Let’s get the Captain Obvious stuff outa the way right off the bat. Yeah, make sure the paint doesn’t suck. Ya might even check if the colors make sense. 🙂 Get rid of the weeds in the yard, and trim things up. If it’s a rental house, DO NOT put it on the market unless it’s vacant. Agents simply don’t like messin’ with tenants. They’ll go outa their way to avoid showin’ your house, unless it’s just too good to pass up. ‘Course, with tenants still living there, there’s an impressive laundry list of things you couldn’t do to make it more sellable.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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The very first thing we do is . . .
Bring in our in-house interior designer for her detailed inspection and recommendations. Yeah, I know many of you are either contractors, big time DIYers, or know a ‘really good’ construction guy. I’ve heard all the reasons investors don’t need an experienced and highly skilled interior designer. I’m a results guy, so let’s cut to the chase. Over half the time my firm lists a San Diego rental home for a client we not only set a new price record, we sell it in a matter of a few days. ‘Course, seein’ that it’s been nearly 11 years since I refused to sell San Diego income property TO investors, I don’t list as many local rental homes as I used to. It’s about to happen though, probably this May or June. Allow me to tell you about the last time I listed one of this client’s local rentals.
The listing, sale, and exchange of a California rental house.
Once the home is tenant free we make the appointment to meet them there for a detailed inspection, bringing our designer with us. We also had our favorite professional property inspector show up. We like to hand the inspection report with everything checked off to any buyer. For the record, an interior designer is NOT the same, by any stretch of the imagination, as an interior decorator. Period, end of sentence, over ‘n out. We found this out the expensive way, as decorators simply aren’t trained as designers are. Furthermore, our designer has a freakin’ college degree in, you know, design. 🙂 There was no kitchen work done as the investor had done that a couple years earlier, and very well.
Executing the Designer’s Suggestions:
The designer comes in and gets a good look at the status quo. Then she recommends various physical modifications, most minor in scope, though she can get downright scary at times. In this house we executed all of her suggestions, which are listed below.
1. Dry wall the garage. I balked at this one at first, but she stared me down. It made a humongous difference in the garage’s appearance.
2. Knock out the entry way closet’s back wall. She had a new one built, making the closet just 10-12 inches deep. Her rationale made sense. Nobody was hangin’ up their fur coats there, just the light jacket, sweatshirts, etc. But the recipient of the eliminated space was the hallway bathroom. It created more room for storage which was very nice. Everyone loved the changes, while nobody missed the ‘full’ entryway closet.
3. The house sported a covered patio. It was roughly 35 feet long and about eight feet deep. The cover was supported by 4X4s on the side away from the house, and then attached to the house just under the eaves. She ordered it to be removed from the house connections and reattached to the first foot or two of the roof, roughly two feet higher. Sounds strange, right? But it then allowed much more sunlight to come through the sliding glass door to the living room, and the windows in the dining area. I hadn’t realized how relatively dark those two rooms had been. A very positive change.
4. The wall separating the living room from the kitchen was nothing new, as most older homes have it. But the designer didn’t like the way it extended 18-20 inches past the kitchen counters/appliances, towards to hallway that lead to the bedrooms. She had us eliminate that last portion of the wall. The result was that when coming from the bedrooms it no longer felt like you were in a cave, or worse, a maze. Just that little alteration made that part of the home far more open and airy.
5. She absolutely hated the way the master bathroom was set up. I mean, she was offended. 🙂 When a husband/wife were gettin’ ready to go to work, the one in the shower had an unwanted view of anyone using the toilet. She had the plumber detach the toilet then turn it 90 degrees left. This resulted in the view from the shower being the back of the head of the other person. She then had them construct a four foot pony wall behind the toilet, which blocked everything except possibly the top of the person’s head. Offending design eliminated.
6. All carpet in the living room was replaced. New floors, high quality wood laminate, was installed in the hallway, kitchen, and dining areas. New carpet was installed in the bedrooms.
7. The exterior paint was just a couple years old and very well done. The entire inside of the home was repainted. I forget the colors, but the photographer loved the way it came out. I wish I had the pics, but don’t any more.
8. As I mentioned earlier the kitchen had already been well upgraded. It sported a new and quieter dishwasher, new stove, along with new granite countertops. There was also a new and nicely decorative vent installed. It was all extremely attractive.
9. She also had us install a new forced air heater/air conditioner, which required some extra work on the ducts. Most homes in the area simply didn’t offer central air. Since the heater needed replacing anyway, it made sense to spend the extra for the A/C. At least that was her story, and she was stickin’ to it. 🙂
We put the home up for sale at the end of the week. We had an offer that Sunday. It was from the first person who saw it. It sold for over $420,000, a price which the appraiser simply couldn’t justify. Since it was the spring of 2009, and possibly THE worst local market I’d seen since the S&L Crisis of the early/mid 1990s, we adjusted to the lower appraised value of $408,000. The previous high price for that neighborhood and that model had been just over $390,000. (Post bubble, of course.) All but one home that had been for sale in that tightly defined neighborhood when we began doin’ the designer’s bidding, was still for sale when we closed escrow.
This example had no ‘big deal’ modifications done. As you can easily discern, it was really a buncha small moves we made. Oh, some of the changes were ideas I’ve not seen much if at all. The ‘haircut’ given the wall between the living room and kitchen for example. Or turning the toilet to face a different direction for non-plumbing reasons. Same with raising the patio cover. Ever heard of somebody turning an entry way coat closet into a buncha coat hooks? Yeah, me neither, though Mom tells me she now sees it all the time on the TV flipper shows. 🙂
Try using an interior designer the next time you’re selling a 1-4 unit income property. You’ll be pleasantly surprised at some of the ideas they might share. Like you, I was pretty skeptical at first. But now I wouldn’t dream of listing a rental house any other way. The results have spoken for themselves in terms of higher prices and shorter sale times.
How do you prepare an investment property for sale? Let’s discuss-