Mike, Yes, when you rehab (restore a house) to its original or current day updates, you build equity in the property.
Again, it depends on what your goal is in the end.
You wouldn't finish out a rental with top quality updates for tenants to use and abuse over time, would you?
If it's a resale exit then by all means, as a rehabber, you'd want to make it as nice (& appealing) as possible to potential new buyers.
You wholesale cheap houses for a small profit to an end buyer that rehabs their properties for resale. It's a lot more work involved to rehab or renovate and so the rehab investor profits a larger percentage in the end for his/her efforts. It simply depends upon the sweat put into each level of the property game. The work involved is congruent to the monetary profits.
A bird dog does very little, their profit is small...A wholesaler carries out a bit more details and plays middleman (supplier); charging about a 5% finder's fee ...A rehabbing investor gains more because he has more at stake (the actual moneyman/buyer, [not a contract rights holder] who (generally hires a crew to perform the improvements) and) has more work to do because he/she is actual rehabbing and reselling a property for larger profits. The improvements are commensurate to the nature of your exit strategy.
Some rehabbers, unfortunately, [to me] leave off a lot of integral exterior details by only improving the interior of the property and leaving the exterior untouched or hardly touched. For example, there was a property in my neighborhood recently that was an obvious rehab flip from MLS pix. They did a wonderful job on the inside! However, it was a surprise to many of us because they hadn't even painted or cleaned up the yard or fence on the OUTSIDE! Driving by it appeared to be the same old house...the book was really good BUT the cover was ugly! LOL
They could've fetched more and improved the neighborhood at the same time as well with a few more dollars on the exterior. Just my thoughts/opinion. ~Hope this helps!
