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Why You Don’t Put “Lipstick on a Pig” in Real Estate!

by Engelo Rumora on July 19, 2014 · 9 comments

  
Why You Don’t Put

Time and time again, I’ve come across many real estate investors and companies that like to cut costs on hidden repairs, especially when they are buying older properties.

Although a cheap and temporary fix might look attractive at first glance, it will definitely result in costing you more in the long run, regardless if the property is a buy-and-hold or a buy & flip.

Below you will find a couple of tips that I have learnt while renovating properties over the years. These tips can assist you with doing the right thing and having a performing cashflow investment.

Tip #1

When renovating properties in lower income areas, it is crucial to insulate the roof and walls.

In the cold winter months the insulation assists with containing the warm air, and during summer the insulation will prevent the suns heat from penetrating through the property while at the same time allowing the cool AC air to stay within.

This will significantly lower the tenant’s monthly gas and electric bill. Most tenants in lower socioeconomic areas are hard pressed for funds and should not be given any reasons or excuses to short the monthly rent and pay for other unnecessary expenses.

Related: 7 Essential Elements of Your Home Inspection (Beware of #7!)

Tip #2

Another “hidden” item that causes landlord grief and tenant disturbance is neglecting the plumbing.

Some of the main problems that can occur are: Backed up house trap, bursting copper pipes, and clogged drains. I highly recommend that every real estate investor contracts a competent and trustworthy plumber, who has years of experience working on properties and in the areas of interest.

Related: Real Estate Investor Case Study: The Plumbing Problem that Kept on Giving…

With his experience he should be able to predict all future maintenance issues and address them upfront during the renovation process.

Implementing these simple tips, the estimated or promised numbers on paper will be more achievable when evaluating the deal.

There are too many shady operators that offer “amazing” numbers for PIG properties with only the very basic cosmetic work being completed (i.e. paint and carpet). By cutting corners you will only smudge the prospect buyers and tenants eyes in paying top dollar when purchasing or renting.

This will in return make it a loose/loose situation. My experience has taught me that within 3-6 months of ownership issues begin arising and they become a never-ending cycle of problems.

These problems if not fixed in a timely manner, could result in that particular property becoming vacant and vandalized. Its unfortunate to see these homes becoming revolving doors with new investors coming and repeating the same mistakes over and over again.

Conclusion

By NOT putting “Lipstick on a Pig”, the buy-and-hold investor will save time and money without experiencing grief, the tenant will get a clean, renovated and efficient home and the flip investor will gain a good reputation and most likely repeat business for a very long time.

“It takes a lifetime to build a reputation, and only 5 minutes to loose one”

Thanks for reading

– Oink, Oink.

Do you have any crazy “lipstick on a pig” stories?

Be sure to leave your comments below!

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{ 9 comments… read them below or add one }

Alex Craig July 19, 2014 at 8:24 pm

Carpet in high traffic areas is expensive reoccurring cost. Vinyl flooring too. Go laminate hardwood flooring. We use the Trafficmaster brand that. Is water resistant. Ceramic tile in kitchen and bath will hold up much better then vinyl flooring. Also spending a little more on the ceiling fan will last longer too. I am not saying you have to put in a Hunter fan, but the Hampton Bay’s from Home Depot look good and perform well.

Reply

Alex Craig July 19, 2014 at 8:30 pm

One other thing to add and this sounds a little over the top, but we have put granite in a few homes and have found we are getting a little extra rent. The extra rent pays for the granite after a couple years and the longevity of it surpasses any other counter top.

Reply

Engelo Rumora July 20, 2014 at 11:18 am

Thanks for your comment Craig,

You have some great tips. We always look at removing the carpet with the hopes of the floorboards being in good shape. A quick sand and coat of polyurethane can really bring them out. Another thing we have been doing if the are too stained is pavement paint. It also does the trick.

Have you guys tried using pavement paint on the floorboards?

Never considered installing granite. Not sure if it would really give us extra rent but definitely agree on the longevity.

Thanks and have a great day.

Reply

dorothy smith July 19, 2014 at 9:35 pm

Yes, be aware that homes that have been vacant for 6 months to a year or more, will have plumbing and water line issues. We bought a home with all the cosmetic updates, like the carpet and paint, but after the home was tested with water, we had alot of unexpected repairs. Yes those repairs were drains, water traps, limed and gummed up plumbing. Also the water lines had build up in them. Plumbing and water lines along with electric repairs were all waiting for us to repair once we turned everything on. So just be sure to always have all that checked out before you purchase a distressed home.

Reply

Engelo Rumora July 20, 2014 at 1:08 pm

Thanks for your great comment Dorothy,

Non winterized plumbing in colder months can also cause problems.

We just recently had an expense pop up on a property that was vacant for over a year. The electrical box was too close to our hot water and didn’t pass the inspection.

It was a great $2,000 lesson lol

Definitely getting our electrician on site to inspect before any future purchases are made although our general contractor gave us the heads up.

Thanks and have a great day.

Reply

Sharon Vornholt July 24, 2014 at 9:06 am

Engelo –

Great tips. Ignoring these things will only cause you money and tenant turnover down the road.

Sharon

Reply

Engelo Rumora July 24, 2014 at 7:13 pm

Hi Sharon,

Thanks for your comment.

100% agreed.

Have a great day.

Reply

John @ Sell Halifax Real Estate August 22, 2014 at 7:03 am

Excellent tips! If you want to save money while buying your new home, you got to keep these real estate tips in mind.

Reply

Engelo Rumora August 28, 2014 at 5:35 am

Hi John,

Thanks for your comment.

Have a great day.

Reply

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