Top 3 Ways NOT to Spend Your Arizona Rehab Loan

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Top 3 Ways NOT to Spend Your Arizona Rehab Loan

In today’s market, fix-and-flip ROI really comes down to smart fiscal management of the overall project and the types of repairs you spend your Arizona Rehab Loan on. Learn which repairs are losers to avoid pouring money into them.

1. Sunrooms, Four Seasons Rooms & Patios: Particularly in warmer climates seen across the sun belt, it would seem like ways to increase outdoor living space would be a great investment. While it’s true that people generally love outdoor living spaces, they’re not willing to pay more for them. Research presented by Moneywise shows you’re only going to get 48-49% of the money you spend on one back when you sell the property. While curb appeal is still essential, creating it doesn’t need to involve costly renovations.

2. High-End Bathrooms: Generally speaking, bathrooms are a great way to invest a Arizona Rehab Loan. Buyers prioritize bathrooms and kitchens. They’re looking for things like newer fixtures and updated designs. The problem is, many rehabbers overdo it and create spaces that are too lavish for the home and area, and in doing so, only get about 56% of of their money back at sale. Chances are, you can forego things like whirlpool tubs now too. Although these were once the mark of quality on a home, buyers have come to realize they just don’t use them and it’s an extra space for them to clean. If you’ve got a choice between going with a large upgraded tub or a shower, it may be better to focus on the shower, but again, don’t overdo it so much that the upgrades are too “rich” for the property and neighborhood.

3. Lavish Entries: Again, curb appeal is important, and so many rehabbers will spend a fair amount of the budget on creating an entryway that makes people pause and want to check out the house. There are a couple of problems with this though. First, it sets the expectations for the rest of the house. If the entry is the high point, viewing the rest of the home is anticlimactic and sends people away disappointed. Secondly, although the additional curb appeal can create excitement, it doesn’t usually translate into higher bids. You might get about 68% of what you spent back. It’s generally better to focus on quality materials and a proper install, but not high-end upgrades.

Learn How to Make Money by Touring Other Homes in the Area

One trick of the trade is to visit lots of other homes in the area that are up for sale. You may be able to get a feel for them by using real estate websites, but it’s not quite the same as viewing properties in person. Make note of the materials and types of upgrades you see, so you can keep your renovations on par with neighborhood expectations and costs, thus maximizing your rehab loan and not spending money where it won’t help.

Get the advice of a home inspector or appraiser, especially on your first few projects.

You may be adept at assessing the ROI of individual projects, but can you spot signs of water damage, mold, or shoddy prior work? These things are routinely caught in inspections, and buyers will want them repaired prior to closing. If you haven’t addressed them as part of the renovations, they’ll eat away at what’s left of your Arizona Rehab Loan and may tank your overall returns. Always work with an expert until you have enough experience to spot these issues early in the game.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg


Level 4 Funding LLC 
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Arizona Tel:  (623) 582-4444

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Dennis Dahlberg Broker/RI/CEO

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22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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