbers and figure that you can install high end stainless appliances and custom granite countertops. You can also install good quality range and refrigerator and tile countertops for much less. Much less means more profit for you. But if it’s too much less, you won’t get as much as you would like when you sell.

A key consideration regarding how much or how little to upgrade depends upon the other homes in the area. You want your property to be similar to others in the neighborhood. If most of the homes have a nice kitchen but none have a Viking range or Sub Zero refrigerator, there’s no need to install one in your project. If however, most homes do have granite countertops then you should probably start shopping for granite.

The selling price of your home will be based on the surrounding properties and a bank will do the same when evaluating a loan application. If you “over improve” it’s possible the bank won’t find the same value as you do. There’s no need to be the most glamorous house in the development.