LIFESPAN & VALUE-ADD OF APPLIANCES

Every Friday over on Real Estate Investing Today they feature an infographic about something cool that in one way or another is of interest to real estate investors.  This week they’ve got a pretty neat graphic from The Home Depot about water heaters.

So, really, how often do you think about water heaters?  What about the other appliances in your investment property?

Rehabbing a home for resale or renting can be a daunting task for anyone in the investing community. Whether you’re an expert flipper, do-it-your-selfer or just getting started, there can be many unknown variables that must be taken into consideration when managing your rehab project.  Perhaps the most important area involves replacing and/or upgrading the home’s appliances.

Will replacing a unit add value or just be a wash? Or maybe a particular appliance works & looks great but it’s over 10 years old, do you still need to replace it?  What about appliances that are broken, aesthetically displeasing (old pastel colors) or even potential ticking time bombs waiting to break?

Start by taking a quick whole-house inventory of all appliances and mechanical systems.  This helps gauge what resources you’ll need as well as identifying any potential showstoppers.  Some items such as furnaces, water heaters, etc. are expected to be in good working order when purchasing a home, so don’t expect a solid return from replacing these items.

However, according to many experts, considerable resale value can be achieved in the kitchen & bathroom areas.  In fact, data from Remodeling’s 2015 Cost vs. Value Report estimates that upgrading just the Kitchen and Bathroom alone can produce a 48% and 60% ROI, respectively.  Just be sure that if you do one, the other is brought up to the same level or buyers will notice a mismatch right away.

How long does the typical appliance in 2015 last, you might ask?  That’s a good question.  We’ve all heard the anecdotes about how older things seem to last longer and there’s some truth to that.  However your goal is to rehab the home and get it to market as soon as possible.

According to the National Association of Home Builders (NAHB) the average lifespan of dishwashers is 9 years, gas
ranges 15 years, electric ranges 13 years, refrigerators 13 years, garbage disposals 12 years and water heaters 10-12 years.  Of course this varies greatly with quality, style 937aec5e1834d8505241e80a050a3af4-huge-apand manufacturer.

Another factor to consider is that while some higher-end appliances might last longer, it doesn’t mean you’ll recoup your costs at the point of sale.  There is a balance to be struck.  Don’t overvalue your home because the ceiling of neighborhood comparison prices will not be breached – no matter how many gold-plated toilets you install.  In fact, the NAHB says that appliances are often replaced long before they’re broken due to changing consumer preferences.

Indeed, aesthetics are a major factor.  Stainless steel continues to be a popular option but according to varying sources, black appliances are trending once again.  One of the reasons cited for stainless steel’s loss of appeal were the constant fingerprints & smudges on the surfaces.  So sticking to basic colors and keeping it reliable & simple might be the best option.

So what appliances don’t add value?  That question has many expert opinions as well.  However, most agree that a good rule of thumb is to remember that whatever appliances people expect to be in good working order will not be part of the equation.  Furnaces, water heaters, garbage disposals etc are hidden away and expected to perform.  If it’s older, been regularly serviced and performing well it might not need replacement.  But don’t let something slip by that could become a showstopper on the day your property goes to market.

Don’t forget, when it comes time for those replacement appliances, National REIA members receive a significant discount on many new appliances thanks to an exclusive arrangement with Home Depot.  Simply browse the custom catalog which is available online to National REIA members.

Remember, the goal of your home rehab is to bring it up to market standards and sell it for a nice profit – which is why you’re in business in the first place!  Keep in mind that there is more to rehabbing the home than making it aesthetically pleasing, you have to make sure appliances (both seen and unseen) are in good working order as well.

Author, Brad Beckett from www.unitinginvestors.org 

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