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.
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.
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.
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.
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?
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