I am a buy and hold landlord. And most of the properties I buy to hold are in some sort of distress. They are foreclosures. They have been trashed by tenants. They have sat vacant for years because the owner passed away and the family could not make a decision. There are a host of other reasons why properties become distressed. Distress does not bother me; I actually look for it because that is where the deals are.
Buying all these distressed properties means I have done a few rehabs over the years. I used to do a lot of these rehabs myself thinking I was saving money with all of my sweat equity. I have since wised up and today hire all of that work out (so I can focus on buying more properties). Either way, though, I have learned a thing or two about doing a rehab for a buy and hold property. Here are eight tips I have learned over the years.
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.
8 Expert Tips for Rehabbing Buy & Holds for Maximum Rentability
Fix it Up Better Than Your Competition
Landlords who fix up their properties to a higher level will get rewarded with higher rents and longer term tenants. There are a lot more renters out there these days since the housing crash in 2008, but there are also a lot more properties available on the rental market. Make your property stands out by spending a little extra money. Don’t cheap things out, and use some of the tips below to make your property stand out.
Use Standard Paint Colors
You need to have a set of standard paint colors that you generally use throughout your properties. I personally like Sherwin William’s Navajo White for walls and pure white for trim. Sure, there are some circumstances where a unique color may be needed or wanted, but in general having only one of two colors can really save time down the road when it comes time to touch things up a bit after a tenant moves out.
Use a Satin Finish
Speaking of paint, don’t use a flat finish anywhere. Instead use a satin finish. A satin finish has a bit of washability to it while not being overly shiny like a semi-gloss finish. A flat finish has no washability and simply has to be repainted when stained. A satin finish can thus save a bit of money down the road, as minor blemishes can be scrubbed away.
Use Hard Surfaces on the Floors
I hate carpet. It always ends up being dirty, ugly and in need of replacing. That is why I always try to go with a hard floor, such as ceramic tile or hardwood. It simply is going to last longer, plus it looks better to tenants and is a nice upgrade. As with paint, you should pick a standard type of ceramic tile and have a standard stain color for the hardwood. Finally, two coats of high gloss polyurethane on the hardwood is the way to go.
In my market, I cannot rent my properties without appliances included. Knowing that, I step up the game a bit and add amenities. I like to install dishwashers and put in washers and dryers. Tenants really like these amenities and will pay higher rents for them.
Install Central Heat and Air
This is a great amenity that good tenants will seek out and pay for. They like the convenience, and they usually save on the utility bills (meaning they can pay you rent). Plus it will save you money in the long run. Window AC units always seem to break after a year or two, and they always destroy your windows and sills. Eliminate those problems with central heat and air.
Make the Kitchen and Bath Pop
Granite prices have really come down lately. In some cases it is just a couple hundred dollars more to install granite counter tops over formica, so why not go with granite? It is one of those things that will make you stand out from the competition, plus it is harder to destroy. I also like to install a tile black splash for additional beauty. In the bath, clean and simple is the way to go. Never use plastic faucet knobs.
Keep the Designs Simple
Don’t go overboard with some of these new tile designs out there. Sure, they look good today, but in a few years they will likely look dated and need replacement. Go with classic designs. I like black and white subway tiles for example. Always looks good and is a timeless design.
These tips may perhaps seem a bit pricy on the front end, but as a buy and hold investor, you have to look at the big picture. You need to rehab your properties so you will attract a higher quality and longer term tenant. The amenities and upgrades I describe above will do that, thus saving you money and time over the long term. Plus, you want to make things harder to break and easier to repair as this will also save you time and money down the road.
If you cheap things out at the beginning, trust me, you will only pay for it later. So, keep it simple, keep it nice and classic, and you will be rewarded with higher rents, tenant longevity and fewer headaches.
Is there anything you would add to the list? Is there anything different about your particular market?
Please let us know with your comments.