Need to cough up 80k for apartment remodel before sale: Ideas ? HELP!
My parents are planning on selling an apartment they own, but before they want to refurbish and revamp the apartment.
Our agent told us it would cost ~ 80k
My parents have this money in their savings, but would rather cough up the money from a different source: Equity from the apartment or Debt
(Mortgage is almost paid off
Sell the dreams bruh. Get a better agent.
I'm far from an expert here, but seems like a HELOC would be the easiest path. I've seen some credit unions in my market offering crazy low rates for HELOCs, even today. The *cheapest* option would be for your parents to use their savings. The other option is to just not do any work. Don't know anything about your parents, but I've seen no shortage of homes where the owner was planning to sell and put in $XYZ amount of work, expecting to get that back in the sale price and doesn't. Depending on what this is, a buyer might prefer a "blank" slate. Now, Florida could be a little different and the market there may want turnkey. I'd solicit a few other opinions other than your real estate agent.
The reason they want to remodel is the following:
They have been renting to the same tenant for more than 15 years now, below market.
They are renting at $3900 while neighbors and friends are renting for a minimum of $6000 - $8000 a month.
They have notified our tenant that they will no longer be renewing the lease, and they plan on working on the apt to rent it out again at a much higher price at market or above, and then eventually sell it.
Makes sense
Get fukt real estate nerd
Get fukt real estate nerd
How does an entire board of RE professionals not know the answer as to how he should finance this? I’m a soph in college now, but would hope working in RE would allow me to make more educated decisions on such manners than can the average person. I understand there’s a disconnect between large scale commercial investing / development / debt and what OP is asking, but is the knowledge really that untransferable?
Residential and commercial real estate are entirely different beasts. Financing options and restrictions/regulations are drastically different between the two, so no, its not overly transferable in this regard.
Can you enlighten us on what the correct answer is?
Why don't you just sell the property as is?
Because the refurbished apartment would sell at a higher price, and we don’t know how long it will take to sell ( even though it’s a prime location and market is on fire especially in that location )
During the meantime of putting it on the market and the actual sale, they would love to rent it out again at a higher price
The market's different than it was six months ago, but it's still Florida. I can't imagine it takes more than 1-2 months to sell. I think you guys need to really price out the changes you are planning to make and see if it will sell for significantly more than current unrenovated value + cost of renovation. I'm just really skeptical you're going to get paid back that much. Is this a place someone might like to own and live in themselves? Encumbering it with a lease will change your buyer pool. Sometimes that's a good thing, but sometimes it's not.
Again, I've just toured too many rentals/houses where the owner recently put in $100K of work and can't fathom why someone isn't paying them for doing that work. I think you need to have a really good sense that the work you're doing is going to be valued by the market. Talking to 3-4 agents is not a bad idea.
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