You know that point in the relationship where things seem to be stale. Is it you? Is it me? Maybe we need to spice things up, or try something different. Of course, I’m referring to your rehabs and flips not selling quickly enough, or exploring if you could be increasing your profits (what else would I be talking about?!)
Fixing and flipping ain’t easy. In fact, in the recent podcast I was interviewed on, I share my thoughts with BP’s on exactly what I think about those who are looking for no hassle real estate. But, when you’re out there grinding to get leads, converting them to contracts, making deals, and renovating properties, you deserve to be properly rewarded through a quick retail re-sale.
Read on and see why making these small changes can have a huge impact on your bottom line.
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
1) Exploring Color
Bison beige, Navajo White, and a short list of “watered down browns” create a clean palette for your rehab, but may lack some emotional appeal Buyers are searching for. The new color that’s on trend? Purple.
Purple exudes elegance, an air of royalty, and encompasses masculinity and femininity. Now, “I’m a Princess” Purple isn’t what I’m referring to. Many upscale resorts, hotels, and offices are using shades of purple with a near grayish undertone to set the stage for a variety of color palettes.
This isn’t an endorsement of any particular paint companies, but here are some real-world examples you can preview next time you’re picking paint for a project.
Olympic: D44b “Shining Armor”
Valspar: 4001-2A “Cadet Gray”
Valspar allen+roth: ar1420 “Embarcadero”
If you have a tried and true color palette that you use on all of your rehabs, perhaps add in an accent wall instead with a richer color from the color lineage your main wall color is from. It’s an inexpensive way to add “pop” to your place, and if the Buyers want to change it later, it’s an easier fix for them too.
2) Setting the Stage
As investors, we’re all about ROI. Here’s a hidden gem for making thousands of dollars off of a few hundred: Buy decorating materials and stage your rehabs.
The mission is to create enough of a vision of what the home would look like furnished, without crowding out the Buyers ability to see their own belongings there. If you don’t have someone on your team that seems to have a knack for style, though, is it worth hiring a professional stager?
This may depend on the size and listing price of the home, and what the Buyer profile will most likely be.
Like any presentation, you need to consider your audience, and staging is no different. For instance, many rehabbers that dwell in the 200K and under price range will typically do “light” staging, meaning, pictures, plants, window treatments, and accessories.
If you’re working with homes in the middle to upper price ranges though, having high-end looking (I stress “looking”) furniture like couches, dining tables, beds, comforters, decor pillows, etc, will showcase the home that much more. Even visiting other homes that are staged, or reading about it online with how-to’s, you can learn with simple steps how to add extra appeal to your sales, not matter what the price range. Here’s some of my personal tips:
A) Check out places like Ross, Big Lots, GoodWill, TJMaxx, and other retail off shoots. Places like these are treasure troves for kitschy materials that are fantastic for staging. Look for items that are durable, popular, and look higher end (with a low price tag, of course). If you’re purchasing materials for higher end homes, furniture auctions, craigslist, and local stores that specialize in selling lots of fine furniture below retail will be your best bet.
Plants, rugs, décor, furniture, you name it. I personally keep my own inventory and currently either decorate in a more traditional “warm tuscan” style or simplistic contemporary look with pops of color and abstract art. What’s appealing may well depend on what’s stylish in your area, but for inspiration, visit an upscale resort near you or a local high-end boutique; they’ll show you what’s on trend!
B) Bins, lists, and how to’s
Make life easier on yourself by not allowing the extra materials be a hassle. As you buy items, create an inventory list that has to be signed off on when items are used and returned. By the way, this also helps keep track of when some of your pretty decor walks away on it’s own! Bins make storage and removal easy and efficient.
As well, take pictures of previously staged houses. If you have someone on your team that can do the staging for you that you think is capable, all the better. Show them pictures and write out a “This is how to stage our rehabs” and create a checklist of what you expect them to do in each room and overall (ie, fold towels and put them on all towel racks. Spray Apple Cinnamon Spray throughout, etc etc). Visit the property once they’re completed, and assess any changes or improvements you would have them make. From then on, you now have a “stager” on your team that knows how you prefer it to be done.
Think of when you’ve visited new construction lots, and they have the model home. The “ooooh” and “ahhhhs” are from the features of the home being highlighted with warm, inviting vignettes. It makes you feel like you’re walking into a nice home, with the potential of it being YOUR home, therefore creating an emotional connection.
With that, personally I like to use touches around the home with accessories that say “Love” or “family” or show pictures of happy people. Buying is an emotional thing, so connecting to your “audience” through visual cues and smell sensory (think “Apple Cinnamon” smells) only increases your chances of the right buyer falling in love with your property.
3) Picture Perfect
Not many things perturb me more than thumbing through MLS at properties and seeing a rehabbed home that has, say, 5 blurry pictures, taken with the type of casualness the person might have reserved for selling an old coffee table on craigslist.
It’s 2013, folks. If your listing agent or person who is selling your property doesn’t understand the importance of having beautiful photos to showcase your retail property online and on print materials, fire them (even if that person is YOU). The fact that you’ve taken weeks/months, potentially tens to hundreds of thousands of dollars to rehab a home, are most likely paying a high per diem for a hard money loan, and they come out with a point and shoot camera and snap a few shots and make a commission is astounding to me. With over 80% of buyers shopping online for houses, and the ever-growing function of social media spreading, your photos have got to be premium.
Again, when will you know when it’s important to hire a professional vs DIY? I guess when it’s important to make more money! But seriously, if you have a hard time shelling out $100-$300 for someone to come out every time and take gorgeous pictures of your property, invest in a DSLR camera and a tripod (you can pick up everything you need for under $1,000) and hire a professional photographer to come out and TEACH you or someone on your team to take good shots. If you don’t do a lot of homes a year, I’d advise simply hiring a company that specializes in property tour photos and charges a reasonable fee (and NO this is not the time to go on Craigslist and try to hire someone for $50.00 – be a pro).
Here’s what I impart on professionals wanting to take their own listing pictures, or looking to be a better conosuier when hiring a photographer:
A) Take a picture and look at the display. Answer me this: What do you see in this picture? If the answer is “I see a floor” or “I see a giant TV”, you need to re-angle the picture to try to “explain” to the viewer what you’re showing. You should be able to say “I see a beautifully lit kitchen with lots of cabinets.” Perfect! Now that’s a great photo!
B) Toilet seats down, no glares, crop out anything unsightly. This goes back to “what do you see here?” Your picture should be clean, clear, concise. If there’s an eyesore in the backyard or the you’re in the process of repairing a few more things, remember that you are shooting the BEST features of this home. Allow the picture to show what you want to be seen: your hard work culminated in a single shot, not the listing agents body in the bathroom mirror with a lens flare for a head.
C) If you saw this property online, would YOU want to check it out? I always tell people, it’s like online dating. You read someone’s profile, see what they’re about, but you’re really checking them out to see if they’re cute, right? If so, you’re interested in taking the next step to try to go on a date. It’s really the same thing with your photos. Are they appealing, well lit, focused, and “showing off” your best features? You want to intrigue your buyers enough to get them in the car and go on a “first date” with your beautiful home.
You love what you do, so don’t be afraid to add more passion to your rehabs and pad your pockets! It’s the type of creativity, fun, and va-va voom that may have been missing in your operation. Create more magic in your “rehab relationship” and let me know how it goes!
Do you use any of these techniques? What else do you do to connect Buyers with your properties faster?