How to NOT Over-improve a Rental Property

How to NOT Over-improve a Rental Property
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Video Summary:

In this video, we want to cover the do’s and don’t of remodeling a property for the purposes of renting it, rather than selling it. You want to maximize your return by doing the proper and necessary upgrades without spending to much in areas that won’t get you a good ROI. It’s a fine line on what you should or shouldn’t do. We walk through a real rental remodel to use as a real life example of what we will be doing to remodel and get the best ROI.

Highlights:

– Focus on kitchens and baths. Modern is better right now.

– Use durable flooring so you have minimal repairs. Refinish hardwood if already there. Vinyl flooring is an affordable good option if replacing

– Paint and carpet are usually a must on any remodel.

– Fix up the yard to get on the neighbors good side. Curb appeal is always good. Minor repairs to make a good first impression

– Matching door hardware and electrical finishes are cheap and make a big difference. Details are important

– Basic efficiency upgrades should be done and usually pay off via utility savings over a few years and help get more rent. Money goes to you rather than utility companies.

– Create one or two quick and easy “wow factors”. Something that makes the property stand out from everyone else. On this one, we are considering a floating staircase since we get a good deal on steel beams.

– Look at other comparable rentals in the area and see what they are charging and what the condition is. You’ll want to match the condition of properties that are getting a rental amount you would like to get.

 

Transcription:

 

Hi, guys. We are on our next series of educational videos here at The Muve Group. Today, we’re gonna go over how to not over-improve a rental. You wanna really nail in your price of what you’re going to rent it for and the quality that you’re shooting for based off other comparable listings and keeping in mind that just because your standard of living might be right here doesn’t mean that everybody else is at the same spot. That being said, you can typically spend a little bit less than you would, for sure spend a little bit less than you would on the normal rehab but still make it clean and livable so you can get the maximum monthly rent out of the property depending on your strategy for rental. We’re gonna go through this on a real property today that we just closed on Friday. Seller just moved out today. There’s a little bit of garbage left, so it’s the perfect example of buying a house cash and telling the people, “Leave what you want, we’ll clean it up for you and we’ll do the remodel.”

So, we’ll start out here, out front. We’re going to clear out all these big bushes that you see. Basically, the theory of “if you can’t see it, you can’t sell it.” Whether you’re actually selling the home or renting it, the theory applies. When you have too much shrubbery that’s big and covers most of the home and isn’t well kept, it’s really hard to sell a house and the first impression isn’t great. So, we’re gonna clean this up, we’re gonna do a wood wrap on the bay window that’s totally hidden right there. Let’s go inside.

All right, so in here as you can see there is garbage everywhere. That’s how we love to buy houses because typically, it doesn’t look great, when there’s all this crap in here it’s worth a lot less but once we get this all cleaned up, this house actually isn’t in that a bad condition. The floors are really great. There’s crap everywhere but once these are all cleaned up, this Pergo will look fine. There are no real big holes in the wall or anything like that. We are gonna give it a coat of paint. We’re gonna redo all the baseboards, do some caulking on the baseboards and make it look visually good as well. And then basically, just paint everything in here. It’s already got new windows. But you would be surprised what a really good deep, deep cleaning like I’m telling you like a crew of two people out here for maybe eight hours is going to almost make this place look livable. This house was nice when they bought it. They just didn’t take the greatest care of it.

So, in here it’s simple, paint and clean up for the most part. After that’s done we’ll see what doesn’t clean up well and make a decision on that. We’ll head over into the kitchen here. In here, same thing, just showing you for reference, when I walked through this house the first time to buy it, I stepped in dog poop not once but twice in the home, inside because they had pets and they didn’t clean up after their pets. The pets even went inside and weren’t trained. And I was looking around at all the different stuff and happened to step in poop. So, that’s a good, good sign. That usually means we’re gonna have the deal.

This kitchen is great and then since the cabinets are newer cabinets, they’ve just been trashed a little bit. So, you can see here, this cabinet is completely gone, we’re just gonna match it, put it back on. Again, clean it all out because it’s just trash everywhere. Same thing over here, all the cabinets actually look good except for this one door, which we’ll get a new door. And then, although there are tiles on the counter tops already in here a hard surface, they’re just really old-dated green. So we’re gonna do coats counter tops in here and we already have stainless steel appliances. They’re actually newer appliances. The stove still has the plastic blue clear wrap on it because they haven’t taken that off yet.

So that’s a score. Just basically coming into a kitchen, fixing two cabinets, redoing the handles and doing counters, it’s gonna look like a brand new kitchen. These wood floors again, we’re gonna clean up really easily. That’s gonna be easy. Back here, we’re gonna do new doors or we’ll keep these old ones in case somebody wants it, but we typically aren’t gonna want pets. And this dog door is so big, we don’t want burglaries happening. So, we’re gonna get rid of that because that dog door is huge, I can crawl through that even I’m not going to right now but maybe if I get enough Likes. If I get 150 Likes, I’ll crawl through the door next time.

All right, so as you can see, I don’t know if you guys can see the backyard but it’s bad. All we’re gonna do is down everything, pick up all the dog poop and lay this all down. There are sprinklers back there that they never used, we’ll get those up and running. They had a coat of paint in the garage, good to go.

Okay, so you’ve heard this many, many times but kitchens and bathrooms sell the house. So this bathroom is pretty good to go. We got some water damage. We got a broken pedestal sink and a toilet. We’re just gonna do… the floor is good though. So we’re gonna do new toilet. We’re gonna do a new modern-like floating vanity sink and spend a little bit extra money there and then we’re gonna do new tile because this is just like a plastic dropping here. So, once we get the new shower head and combo and everything on the shower and tile that looks modern, this again is gonna feel like a brand new bathroom. So, you got brand new kitchen, brand new bathroom feel for what we’ve discussed so far is under five grand.

So downstairs in the basement, this place is a pigsty. I wish you could smell it. I’m sure in the future, we’ll have some type of technology that captures a smell and then spits in your face from your computer. But if that were the case, you wouldn’t like it. It smells pretty bad so we’ll get rid of all the carpet. We’re gonna put a paint seal on all the floors, get rid of the pet smell and everything like that, fix a couple of the holes in the wall, redo all the ceilings.

This is where, I guess, the wrestling matches happen. Maybe they wrestled with the birds. When they moved out, I’m pretty sure they just opened the bird cage and opened the window and let the birds fly away probably. So, it smells… if you got birds, you know what they smell like. If you’ve ever been in a house with birds, you know you don’t want birds in your house.

But that what it smells like between that, a bunch of teenagers and dog poop. But down here after that’s all cleaned out, it’s gonna look really good. We’re gonna do a really cool floating staircase because we’ve got a unique step up over here with the staircase where it kind of you go underneath the staircase to get back to the laundry room here. And to open this up and not feel so awkward, we’re gonna do a steel staircase and that’s the only place we’re gonna splurge to have wow factor to make this basement seem really cool and have that access to the laundry be more functional. We’re just gonna give a coat of paint on the walls, make it all fresh, clean and white in the laundry room. And then again, paint and carpet in the both bedrooms and the living room is gonna make a huge difference. Let’s go check out the bathroom.

So surprisingly enough in this bathroom, kind of pan around a little bit but it looks horrible in here. Again, it’s all mess. Once we clean all of these up, get everything clean. This tile’s probably 10 years old, same with the floor but a newer vanity. It’s good enough for a rental. You don’t wanna tear this out and start from scratch again. But we’ll do a new mirror, we’ll get a new faucet on here and then just clean the whole thing and a new toilet. And all of a sudden again, we got a brand new bathroom for the cost of a couple of fixtures and the cleaning crew. So, this will be a good example of finding a house that doesn’t look great, seeing past it, cleaning it up, doing a couple of things and all of a sudden it’s a great bathroom.

So, yeah, that’s pretty much everything I wanted to do this video here for education and then we’ll do a video after we’re done to show you the biggest difference, kind of before and after. They’ll be a link in this post after we do the after video. We’ll update the post and then in the new video we’ll reference this video so you can kind of go back and forth between the two and use that as a learning lesson whether you’re buying a property, looking for a fixer up for yourself, whatever it may be, this is a good example. So, thanks for tuning in. Catch you next time.