Buying Distressed Properties

9 Replies

I was just wondering if I was the only one that was having a hard time looking at a distressed property and actually visualizing the renovation or "make over" sort of speak. I think that maybe I just don't possess the designer gene or is this something that can be learned (I'm sure it can be learned).  I'm also sure there are books, blogs, or maybe youtube channels that can help. Do most investors hire other people for this (understand that may put a dent in your bottom line) or do they just take on partners who do possess the "gene", or is this just something that you learn through experience (trial and error). I'm just looking for any feedback, recommendations or best practices, thank you.  

You definitely are not alone.  I am horrible at visualizing how a property can look after renovations, even when it is described to me.  I suspect that people can start to develop that skill just by doing enough flips.

You have options in the meantime.  One is to hire someone to fill that role.  Obviously that will be an expense that you will have to incorporate into what you can offer for the property.  Another option is to partner up with someone who has that skill.

@Samuel Joshua Go to a local REIA and meet other investors. Offer to take them to lunch and then tour one of their projects. I am a visual learner, I found early on the more projects I saw happening and seeing first hand the before and after helped visualize the final product.

Also, spend a couple Sunday afternoons walking thru Home Depot or Lowes. Start to pickout fixtures with different finishes, walk the flooring section, check out paint colors you like. This helps you understand the different options and gets you very familiar with them. Don't go and walk the store once, walk the store every weekend for two months.  It also helps you get very familiar with prices, which will help you estimate rehabs better.

Thanks for the feed back Brian Schmelzlen. 

I cannot tell if I will like a color mix until seeing it complete.   It means I should not be picking the colors of floors, cabinets, pantries, and walls at the design phase unless I am choosing colors that I already know work.  So you are definitely not alone in not being great at that skill.

Fortunately my 2 primary partners (my wife and 15 year old son) both have solid skills in that area.  In addition, many of our units have a similar look.  We have used the same color composite flooring on the last 4 rehabs.  Many of our units have the same interior wall color.  We have had people look at our rental ads and guess correctly that they were our units just because of a similar look.

So I think you can improve your skills in that area or you can partner with someone with those skills or you can hire a designer.  But after you have done a couple/few you can reuse colors and concepts that work with confidence that they do work.

Good luck

@Samuel Joshua So I don't buy distressed properties but I've definitely considered it and had a couple of offers turned down.  To be honest, I don't know how much "taste" I have when it comes to finishes and it's also important to match the quality to the end product.  So what I did to figure out (guesstimate) rehab costs was two things: 1.) Ask my property manager what I should do to make the unit justify above-average rent (so I didn't let the lowest-common-denominator when it came to tenants) but not go overboard and 2.) Look at for-rent ads as well as new construction listings to get a feel for what's popular at the moment.  It's really not that tough to go through ceramic tile floors, white baseboard and trim, tan walls, etc. so if you're aiming for "neutral" I'm 100% sure there are some easy options out there.  When you "splurge" for an undermount sink (for example) is much more market dependent.  

Now where it gets tricky is if you want to "visualize" taking down walls, guessing how much value an "open floor plan" will add, etc.  But it's worth noting that you probably have to think through both the design and construction angles on that one.

@Samuel Joshua I would have your contractors give you advice also on what is your best bang for the buck on the layout.  I would probably pay your contractor to do the inspection while at the same time doing a quote and helping you with layout and you can pay him $350 which is what you would pay for an inspector and kill two birds with one stone.  I prefer a contractor to do my inspection over an inspector anyday. Your contractors have probably done enough renovations to know what type of layouts are popular and give you advice on what's in style.  I would not get an interior designer or planner unless it is a seriously high end flip because they will go over budget. They have no idea what their renovations cost they just care that it looks good.  Also a realtor with flipping experience can be helpful with layouts because they know what your end buyer wants.

@Samuel Joshua I'll assume from your post that you're starting from ground zero on this. As cheesy as it sounds, watch a few episodes of Fixer Upper/HGTV, (I know, I know, it's not really real) then find a bunch of before/after pictures on BP or Youtube and look at what they've changed with the space. Even though I've been involved in some aspect of rehabbing and construction for almost 20 yrs, I still like to see what other people are doing to utilize space and improve floor plans. Once you learn to "see" through walls and learn which ones are load bearing and which aren't, you can sometimes really transform living space without a lot of effort. 

Oh, and I've also been known to commandeer my wife's Pinterest account from time to time when comparing ideas!  :P

All the best!

Thanks for all the awesome feedback! I will be incorporating a lot of the ideas recommended here. 

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