I recently had a consulting call with a client who brought me a full rehab deal to review. It’s a cheap, sub-$40,000 listing in Detroit.
The home is huge by Detroit standards, about 2,000 square feet. And it needs everything: a new roof, full sewer line replacement, completely new HVAC system (with ductwork), porch work, two bathrooms, a full kitchen replacement, plaster repair, drywall work—plus all the standard cosmetic updates.
From a financial and capital efficiency perspective, it’s the kind of project I typically advise against. It doesn’t make sense in this area given the comps.
But my client owns a property nearby, loves the home, and sees this more as a passion project than something strictly financially motivated.
He’s got the right mindset for it, and if he can pick it up for half the current list price (which I think he can), I gave him the green light.
It also got me thinking: While I often tell people not to take on full gut rehabs, there are situations where doing a full rehab can actually make sense.
Let’s talk about those.
What Is a “Full Rehab”?
Before we jump into the reasons to do one, let’s define what I mean by a full rehab.
To me, a full rehab means tackling all the major capital expenditure (capex) items—things like the roof, HVAC system, plumbing, sewer lines, and significant structural work—plus the cosmetic updates like kitchens, bathrooms, and flooring.
However, it does not mean taking the home down to the studs like I did with my Detroit short-term rental.
That’s where a lot of investors go wrong.
In markets like Detroit, where the comps don’t support massive budgets, taking a property down to the studs is usually overkill.
Instead, the smartest approach is to address all the big capex items while keeping the project as efficient as possible.
With that clarified, here are three situations where doing a full rehab might make sense.
1) If You Plan to Hold the Property Long-Term
If your goal is to hold onto the property for 5-10 years (or longer) and you can keep your total investment somewhere in the ballpark of the comps, a full rehab can make a lot of sense.
In the case I mentioned, we talked about essentially replacing all the major systems—the “guts” of the house—and tackling the capex items like the roof, HVAC, and sewer.
Once those are addressed, the idea is to focus on making the home functional from a rental perspective rather than going all out on aesthetics.
The long-term benefit here is huge.
If the area improves—and we believe it might—you have the option to upgrade the aesthetics later on and create a gorgeous home with all the capex already taken care of.
There’s a lot of value in thinking ahead like this.
Where else can you be all-in for under $150k on a 2,000-square-foot home that’s essentially “brand new” under the hood?
If you have a long-term mindset and the numbers make sense, a full rehab can set you up for big returns down the road.
2) Full Rehabs Can Make a Real Impact
Not every project is about maximizing your ROI.
Sometimes, you just want to do something good—to improve a neighborhood and create a ripple effect.
A full rehab in a transitioning area of Detroit, like the one my client is tackling, can do exactly that.
Here’s what happens when you take on a project like this: People notice.
Homeowners see others investing in their community at a high level, which attracts more homeowners.
Investors start paying attention, too. The momentum builds.
Years ago, I did something similar in Morningside before the area became popular. I know firsthand that a handful of these “crazy” higher-ticket projects can help tip an entire neighborhood.
If you value impact over immediate financial returns, a full rehab can make a difference.
It’s a chance to be part of the positive change happening in Detroit—and that’s worth something.
3) If You Already Own Property in the Area
If you own other properties nearby, taking on a full rehab like this can benefit you in the long run.
All those ripple effects I mentioned—increased attention, improved neighborhood quality, higher demand—will eventually trickle down and make your other properties more valuable, too.
This is why it pays to think strategically.
The more you own in a specific area, the more you stand to gain from projects like these.
It’s a classic case of improving the value of your investments through direct action.
But again, this is a long-term play. It won’t happen overnight, so you need to be patient and have a clear vision for the future.
Should You Do A Full Rehab?
While I’m usually the first to tell people to stay away from full rehabs, there are exceptions.
If you’re playing the long game, focused on making an impact, or already invested in a specific area, tackling a full rehab can make a lot of sense.
Just remember to approach it smartly: address the capex items, keep the project efficient, and avoid taking the home down to the studs unless the numbers truly justify it.
These projects aren’t for everyone, but if you go in with the right mindset, they can be incredibly rewarding—both financially and personally.
So, before you write off that big rehab project, ask yourself: Does this fit into my long-term vision?
If the answer is yes, it might just be worth the effort.