Home Renovation Tips for Investors

 

Discover home renovation tips for investors that will help you save money and make your next rehab deal more profitable. In the following video, you'll learn what types of deals work best for real estate investing. You'll also find out some key things you must do on every deal you renovate that many investors overlook until its too late. Get ready to see before and after shots of a property that I recently renovated and why I did what I did. In addition, you'll be introduced to a hidden secret as to what room is most important to make sure is fixed up right and why that room is so critical to your overall project. My hope is that these home renovation tips will help you be a better investor on your next deal.

 

 

I want to share with you some tips for renovating houses when you're investing in the property, whether you are re-selling to a new buyer who's going to move in or even if you are going to be the landlord, and you're going to be renting property.

The background to this actually on a previous video, "How to Estimate the Rehab Costs." What I did is, I took you through this exact same house, only when it looked absolutely terrible. In this video, my goal is for you to see what I did, why I did it, so that you can apply these lessons on your own deals in the future.

 

Cosmetic Work

 

Now, the very first and arguable the most important point to make is that a lot of the time, I do not purchase the property. In fact, I usually flip or assign the property to a real estate investor who's then going to do all of the dirty work. In this case, I went outside of my rules. Now, you can learn more about why I believe that's the case in a video called "The Secret to Flipping Houses."

Why did I go outside the rules? Well, number one, cosmetic work. When all a house needs is a lot of cosmetic work, that is tailor made for a real estate investor, because when you have cosmetic work, there's a lot less that can go wrong.

Also, if a deal has a ton of room in it, and you can make a lot of money, sometimes it's worth the hassles to fix the property up.

 

Example

 

I want to take real estate investors through this property, because it's such a shining example of what can happen when you focus on the right deals to renovate. This house had something special, because I broke the rules. My rule  is that, in most cases, renovating the house from where it's an ugly duckling to make it a beautiful swan often times is a lose/lose, and it's more of a financial pitfall than a profit center. This one was different.

This house looked like a disaster when I first acquired it. The person was a hoarder. I had junk everywhere.

The house itself, the guts were good. This was cosmetic fix-up. That is painting, refinishing the floors, new carpets, anything that's external. One of the big rules that I've discovered in all of my investing is that you want to refinish before replacing. Television shows, they love to show the part where someone has a sledgehammer in their hand, and they're banging through walls. Well, I've got news for you. That is not investing. You see, people seem to feel like they're getting a lot of work done when they knock out walls, and they remove things. Really, a truly successful investor refinishes. They paint. They do the cosmetic work. Now, I'm not saying that you cover over a problem, by no means. If there's a significant problem, it needs to be replaced. Wherever possible, as opposed to knocking out walls, you want to repaint. You want to do cosmetic work. That's what was special about this house. It looked terrible, but it was cosmetic work.

 

Potential Profit

 

Now, there was one big gaping hole in this house. With all that junk, there were things you couldn't see. You couldn't walk in the master bedroom. There were definitely the potential issues of hidden problems. Why would I take on a deal like this? Because there was so much room in the deal, a lot of potential profit. I was willing to take on the risk of discovering some potential problems that I didn't know. That's why this particular property was special. It went outside the rule, my rule of "a quick nickel beats a slow dime." Well, in this case, a slow quarter definitely beats a quick nickel.

Cosmetic exterior improvements. New paint. In fact, we freshened it up with a different color to make it more light, more fresh, more airy, repainted all of the trim. We not only improved the roof look by trimming the trees, but we actually improved the look of the shingles themselves. This roof was not all that old. It was just the tree limbs that were above it had actually created a lot of mold and those kinds of stains. With a little bit of cleaning, it went a long way.

 

Landscaping

 

We absolutely opened up the view of the lake. Now, we didn't completely remove every tree from the view, and that's because the HOA would have had a real problem with that. We had to tread lightly there, open up the view but not completely. You'll notice that there has been some landscaping done. Now, I will confess. I am not a master landscape architect. I put those kinds of things on the shoulders of the contractors I hire, to use their own creativity to make it look good. Now, some may disagree with that point, and they may want to have complete control over the entire project, but for me, since I know that's not one of my skill sets, I hire good people who I know can do a great job with the landscaping.

 

Make it Flow

 

When you walked into this entrance room, you had to take two steps down and then two steps back up. It was a bizarre design, and there was wood paneling on one wall. What we did was, we put in a floor to even this out, and then we also put some drywall over that paneling. Now, this is a little bit more than cosmetic, but it wasn't very difficult to add a few beams and put a sub-floor down. This was actually well within the range of cosmetic, but look at the difference. It's just pretty simple stuff, but an amazing change that created a nice flow from the front door as you flowed into the kitchen.

 

Invest in the Kitchen

 

Look at this kitchen. Now, this did involve a little bit of replacing. We replaced the cabinets, replaced the countertops. We put in a backsplash. We replaced the appliances. We ended up putting quite a bit of time, energy and money into the kitchen. Why? The kitchen sells the house. You know, that's a simple principle that most people know, but you've got to apply it in your investing experiences. You know, being able to transform a kitchen can make the difference between you selling the house quickly and not. When in doubt, and what we did here is, we put more time and energy into the kitchen than any other room.

There's a hidden secret as to why spending time on the kitchen is so important. It's the only counter space in the house. When a real estate agent or a buyer is walking through the property and at some point they want to consider making an offer, they typically congregate in the kitchen. That means there's more time spent there, which means that if there is going to be more eyeballs, more time spent there, it needs to feel and look great. I guess by the same token, if you don't have any plans of fixing up the kitchen and you want to take the eyeballs away from the kitchen, then I suppose the best thing to do is put a table and chairs in another room.

One last reason why the kitchen is so important. Gentlemen, and you know this to be true, the women in your life are going to make the decision on which house that you're going to move into. That is absolutely true, so you definitely want to cater to the women when it comes to your renovations. How do you cater to them? Make the kitchen nice. Make the bathrooms nice.

 

Flooring

 

The flooring is certainly a critical part of a cosmetic renovation. We chose a mid-grade PERGO for basically the entire house except the bedrooms. We put carpet in the bedrooms, because that's what retail buyers want. If my goal or my end strategy was to rent the property out, I would put PERGO in every single room. I'll use differing levels of PERGO, depending on the neighborhood. If it's a really, really nice area, I'll do a really, really nice PERGO, and if it is a not-so-nice area, I'll do the least expensive PERGO. Now, if you are in a house that already has wood flooring, and you just have to refinish those floors, that's even better. For those that have to replace the flooring altogether, I'm a big fan of PERGO. It's inexpensive. It's easy to install, and it looks absolutely fantastic.

 

Refresh and Accentuate the Good

 

We walked in that living room before. It was dirty. It was old. There was a crack in the ceiling. The chimney was dirty, and now look at it. The cathedral ceilings are now a strength. We've accentuated them by painting, by spackling over the crack and also by refinishing the chimney and making this entire room look and feel like home. As a homeowner, how relaxing, to be able to look outside your living room and see this beautiful lake.

You could actually walk into the master bedroom. Before, I had to cram the door open just to slide in, and I was tripping over cassette tapes and books and all kinds of stuff. What we did here was so simple. We removed a lot of junk. We also accentuated the cathedral ceilings by making sure that they were painted, and now, this is the kind of room that is truly a master bedroom. With the cathedral ceilings and the light pouring in, this is a special place, and it's the kind of room that is important, because typically the person staying in this room is the one paying for the house purchase.

Here in the bathroom and in the other bathroom as well, it was as simple as cleaning this tile with the special cleaning tools, as well as changing the vanity, painting and that's it. I mean, this was cosmetic at its best, and you can see the difference between where it was before to where it is now.

 

Quick Tip

 

One thing can definitely occur when you repaint, when you refinish, when you replace floor coverings, and that is, it will expose any old or gross things. In fact, the things that you didn't even notice will all of a sudden stick out like a sore thumb. To avoid that problem, make sure, when you are going to go through a rehab of any type, any sort of cosmetic renovation, that you put into your budget to replace all of, what we call, hardware, whether it be blinds or light switch covers and knobs and door handles. All of these things, they're little. They're small, but they make a big difference.

 

For Rentals

 

What would I have done differently on this house, if I was renting the property? Well, I would make sure that all of the flooring is PERGO, as opposed to any carpet. The paint actually would have been a different type of paint. That way, I wouldn't have to keep repainting over and over again. It's more expensive, but it will last longer, so I would have spent more money on the paint materials. I may not have gone to such a great extent to replace the cabinets, although I would have replaced the countertops, because renters are not going to be quite so fickle about just how perfect everything is. I would have probably skimped on the replacement of the cabinets. I would have put in new appliances, because the tenants would complain about that anyways, if the appliances weren't working. On the exterior, I may have avoided even painting the outside. Now, yes, it didn't look as good as it does now, but since I'm not trying to sell it, I don't have to absolutely knock the tenant out with just perfection and beauty.

In some ways, you cut corners when you are going to be a landlord, but in other ways you don't, especially on paint, because you don't want to have to keep repainting over and over again. If you use the right kind of paint, it's a lot easier to wash off their marks and those kinds of things. It may cost a little bit more money to not put carpet in, but the difference can be not having to replace the flooring over and over again, every time a tenants moves out.

These are the deals you want to focus on, the cosmetic repairs, because they have huge bang for your buck. It's easy to find a lot of contractors that can do it, and it's easy for you to manage the project, because you know what they're doing. You can see it. There's nothing hidden. You know if they paint it or not. You know if they finish the floor or not.

 

You Can Do This

 

This is absolutely within your wheelhouse. You can turn an ugly duckling into a beautiful swan, simply be applying the rule of going with projects that require cosmetic renovations. What that means, not only for you but for the new homeowner, is that you're giving them a freshly updated home and for you, a huge potential profit.