I've finally decided on my first property investment, and it is in Cedar Park, TX, just northwest of Austin. I've just gotten into contract, and like everyone's recommendation on a property manager. I've already downloaded BP's Property Management Interview Worksheet. But your recommendations will mean so much more.
I'm also hoping the Property Manager will recommend or have a good contractor, since this place requires some remodeling before it is rent ready.
The quick math on my 3BR/2.5BA SFR property is the following:
$245,000 Offer Price
$10,000 Make Rent Ready
$1800 to $2000 Monthly Rent
Not exactly the 1% rule... but I did try really hard in the Austin metro area. And I think Cedar Park is nice with newer homes, good schools (9,10,9) and close proximity to the new Apple Austin campus.
Any advice welcomed. I'm targeting closing at the end of Feb.
Thank you all in advance,
Remodel? Paint walls and replace carpet with snaplock floating wood-look vinyl floor? Or more?
What are you trying to remodel to get it rented out?
Yes, the Cedar Park area has alot to offer with great schools and even more importantly a nice appreciation rate from last year to the present at around 13%. 13% is super!!!
I run an property management company. I would love to try to get the business of managing the property and maximizing the rents and value of your property. Yes I do have a handyman that can do most anything reasonably. In fact, I have a long list of contractors that can do anything that you want from building to a simple remodel. Please feel free to contact me and I will do my very best to help you.
Have a good one!
You asked a great question about the remodeling. My agent in Austin suggested preparing $10K to make rent-ready. Actually, even thought the house was build in year 2000, he said the house requires updating and serious deep cleaning (cobwebs everywhere). I'm here in California and so I haven't seen the property yet -- will be visiting Austin when it closes.
I know that interior painting is required.
I was going to just replace the carpet on the second floor (there is carpet in the Bath too).
But I really like your idea of stripping out the carpet and replacing with wood-like flooring.
So the allocated breakdown:
$2500 Interior Painting (2700sqft 2-story house)
$2500 Flooring on Second floor + Stairs (Wood, Tiles, Carpet??)
$5000 Two and Half Bathrooms Remodel (flooring, new vanity, countertop, faucets, lighting).
$500 Deep Cleaning
I was also going to allocate another $2K for a refrigerator, washer and dryer.
What do you think?
Hi @Aaron Gordy ,
Thank you for offering your services. Let me reach out to you directly and you can explain your services. I'll probably ask you questions from BP's Property Management Interview Worksheet :)
Good luck in Austin. If you ever want to get into less expensive homes, consider the Alamo City down south :). Here, pick up 50-60k houses and make 12%+ cap, no maint. needed if you decide to owner finance as we advise. Cap rates are a lot higher on these cheap houses.
I have 4 rental west of I35 in Round Rock. 1325-1525 mo. I can tell you, In your price range it is not customary to provide washer, dryer or refrigerator. Read the Steve Crossland property managemnet blog. He does not provide them at all unless they are in the unit when purchased or left behind by a tenant etc. And then on his lease he specifies that he does not warranty them. Yes, dishwasher and range, but that is all that is customary. Most people in that price range own all three....they are not coming from an apartment.
And in that price range people prefer hard floors in the living, kitchen and halls. If you put carpet in, require a carpet cleaning upon move out...in the lease. Let me tell you, every rental that languishes on the market is grimey with spotted carpet and an out of town owner (I look when I am establishing market price for my rentals). So do yourself a favor. laminate or vgood vinyl. i am going to post a photo of the .59 sq ft laminate from Home depot I put in my apartment in Boston because the carpet was gross. i love it . it is not yellow oak but birch looking .
Can't post the photo because I am on an ipad and havent downloaded the bp app. But it is very nice for 7mm. And a nice color. And light and pretty. And .59$! Buy your underlaymnet from tools forfloors.com for half of home depot price.
Looking forward to it. Thanks for the opportunity.
Hi @Account Closed ,
Thank you for sharing 12% cap investments in Alamo City.
I had my eyes on Austin for more than a year now as I see the tech growth exploding there. Being an engineer, I am more comfortable investing in areas that I can understand better. And I do see Austin as one of the major tech centers in America.
Since this is my first investment, let me see how this one goes. I'm sure that I'll want to research more areas when I want the cash flow.
Hi @Marian Smith ,
Your advices are incredibly useful. Thank you so much for sharing. I took away immediate action items.
- I will NOT buy the refrigerator, washer, dryer.
- Buy 7mm laminate for $0.59/sqft from Home depot
- Use laminate for all common living areas (living room, staircase, and hallways)
- Put carpet in only the 3 bedrooms, and require carpet cleaning upon move out in the lease
Just one more question:
- Should I remodel the 2.5 baths? What do you think is minimum? Floor is a must since they have carpet now, and replacement of toilets and faucets since there are plumbing issues.
Thank you again,
The 7mm .59$ flooring is just a suggestion. It is a better option than carpet. But install expenses need to be considered v lifespan of the materials. Tile is the most durable floor and Fusion grout never stains or needs sealing and best if all, it is a consistant color because it is premixed so even a very dark grout has no efflourescence. Lots of bp landlords with 5x the sf units that I have have gone to the vinyl snap lock...which is what I used on my last rental. It is beautiful and waterproof and I paid $1.59 at Floor n Decor. I always give tenants a big pack of felt pads to go under chairs.
But I installed the .59 cent stuff and I have used at least 5 brands and I was very impressed.
We have hard water. Depending upon the age of the house, replace the tub/shower cartridege and clean. i always buy a 20$ rebuild kit for toilets but plumbers charge a small fortune to rebuild, so replace? Depends on price. Clean: I own a shark steam cleaner and carpet companies own better ones. But you have not posted photos. Anything white is usually a keep. Cigarette stained marble in gold....replace. You're not flipping. You are creating a durable product with timeless appeal...boring and tough.
Updated about 3 years ago
After a good clean, seal the grout. And the tub caulk will need to be replaced more than likely.
I do understand engineer investors :) we have a few of those. Good luck in Austin!
I was also going to allocate another $2K for a refrigerator, washer and dryer.
Look around at scratch and dent places in Austin. There is one north Lamar past Braker, another at Lamar and Justin area and on one the eastside off of Decker Lane. I've been able to grab stainless appliances for pretty cheap by looking around.
You have to do improvements that conform with the neighborhood. Additionally, you have to look at long term, not short term. Tile vs laminate. You don't need to supply appliances nor a redo of bath. If plumbing is the issue, re-doing the bath will not fix plumbing. Best of luck.
Good luck with your rehabbing. If you ever want to learn about real estate where you don't need to bother with most of that, please let me know, I have the contact for you here.
Thank you @Jim Robertson . That is a great idea to get open box appliances. And I do need the stainless steel models to match the rest of the kitchen. Can you give me any specific addresses? Greatly appreciate it.
Thanks @Rica Greenwood , as you bring up a great point about conforming to the neighborhood. Today, I just checked the rental comps, and found there are about 10 other rentals around my Cedar Park property listed. I know the winter season is probably why the inventory is high. And some PMs (that I interviewed) said that it will take more than a month to rent out right now.
So I'm trying to think... a little higher end remodel and more unique. So that I can get it rented out faster.
I live in Cedar Park after moving from the Bay Area 2 1/2 years ago. I'm happy to help any way I can. I would not replace a shower cartridge if it's not dripping. Doing that on demand is not a big deal. I replaced one in my 1995 rental a couple of weeks ago, and it's the only one that has needed the work out of eight showers in my rentals. It took about a half hour after I got the part. For a bathroom floor, ceramic tile is much better than laminate because water won't hurt it. You might try some of the new tile that resembles wood if you like that look.
My view of appliances is that tenants want to be able to move right in, and you will lose some prospects if you expect people to provide a washer and dryer and especially a refrigerator. If you worry about appliance repairs, consider a home warranty, and you may get one from your seller as part of the deal.
You haven't mentioned the exterior of the property your're buying, but consider exterior painting and dealing with any rotted or poorly sealed trim. It makes a big difference in curb appeal and longevity.
Thank you @Bob Hucker for the advice on appliances. I am seeing more Cedar Park rentals coming on the market these days and with more days on the market too. So to make my property more attractive, you have a great point about including appliances for new comers to the area. I'm still on the fence on this one since it will add $2K and more maintenance. If I do buy the appliances, @Jim Robertson made a great point earlier about buying open box, scratch and dent items.
General Question: if you had $2K, what would you do to make your property more attractive?
That's a great question. It depends on the property. At one of my rentals, I might remove the carpet upstairs and install laminate flooring to match, as closely as possible, the laminate downstairs. In another, where I already have replaced old kitchen appliances with new stainless-steel ones, I might replace the old sliding patio door with a nice french door with blinds in the glass -- as the beginning of an eventual kitchen remodeling -- and maybe replace old bathroom lights, faucets and towel racks. In a third, I would finish the interior painting that we started before the current tenant moved in. About two-thirds of the interior needs new paint. In the last, I'd paint the exterior.
I love the 2k question. It is the premise behind the best RE show ever...design to sell. People are very emotional buyers. But the question can only be answered property by property, which is why the show was so successful.
And renters want location, schools, price, clean and basically, the ability to have family, co-workers, kid's friends over and just live without being embarrassed or affronted by outdated, ugly or unsightly damaged finishes in a house.
I remodel all my rentals and use glass tiles and vessel sinks and do whatever I can to outshine the competition....within reason. But I HAVE to remodel because I buy dogs. My competiton may have granite and stainless and rent for more or a teal accent wall, painted paneling, goldish bath vanities and butcherblock kitchen countertops and rent for less. (Both true on my street) But everyone rents in good times. They price according to condition.
These are good times. There is a house in the better neighborhood I buy in that has blue carpet. It rents...in a few weeks. I am amazed everytime. But it turns over...but almost anyone renting for $1600 mo can buy ...if they can find a house.
Clean, repair, fix anticipated repairs while the place is vacant. Lower your rent if your house isn't as nice as the one down the street, especially if it photographs well. Save your 2k for the bad times. SC has his owners rent at slightly below market to get tenants fast. A house is shelter. Bling gets dated. Best bang for your buck is and always will be paint. Actually cleaning. But fresh paint is pristine clean.
I've leased out my investment property during winter with many interested parties and no appliances. I agree with Marian. Save your money. I'm a broker and rule of thumb, as with all sales and leases, the dictating factors are PCL: price, condition, location.
I'm finalizing my Remodeling TODO List, and thanks to all your advice, have parsed it down to:
2) Painting (Interior)
3) Flooring (remove all signs of carpet)
4) Baths (just replace countertop and faucets - nice and shiny :) Repair the rest.
5) Lightings (update to make the rooms brighter) OR maybe just high-wattage light bulbs
Looks like my trip to Austin will be very focused and productive now. Thank you again!
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