What is the difference between a rehab and a rental rehab

Typically, You do a resale rehab with a higher quality finish.
When you rehab a rental, you want to do it nice so you can rent it for top dollar. But, you have to consider that the tenants are not likely to take real good care of the property. So, you will have to redo much of it when they move out. You are looking at overall cost savings here.
If you are doing a lease option, rehab it to the higher standard or somewhere in between.

Hope you do well,
Jim

Jim answered this perfectly. Because someone who wants to buy to move in, likes seeing things like tile floors, granite contertops, etc. If a renter is going to be in it, then you just want to focus on the basics (i.e. new carpet, fresh paint, etc). Because these are the things you will most likely need to redo if the tenant moves out so that you can get a new tenant in. So, yo want things to be cost effective.

Hope this helps,

Yes it does, I knew that there was some differences, but was not sure what they all were. So you will just have to put lower quality items in for a rental and high end items for a flip. Is this right ?

I agree with what Jim said but I would love to read more responses to this post.

Goodluck Investing

What you need to take into consideration is the area of the rehab (for resale). If it is a low end, entry level house, I'm not sure I would go with total high end finishes, i.e. granite, maple or cherry cabinets..., but what would be considered nice for that area.

I would recommend looking at other homes in the area and see what their finishes are, and maybe go just a bit better, then price it right. I always like to be 2-5% below the market. My motto has always been "the best house, at the best price". You don't need to get greedy. Get it sold and move on to the next deal.

By holding out for a higher price, you could actually lose money from the accumulation of your carrying costs, because it sits on the market forever. Whereas, if you price it lower, you could get competing offers that would push the price up. Another good rule of thumb is to take the first offer. It is usually best. Of course this won't matter if you get multiple offers in the first couple of days. And with inventory falling very quickly in many areas, in the current market, that is a very common occurrence.

For the rentals, go with cheaper products. Because, you will have to replace carpets and paint when the tenants move out. You may consider inexpensive tile for the kitchens and baths. The tile would likely hold up and not need to be replaced, where linoleum probably would. Linoleum seems to easily tear.

Jim

Although I agree for the most part that the quality of the finishes will vary depending on whether you are renting or reselling - - it is always good to keep durability in mind.

A particular example that comes to mind is in the case of flooring. You can choose linoleum for a kitchen floor in a rental, or you could choose ceramic tile and save yourself the headache and expense of replacing it throughout the years to keep the house looking decent.

This is also a good strategy if you think you might sell the property in 3-5 years after some additional equity has been gained through appreciation. You wouldn't need to change the flooring in order to ready the property for the market.

This all sounds like great ideas and I will keep them in mind and put them in my notes.

Thanks for the responses, it helps

Typically, when you rehab to resale you want to bring the house up to today's standards, but be careful not to over build the neighborhood. If granite tops and stainless steel appliances are what the newer houses in the neighborhood have, then that is the standard you need to duplicate. If nice formica tops and black appliances are more typical, then upgrade it to those standards. Generally, smaller homes in less expensive areas will have less expensive finishes, so an average square foot price can be established for rehabbing most homes for immediate resale. When you are rehabbing to rent you aren't concerned with selling for top dollar, but only attracting renters, who are usually willing to accept a lower standard. Once again, though, it depends on the rent being asked and the area in which the home is located. Look at the other rentals in your area to determine what standard you need to dupicate. Usually, rentals just need repainting, re-carpeting and cleaning up, along with fixing anything that is broken. The rule of thumb square foot figures for fixing up rental property is 10-12 dollars a s.f. The rule of thumb square foot figures for rehabbing a home to resale to a retail buyer is 20-24 dollars a s.f.

Glad to see the community jumping and helping to answer the questions. Came across an article on different things that can be done to help update a kitchen for a budget prices.
http://www.bankrate.com/lite/smart-spending/kitchen-remodeling-ideas-und...
They make some great points that echo what has been stated.
Price vs durability when looking at upgrades vs repairs will be your constant decision making companions.
From personal experience early on in my career, went with very bottom end on everything (appliances, flooring, paint, counter top, etc.) If I could save a buck I did.........6 months in I was getting calls of things wearing out and not working the way they should.
All told had I listened to a mentors suggestion and gone with one step below mid range instead of basement bargain quality, would have save me 5k per property.
Getting a great price is something to celebrate, going for lesser quality will have it consequences..
Keep on investing and applying action!

When you are rehabbing to rent you will probably not spend more than about 15K in repairs. Don't get me wrong there are always exceptions to the rule however, this is a good rule of thumb.

When you are rehabbing to resale the amount you spend could be any amount of money. For example, one of the last properties I did had almost 50K in repairs before it was all said and done. However, you don't want to overspend when rehabbing to resale either. So there needs to be a careful balance.

In conclusion, in rehabbing to rent you will only repair to make the house livable. In rehabbing to resale you will repair to make the house comfortable. I hope this makes sense.

One thing I remember Greg Murphy saying once that made a big impression on me. When he is rehabbing for a rental, he does his painting with a sprayer. After taping paper over glass in windows he sprays walls, ceiling and trim-all at once.

For a rehab for resale, he does them by hand, doing the trim separately with different type paint, etc. so that it looks nicer.

Make the rental a decent place to live-no fancy stuff. You will be redoing it before long anyway. Make your rehab for resale a little nicer than the competition in the neighborhood and priced a little less. That will make yours sell first!

Karen

For a rental rehab: if you are required to get inspection for your rentals, get a list of requirements from your local city inspector or section 8 inspector. The list will provide a guide of what items need to be addressed for a property to pass inspection; you just have to make the property clean and functional, not pretty