The Simple Step-by-Step Guide For Rehabbing Your First Rental

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I have a friend who recently bought his first rental property in a fairly rough neighborhood in Atlanta. He has no experience and jumped right into the thick of things without much advice from anybody else. After he bought the property, he was instantly faced with the question, “How do I go about renovating this property and making it marketable to renters?”

I would imagine there are a number of new or aspiring investors who could benefit from a simple plan of action when it comes to renovating their first rental property. Here is a very basic strategy for assessing and executing the renovation of a rental property.

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Secure the Building

The very first order of business in your rehab is securing the house with new locks throughout. This means either personally changing the locks or calling a locksmith to make sure the building is fully secured. In some cases you will need to make a temporary decision to deal with windows and doors that do not secure by having them boarded up or blocked off until you can change them out. You want to make sure you are securing the property well enough so that vandals cannot get their hands on anything inside the building. If you do not take the time to check and double check the security locks on the home, then vandalism, either by actual damage or stealing fixtures, appliances, or even AC units, could leave you with far more work than you had originally intended.

You should also make sure that you get the electricity turned on right away and leave (or add) exterior lighting on at the property. This might mean replacing some bulbs or purchasing a few floodlights to keep the area well lit. You may also consider leaving a light or two on in the interior to make it look like someone is there.

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Work With Local Authorities

If you feel you’ve bought a property in a rough neighborhood, you may want to contact the local authorities and tell them that you have purchased the property and are currently renovating. Ask them if they could have police patrols on the lookout when in the neighborhood. They will likely be very happy that you are renovating a property in the neighborhood and will be fine with keeping an eye on things for you.

Related: 4 Rehabbing Materials That Are Always Worth Spending a Little More On

Create a Game Plan

Having a scheduled game plan that makes sense is always a good idea before starting the rehab. For instance, you don’t want to replace the flooring before repairing the walls or ceilings. Take some time to consider the property and what needs to be done. Make a list and then order it, starting with major systems such as electrical, HVAC and plumbing. The cosmetic items, such as paint or new lighting fixtures, should come last.

Also, be sure to take a close look at the roof to make sure you don’t have any potential water leaks that could damage the work you are doing on the inside.

Remove Initial Debris

It is vital that you make sure that you start by removing any loose debris that lies in the yard and around the house. For one, the neighbors will be pleased to see you are cleaning up the property, but you also want to comply with local codes. The last thing you need is to have any kind of code enforcement citations coming at you when you are just getting to know the property. Do not worry about any major renovations on the landscaping or exterior until you have tackled the interior changes.

Start the Interior

It is recommended to start all of the interior work first, unless you have some leaks that need to be fixed before getting started. One reason for this is that you want to utilize your budget on the inside where people will be living before tackling the overall curb appeal. While you might have a rough idea of the costs, you never know what you will find in a building until you start the work.

Windows and Doors

Take a really good look at the current condition of all of the windows and doors on the property. You may need to order new items, and that will take a number of weeks or more for delivery. Getting that taken care of right away will keep your renovation timeline and budget on track.

Hide the Work

Again, if you happen to be in a rougher neighborhood, putting up fabric or sheets of butcher paper over the windows will distract those on the outside from being able to see what you are doing on the inside. Make sure that you keep your work under wraps while you are taking care of it. Keeping the outside world from peering in discourages unwanted advice, as well as vandals or thieves from breaking in. You do not want those brand new light fixtures to go missing.

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Remove Interior Debris

You cannot start renovating if there is junk all over the house. Cleanup and demolition can all take place the same day, but demo cannot start until the house is empty. This will make for a safer work environment. Once the junk is gone, you will have a better look at the exact demolition that needs to be done. Also, be sure to have a plan for junk removal, rather than piling it in the front yard. If the property requires a great deal trash and demolition to tackle, it is best to rent a “roll off” trash dumpster that can be dropped off in the morning and picked up that night or the next day.

Begin Repair Work

The next phase of your rehab is to locate the major systems that need work. Be sure to hire licensed electricians, plumbers, HVAC contractors, etc. to evaluate the entire property and make needed repairs to these systems. Also, if installing an HVAC condenser outside, be sure to have a plan in place to protect this from theft (i.e. a metal cage). Once these systems have been fixed and are in working order, you’ll want a good handyman to make sheetrock repairs and prepare for paint.

Paint

Once the major systems have been fixed and sheetrock has been put back together, you’ll want to have the interior ready for paint. If you are painting kitchen or bathroom cabinets, then be sure they have been sanded so that a new coat of paint can be applied correctly. Everything you don’t want covered in paint should be covered in plastic or painter’s tape.

A new coat of paint always results in a noticeable change to the interior aesthetics. If you are painting the entire interior, then consider working a professional painting crew into the budget. The time they save will make it well worth the additional cost.

Related: 9 Steps to Follow When Tackling a Large Rehab Project

Replace or Repair Flooring

When tackling the decision about the flooring, consider cost, durability, and overall appeal. New carpeting always makes a property look nice, but doesn’t necessarily stand up over time. As such, you may consider refinishing original hardwoods or even installing laminate floors that may be more durable over time.

You also want to consider the current kitchen and bathroom flooring. If it looks old and dirty or has broken tile, you are probably better off replacing with new tile. New tile or linoleum always adds to the appeal of the property and will likely help you justify top dollar for the rental.

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Tackle Exterior Needs and Desires

Once you have completed the interior rehab, take a look at the essentials needed outside. This would include siding, porches, railings, shutters, screens, garage doors, gutters, etc. If the exterior is in bad shape, you’ll want to consider painting. However, if this is just a rental property, you may want to consider touching up or painting the front of the house to add to the curb appeal without breaking your budget. You’ll also need to be conscious of any items that may pose a danger to a potential tenant (i.e. broken handrails, falling retaining walls, etc.). Be sure to pay careful attention to any items that might become a liability.

Take some time to make the landscape attractive, with pops of color from flowers and a clean look for the yard. Hiring a landscaper may be worth the money for this project. Other things that might seem minor, like a nice mailbox and proper numbering on the building, are all things that will improve the value of your rental property. Take time to check out these details ,and if you can affordably make changes, do so. These items are going to make your rental property feel like home to some prospective renters.

Following these steps to a quality renovation will give you everything you need to attract the right tenants and to keep your rental property competitive in the market. It’s always wise to take the time to make good decisions about what and how to rehab in a rental property. Doing this thoughtfully can make the difference between a profitable and an un-profitable investment.

Have any questions about this process? Rehabbers: Any details you would add?

Leave your comments below!

About Author

Ken Corsini

Ken Corsini G+ is the host of the Deal Farm Podcast (on iTunes) and has 10 years of full-time real estate investing experience. His company, Georgia Residential Partners buys and sells an average of 100 deals per year and has helped hundreds of investors around the country make great investments in the Atlanta market. Ken has a business degree from the University of Georgia and a Master Degree in Building Construction from Georgia Tech. He currently resides in Woodstock, Georgia with his wife and 3 children.

14 Comments

  1. Maggie Tasseron

    This is all good advice but depending on the neighborhood, even the best precautions may not work. When flipping was good here in CA, I bought a property in an area that wasn’t even what I would call “rough”. As I did with the other properties I had flipped there, I first made sure to introduce myself to the neighbors whenever I ran into them on the street. Then I changed the locks and put alarms on all the doors and windows. I also put signs up with my name and number, asking if any trouble, would people please contact me. I had not yet started the rehab so had nothing of value in the property but arrived several times to find it had been broken into anyway; the alarms had been ripped off and thrown on the floor and several windows had been broken into. The apex was when I arrived one day to find someone had thrown a huge boulder through a glass slider. One can imagine what a racket that must have made but not one person called the me or the police, not then nor when the alarms went off on other occasions. I had asked the City to allow me to put up temporary wire fencing but they refused and as a result, people in the neighborhood parked all over the property which resulted in my also having to pay some hefty fines. I could probably have hired a security company but even that would not have made me feel safe to be there alone while doing the rehab. I’ve always lived in a neighborhood where if any of that kind of high-decibel vandalism had taken place, 15 people would have called the police. It was an expensive lesson and one I won’t repeat.

  2. Vishal Gadhia

    Great step by step article. Good for first time rental rehabbers. One thing, for big jobs like roof, siding, electrical and plumbing, try and get licensed contractors they will be a little expensive, but you won’t have middle of the night phone calls.

  3. Robert Leonard

    This is generally good basic information, but I take issue with two ideas. HIDE THE WORK – I disagree with that. I always leave blinds open and forbid contractors from leaving tools in my property. When work is being done, people in the neighborhood know it. If you close the blinds or cover the windows, thieves are looking for tools as their high payoff items to steal and pawn or sell on the street for quick cash. Leave the blinds open/windows uncovered and leave some lights on inside and outside to show everyone that there’s nothing in there to break-in for. Since following this practice, I haven’t had a break-in.

    “THIS IS JUST A RENTAL PROPERTY” This is the motto of every corner cutting half @$$ contractor who does substandard work when you hire them for the rehab of a rental. I always tell them, “this property is one I haven’t decided whether or not to flip or rent.” That’s not a lie. I always have two exit strategies for my investments and when the situation calls for it, I will flip a property instead of holding it. You also need to be aware that you are rehabbing the property to get a good appraisal if you intend to refinance. So you shouldn’t think you only have to satisfy renters who don’t care if it’s professionally renovated. An appraiser will recognize when you cut corners on your rehab and that’s the last thing I want an appraiser to think about my property.

  4. I usually bring the house up as if I were going to sell it. Being an absentee owner, I want to do all that needs doing while I am there. That will better allow me to know what needs to be done if something breaks later, because I have carnal knowledge of what went on before.

    Always put window coverings, that a renter would use, up before turning it over to a PM. At least put them in the front of the house. If you put them everywhere, the renter will not see themselves having to \”decorate\” your house, when things they put up may not go well or fit in their next rental. Renters look at window coverings as an expense they do not need/want to make. You will rent quicker with window coverings, no matter how spartan. I use the one inch blinds that can be had at Walmart, Kmart, Lowe\’s or Home Depot. Leave them down, but open, where folks can see it has coverings, but can also see inside.

    If the cabinets are marginal, you might take all the faces off, and have them sanded and stained, or new ones made from the measurements of the old ones. Replace all the knobs/pulls will dress up cabinets also. Avoid painting the cabinets until it is the only option to replacing the whole cabinets. Cabinets are expensive.

    Verify this, but I have a house that faces the wind, so it gets damaged on one side a couple of times a year. I have to replace shingles here and there often. Can you replace half of the roof (that faces the wind) in one tax year, as a repair, and fix the other half, in some subsequent tax year, and not have to depreciate it (as opposed to expense it in the tax year the money was spent)? I would like to hear some opinions from knowledgeable people on that.

    Some PMs are lazy, ok, most are. Get a For Rent yard and window sign, and put the PMs phone number on it. That ten bucks may get your property rented quicker than folks going by the PMs office and looking at a list of properties. Put them out as soon as the house is presentable, but it does not have to be complete.

    Calculate the daily rent you expect to receive. Use that to help you get the property ready for rent quicker. You MAY save money in the long run by paying more, but getting things done faster. You can make some repairs, a Painter can do others, and a flooring guy can do others. Try to make them work at the same time, as much as possible, and where logical. A week saved is a weeks worth of rent.

  5. Amilia Bargues

    Really helpful article, thanks! Especially part regarding Local Authorities. But my question is how to calculate the budget, even approximately. If you purchased this property abroad and do not know the prices. Please share some experience if somebody faced with it.

  6. Great Tips. I’m a newbie in real estate investment and is interested in rehabbing, this guide will be really helpful. I really appreciate the way you tackled every details. Thank you for sharing this guide. I will surely use this and it with my investor friends.

    Jason

  7. John Kai

    Terrific article. I agree with the de-cluttering steps for both interior and exterior prior to starting renovations. Expose the bones first and understand what can be salvaged and rehabbed before complete demolition. I like the steps and suggestions to deter vandals from targeting your property. Lighting always is a good deterrent as is window coverings.

  8. Ulrike Koehler

    Thank you Ken, great article. Not sure if this was already mentioned but it is very important as well to have your “team” together before you start any rehabbing effort. I just learnt the hard way by doing my first very extensive rehab as an investor newbie. I had to let go the GC I hired to oversee the project and coordinate the work after I found out that he was having some serious financial issues and was not doing what was agreed upon. Yes, I know I know, I should have checked his references. But as newbie I was excited to start the project and the years of experience, glossy business card and Web page seemed to be prove enough to hire him. So all of the sudden I saw myself in the middle of a construction site and needed mason, plumber, electrician, expert for woodwork and someone to hang dry wall, all insured and able to perform the work per the the original GC quote. What a fool I have been. I was meeting with contractor after contractor for weeks, tried to seed the bad from the good, the reliable from the unreliable, checking references…this was a full time job until I finally had my team together. This were the worst and most stressful weeks of my life I believe. I guess i don’t need to mention that I will get way over budget to finish the work, so far 5K. I am able to paint, mudd dry wall and do landscaping and I guess I will spend the next 4-6 weeks doing that after work and on weekends to limit the financial damage. I learnt a lot in those last month, build your team before you start a project, have a back up plan/team and always check references.

  9. Isaac Rothermel

    Hey Ken, thanks for this thought-provoking article. I’m just starting out as an REI, but I’ve worked as a property manager and a general/skilled laborer on high end apartments in my area. One thing that surprised me while working construction was that the two guys I worked for never made comprehensive check off lists/strategies for renovating, despite the fact that they were taking old manufacturing buildings and converting them to apartments. Because of that lack of strategy, a lot of inefficiencies (like daily runs to Home Depot) and last minute changes resulted, but they kept track of construction needs in their head. It wasn’t quite as bad as I’m making it sound, since it was only 10-30 units at any time, but I tend to be very systems-based, so it frustrated me haha. Do you normally plan out renovations in depth?

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