Is turnkey repair / painting really this expensive?
Atlanta, GA · Member since 2014 · 240 posts · 130 votes
Greetings!
I use a property management company to rent my units, and they are doing a good job. But every time one tenant leaves and another comes in behind them, the costs associated with the turnkey repairs seem really high.
For example:
I have a house that is 3/2, 1500sf. The quote on the repair work is $2500, which includes painting the whole house for $1500 (and a bunch of other miscellaneous stuff, including a couple of small plumbing repairs, reglazing the tub, cabinet repairs, etc.)
The house went vacant a year ago, and we paid to paint it then -- for $1500.
Questions:
1) Is it normal to paint the whole house between each tenant?
2) Does it really cost $1500 to paint the whole house?
3) How does anyone make money on their rentals with this sort of expense on the turnkey?
We do our own management and most maintenance in our apartment building. We use high quality paint, from a good paint store, that custom mixes the colors. The color matches are so perfect, I just touched up a 3 year old paint job with a Qtip. We use a semi-gloss, washable paint with extra coats around light switches, corners, and other areas likely to get dirty. The walls wash up quickly and easily.
I know that many will advise LL to "take the tools out of the truck", etc. We have done the opposite. Not only is hiring everything out expensive, it is also time consuming. You will have delays waiting for workers to show up, which will increase turnover time. My husband and I could paint a 1500 square foot house in 2 days. Painting an empty house is easy (especially if you use the same color.) We have learned to lay flooring, repair drywall, repair/replace/ adjust bifold doors. We can repair broken door jambs. We pick up and install our own appliances. You Tube can teach what you can't figure out on your own. (Did I mention we started this in our 60s?) We have learned that the skill set required is actually fairly limited. You end up doing the same tasks again and again. Being a hands on LL has other advantages. We know what is going on in our building, and are able to nip problems in the bud.
The money that we have saved using this approach has allowed us to make improvements to our building. We had landscape sprinklers installed last fall. That has been a huge time saver.
We used to employ a PM when we had one SFH and were out of town LL. It was never satisfactory. Do your own management/maintenance if you are in the same area.
You asked how LL were able to make money if turnover costs are so high. By doing our own maintenance, we are able to take $36K a year out this building, even with capital improvements and paying $6K a year in property taxes. My husband once estimated he spends, on average, 4 hours a week on the apartment building.
Just to clarify....this has nothing to do with the property being turnkey. Turnkey is a way of buying, not of owning. It's now the same as any other rental property.
As far as the expenses, it just depends on the condition it was left in. But definitely price out different contractors, especially for the paint.
You should not have to repaint the whole house every year or every tenant turn. But expect to do so every 3-5 years. Otherwise patch up work should suffice. PMs have a tendency to over repair. Makes it easier for them to rent. You have to push back on both the scope and the cost. Also you should recover as much as possible from deposit. Repaint after one year is not regular wear and tear.
Those costs are pretty normal. As someone suggested you could likely find someone on Craigslist who will do it on the side for cheaper but there's risk to that as you get what you pay for and we have to believe that everyone will charge as much as the market and their skill set will allow.
So you have to ask yourself why someone is on Craigslist doing work for less than refutible companies? What is holding the person on Craigslist back from competing with everyone else's prices? After all, nobody prefers to make less money so there is a reason this person is unable to charge more. Perhaps they are unreliable, inexperienced, addicted to drugs, running a scam etc....Sometimes you get lucky & find yourself a solid handyman, other times you end up paying your actual PM company to go back and correct the mistakes your handyman made. Sometimes your handyman steals your furnace. I have personally seen it all.
Is the minimal savings really worth the work & risk associated with the search. Maybe, maybe not will depend on your risk tolerance as well as what you value your time vs money.
Those costs are pretty normal. As someone suggested you could likely find someone on Craigslist who will do it on the side for cheaper but there's risk to that as you get what you pay for and we have to believe that everyone will charge as much as the market and their skill set will allow.
So you have to ask yourself why someone is on Craigslist doing work for less than refutible companies? What is holding the person on Craigslist back from competing with everyone else's prices? After all, nobody prefers to make less money so there is a reason this person is unable to charge more. Perhaps they are unreliable, inexperienced, addicted to drugs, running a scam etc....Sometimes you get lucky & find yourself a solid handyman, other times you end up paying your actual PM company to go back and correct the mistakes your handyman made. Sometimes your handyman steals your furnace. I have personally seen it all.
Is the minimal savings really worth the work & risk associated with the search. Maybe, maybe not will depend on your risk tolerance as well as what you value your time vs money.
Finding workers on Craigslist is probably the biggest headache on earth. Any time I've tried in the past, lets say out of 10 responses, maybe 3 can form a sentence and actually read what work I need done, 1 will show up to actually do the work, and 0.5 will do the work correctly.
Unless this property is an A+ unit I don't think you should have to paint it for each tenant. If your last tenants damaged the paint their deposit should cover it. I would think the walls just need to be cleaned. Hopefully the last time it was painted they used quality paint that can be cleaned easily.
That's about 1/sqft. Not a bad price, but not a craigslist random guy price. if you wanted to take a chance on someone that may go cheaper, it could be a bad mistake, I would say 70/30 chance you could save some money and get a decent job.
I've recently had quotes on my apartments, and they are smaller and the quotes are roughtly the same as yours. My problems arise from previous owners using flat paint. Impossible to clean, practically. What kind of paint do you use? I'm going w/ eggshell when I repaint in the hopes that a damp sponge can delay repaints for a while.
It seems ridiculous for me to see that a home would need repainted every time a tenant vacates the property. Do you have annual/bi-annual inspections to show condition of property and do they trash it? I only had to deal with touch up paint work and nothing as extensive as you are experiencing. $1,500 is actually pretty cheap for paint. I have paid over $6,000 for a home to be repainted and popcorn ceiling taken down. It also depends on quality of paint and workmanship. I've seen varying degrees of quality from different painters and detail work is lacking in some. For a rental property, I can't imagine having to pay $2,500 to make it turnkey. How are you staying profitable? Major expenses have been water heater, roof, and flooring. Sounds like someone is making money and it probably isn't you. Does the PM company own the painting and handyman (in-house) service as well?
Thanks everybody! Good to know that the quote is not crazy.
Sounds like this is the summary of wisdom here
-Don't paint in between every tenant, maybe try every 3-5 years
-Try to use the security fee if possible to make the repairs
-Try to use eggshell paint so it is more clean-able
-Try to negotiate with the PM on price and scope of work
Really appreciate the advice!
@Tavis Stice
PS -- I know that turnkey usually refers to buying rehabbed properties with a tenant already in them. Around here the management companies refer to in-between rehab and repairs as turn-key. Thanks for the clarification though!
We do our own management and most maintenance in our apartment building. We use high quality paint, from a good paint store, that custom mixes the colors. The color matches are so perfect, I just touched up a 3 year old paint job with a Qtip. We use a semi-gloss, washable paint with extra coats around light switches, corners, and other areas likely to get dirty. The walls wash up quickly and easily.
I know that many will advise LL to "take the tools out of the truck", etc. We have done the opposite. Not only is hiring everything out expensive, it is also time consuming. You will have delays waiting for workers to show up, which will increase turnover time. My husband and I could paint a 1500 square foot house in 2 days. Painting an empty house is easy (especially if you use the same color.) We have learned to lay flooring, repair drywall, repair/replace/ adjust bifold doors. We can repair broken door jambs. We pick up and install our own appliances. You Tube can teach what you can't figure out on your own. (Did I mention we started this in our 60s?) We have learned that the skill set required is actually fairly limited. You end up doing the same tasks again and again. Being a hands on LL has other advantages. We know what is going on in our building, and are able to nip problems in the bud.
The money that we have saved using this approach has allowed us to make improvements to our building. We had landscape sprinklers installed last fall. That has been a huge time saver.
We used to employ a PM when we had one SFH and were out of town LL. It was never satisfactory. Do your own management/maintenance if you are in the same area.
You asked how LL were able to make money if turnover costs are so high. By doing our own maintenance, we are able to take $36K a year out this building, even with capital improvements and paying $6K a year in property taxes. My husband once estimated he spends, on average, 4 hours a week on the apartment building.
I'm writing up a long post on the many benefits and drawbacks of active landlording for the local smallholder. You have six units (according to your profile). You obviously would be working differently if you had 200. I've always felt there's not enough focus in most information about real estate investing that seriously looks at doing what you're doing, and far too much emphasis on putting more faith in your PM than a priest has in Christ.
@Account Closed I appreciate this perspective. And I am looking forward to your post.
@Bettina F. I was smiling inside while I read your post above. Especially the lines about starting in your 60's and "We have learned that the skill set required is actually fairly limited. You end up doing the same tasks again and again."
This is exactly how I started. I knew that I couldn't afford to be in the Landlord business if I hired everything out, but I quickly learned that I could learn to do just about anything, and after I learned these skill myself, it would become very easy to estimate labor/material costs when scaling up and dealing with sub contractors.
@Joshua Feit , in my opinion, this is a people/relationship business. $1,500 to repaint the interior of one house may be a simple time management decision. But what about when you have three houses? Five houses?
Wouldn't it be more cost effective, "time management wise", to do the "work" necessary to cultivate one or two "small guy" painters who can handle those interior repaints for you? And maybe that "small guy" painter will turn out to be a great guy who will refer you to a "small guy" tile layer? And so one relationship leads to another...
If you do let the property management company handle the painting, please do us all the favor of stopping by to interview the painters themselves. Are they driving company trucks? Are they licensed and insured? OR is the property management company "handling the job internally"? And if this is the case, can the property management company show you that these personnel are legitimate property management company W2 employees working within the scope of their workers comp insurance job descriptions. : )
One last thing that I will disagree with everyone else on, and that is the use of Flat Paint. I love flat paint in rentals, other than bathrooms and kitchens of course. I would rather spend the "clean up" time simply painting over dirty walls. Plus you get that "freshly painted" smell even if you only did a few spots on a few different walls. New tenants love that freshly painted smell and flat paint will always match perfectly on touch ups.
DL
By doing our own maintenance, we are able to take $36K a year out this building, even with capital improvements and paying $6K a year in property taxes. My husband once estimated he spends, on average, 4 hours a week on the apartment building.
LOL !!!!!!!!!!!!!
Correct me if I'm wrong, but isn't this $3,000 per month NOI the same NOI as the Bigger Pockets Trending Thread:
"$1,300,000 deal at age 21 and I'm Retired!!! "
which has 467 replies ????
It seems like we Bigger Pockets people are intoxicated with the concept of "passive income" and "work on my business instead of in my business"... We are all "high rollers" whom "value our time" so much that we can never be bothered to chat up the handyman in the tile isle at Home Depot or the concrete guy pouring a patio at the house down the street.
Much less actually pick up a paint brush or a screwdriver.
DL
-Try to use the security fee if possible to make the repairs
Paint, and most likely that tub reglazing, is going to fall within "normal wear and tear" and will not be recoverable from the security deposit...Probably pretty tough to prove that the tenant destroyed the finish on the tub. Unless you installed the tub just prior to that tenant's occupancy and you have photo's documenting that. Even better if on the "move in checklist" you have their initial acknowledging the new tub.
DL
p.s. I always try to give back as much of the deposit as reasonable. In those instances where I don't, I take 50 (or so) digital photos, print them out at Walmart (super cheap), and mail them to the tenant along with whatever deposit is left over. We have never had a deposit contested in twenty years.
I can't imagine painting every single year. Paint should last a good 3-5 years.
I use semi-gloss in my rentals, as it's the easiest to clean. Others may have differing opinions.
I'm writing up a long post on the many benefits and drawbacks of active landlording for the local smallholder. You have six units (according to your profile). You obviously would be working differently if you had 200. I've always felt there's not enough focus in most information about real estate investing that seriously looks at doing what you're doing, and far too much emphasis on putting more faith in your PM than a priest has in Christ.
I read and post on several Landlording sites. IMO, Bigger Pockets readers tend to be younger professionals whose first response is to hire everything out, including management and maintenance. (it reminds me of that old joke. "Honey, what are you making for dinner? Reservations.) Their emphasis is on growth, debt financing, and cash on cash return. I get the impression, most BPers would consider mowing a lawn beneath them. I consider it earning $75 for 30 minutes of effort.
Our goals and situations are different. My husband and I getting ready for retirement. Our goal in RE is another income stream for our retirement, and to keep the same proportion of our portfolio in RE.
After watching our aging parents hold on to their "big house" too long, we knew we wanted a smaller retirement house. We paid cash for a modest house in a less expensive area in 2011,(recession prices) and rented that out for 2 years. We sold a big house in an expensive area in 2013, after prices had rebounded, retired to a less expensive area and paid cash for our 6 unit apartment building.
What I did not expect was how much I enjoyed LLing. After spending my life as an employee, it was fun to run our own business and see our ideas and investment pay off. We considered expanding and cashing in stock to buy more property, but then realized we would not be retiring -- just changing jobs.
After a career in abstracts (nursing and psychology) my husband and I have enjoyed the creativity and concreteness of property rehab and LLing. I am very proud of our apartment building. We have upgraded units,upgraded tenants, and raised rents. The building is now attractive. The tenants take more pride in their building as evidenced by less litter in the parking lot. It cash flows well with a minimum of hassles. On another site, I posted before and after pics of a trashed unit we had rehabbed. It is now a beautiful unit with a great tenant.
Much of our learning to do our own maintenance resulted from 1) difficulty finding quality workers, and 2) frustration waiting for quality workers be available. We would decide to "just try" to fix that smashed door jamb. One You Tube video and a trip to Home Depot later, and the door was fixed.
We work like dogs when we are rehabbing a unit, but hey -- it keeps us off the golf course! So far 4 of our 6 units are rehabbed. We have 2 elderly remaining inherited tenants who will probably die in their apartments within a year. As a nurse, this does not freak me out. We have standardized our units in terms of paint, flooring, etc and turnovers of the rehabbed apartments are easy.
@Account ClosedTrue! Tenant screening is not an issue -- most of our tenants stay for years, and we've had no evictions. This couple got a divorce and decided to move. Not much we could do to change that situation!
By doing our own maintenance, we are able to take $36K a year out this building, even with capital improvements and paying $6K a year in property taxes. My husband once estimated he spends, on average, 4 hours a week on the apartment building.
LOL !!!!!!!!!!!!!
Correct me if I'm wrong, but isn't this $3,000 per month NOI the same NOI as the Bigger Pockets Trending Thread:
"$1,300,000 deal at age 21 and I'm Retired!!! "
which has 467 replies ????
It seems like we Bigger Pockets people are intoxicated with the concept of "passive income" and "work on my business instead of in my business"... We are all "high rollers" whom "value our time" so much that we can never be bothered to chat up the handyman in the tile isle at Home Depot or the concrete guy pouring a patio at the house down the street.
Much less actually pick up a paint brush or a screwdriver.
I hadn't read that post until you pointed it out. Although his bar for being "retired" is set pretty low -- he says his living expenses are $1500 a month. He also just closed on that property and is basing his "retirement" on pro-forma calculations. Something about counting chickens keeps running through my mind .......
Anyway, we are still waiting for the passive part of "passive income".
Its SO easy for PM to spend other people's money..... the cost isn't coming out of their pockets..... its going into it...so, yeah they are going to want to paint every year and fix EVRYTHING!!!
The price you got quoted is reasonable...... I wouldnt cheap out on it, if you opt to do it......the reason and time frame to do this job over and over is ridiculous....no way I would paint the entire house every year...no way....