About three years ago when the real estate in Logan Utah was at a peak me and a friend both bought separate properties that we identical. They had been built around the same time, were practically mirror images of each other and they were in the same condition.

 

We both proceeded to buy the properties for sale in Logan at the same price, same down payment, same loan, everything.

 

We both decided to rent out our properties with good results. I was able to receive a bit more for rent on my property because i allowed pets. When my renters moved out last year I was able make my house available as a "lease option". I quickly had renters/buyers who agreed to a lease option price that would give me a net return investment of $18,000 

 

My friends approach to his unit was very different. He was a building contractor so his idea was to update the 30 year old home to make it more valuable and more sellable. So when he was in between renters he  completely upgraded the house. He added siding, central air conditioning, new tile, carpet, cabinet stain, paint, a deck,new fixtures, sinks, toilets, trees and so on. He put more than $16,000 into the renovation of the property. The property turned out really nice and will sell quickly at the right price.

 

The only problem is the cost it took of all the upgrades is more than the value of the upgrades. This happens often with upgrades.

 

Since the property is now so nice he wants to sell it rather than rent it out where it might get ruined. If he gets the full asking price, he will only get a net profit of  about $10,000.

 

So it seems like upgrades will be a good real estate investment but as you can see that is often not the case.