Not to sound like a cooking show, with maybe Guy Fieri extolling the virtues of, say, a sandwich. When it comes to property management, the recipe for rehabbing a rental property is part art, part science, a whole lot of sweat, and a pinch of flair to take a property from Drab to Fab. We at Management One Property Management know all too well the truth behind rehabbing a property.
To clarify, I seldom use the words Drab, nor Fab, except in extreme cases.
You see, we've rehabbed (repaired, paint, cleaned, etc.) over 10,000 homes over the years, and you learn a thing or 10,000 about the topic. You learn what the trends are; you learn how to make a so-so house turn into a great-looking home, all without driving a property owner into the poor house. We also have learned that sometimes a trend may not necessarily be the way to go.
In this article, we'll dive deeper into the topic; however, at the same time, we will touch on ROI (Return on Investment) and give some tips that lean towards the more expensive side as well, and why you should consider it.
The things to consider:
The main components of a rental home rehab are, in order of how the average renter sees them:
- Curb Appeal
- First impression at and inside the door
- Kitchen kitchen kitchen
- Family Room
- Master Bath
- Window coverings
I note each of these in this order at each rehab because I know that the potential renter will do the same. Depending on a property rehab state, each of the above items can make or break you.
That vibe you get when you first pull up to the property is the Curb Appeal. You have 100% control of that on your property. However, that guy who parks his car on his dead overgrown lawn across the street? The barking dogs next door? You have no control over that, so make the most of what you do have control over. We seed and cover every property with lawns upon notice that a resident is moving out.
At the Door
The porch area, and whether the door is clean and painted means an awful lot. Have you ever reached for a dingy doorknob and recoiled a bit when something crusty comes off in your hand? I have. It is a deal-breaker for me.
But when the door swings open, it's showtime, folks. That first impression is nearly as vital as the curb appeal and sometimes more critical. I'm talking about the look, the smell, the feel, and how it moves me emotionally.
Did you know that on each rehab, we schedule a deodorizing? That sense of smell is super important. We have the contractor set up and run a deodorizer machine (ionizer) that releases a citrus smell. Which would you prefer, a house with a clean, fresh smell, or one that smells of a dollar store? Case closed.
Cooking it all up
The kitchen is the heart of the home. Everyone knows that. However, those butcher block counters? Yeah, it may be time to do something about that. Dingy, ugly appliances, they are not doing you any favors, seriously. Then again, one must look at the ROI. A $10,000 expense that gathers you back an additional $200 a month will take 50 months to return.
Cleaning is the name of the game
As a new resident strolls through a house, they will note the cleanliness along with everything else. It's human nature. Upon completion of repairs, it’s imperative that the home is cleaned from top to bottom, down to the smallest detail like the window tracks. If the home is dirty at move-in, I can double-dog-guarantee you the new resident will pick apart literally every aspect of it. It's called buyers remorse.
Painting is right after cleaning, usually, but in a marked-up house or one with funky colors, this item rises straight to the top.
Also, semi-gloss is the way to go. Always. The cost to have a contractor clean the walls for $185 versus $1900 in paint is a no-brainer.
As your potential resident walks through the house, every step covers the flooring, unless they can float, and if that's the case, well, that's just weird.
Depending on the flooring condition, you might be able to get one more resident out of it. However, if it is flat-out nasty, you may have no other choice than to replace it, and in that case, consider all the options. Be careful, though. Vinyl planks may sound like a nifty idea, but you will spend nearly as much for that as you would porcelain flooring. This cost is due to the amount of prep/labor it takes. However, either will rent your property three times faster, and you won't be replacing the carpet in 5 years.
As your possible resident walks through, they are going to be switching on lights. A cracked or crusty light switch plate is a turn-off. I ask our cleaners to carry a bunch of switch and socket plates with them and replace all of them. Then take the ones that came off home, soak them in simple green overnight, and use them on the next property. $1 of labor and cleaner versus $50 of labor. No brainer.
Drab vs. Fab
Okay, let me lay the ground rules here. I recently walked through a kitchen with 6 (SIX!!!) hot water faucets in the kitchen, each with its very own mini water heater. This concept is not FAB; this is a long-term maintenance nightmare waiting to happen. The guy thought it was cool, but seriously, why would you need a hot water faucet over the stove? The point is, keep it simple. Remove the extraneous.
Fab does not mean bells and whistles or an aluminum screen door on the front door. You see, with added items come potential added maintenance costs.
At the same time, do not neglect the needed items. You see, a great-looking house will attract a good resident faster. They will be willing to pay more and stay longer.
The faded yellow exterior paint, while okay in 1980, is out today.
Butcher block counters - out.
Avocado appliances - out.
Oil-stained driveways and garage floors - out.
Stained green carpet - lose it.
Fab is a lot harder to define, but it is the opposite of the above. Laminate floors are lovely, but they don't necessarily have to be in every room. At over three times the carpeting price, it's better to do the traffic areas in laminate and the bedrooms in the carpet. And never, ever should the kitchen have laminate flooring installed. With one water leak and cha-ching, your wallet is significantly lighter!
You may think glazing butcher block counters are a cost-effective route, and it is to an extent. They can look like high-end granite, but therein lies the trouble. Residents will treat them like high-end granite, cut foods on them and such, and that $900 glazing will need a do-over. On the other hand, putting solid granite on old counters is a huge no-no. The point I'm making is, do what needs doing to get by, or do it all. The middle ground does not exist.
I have addressed this in another article some time back, so I'll only strike a glancing blow here. If your front yard looks great, more on that in a sec, be sure to do the same for your rear yard. Over many years, we have noted that folks who tend to stop paying rent tend to also, coincidently, be the ones who have untouched, or dirt, back yards. Is it that those sorts of folks prefer that sort of yard? Does that type of yard draw a particular person? Or does it, in some strange way, psychologically impact people to become non-payers? Likely the former rather than the latter, the point is, why chance it either way?
As I promised above, we're going to the front yard next. Suppose your rental is in California or anywhere else where water is at a premium. In that case, you may want to take advantage of the rebates the water companies have for turning your yard(s) into low water use paradises. It's something like $2 a square foot of rebate money, but there are provisions. So do check your water district.
No, you may not have asked for advice, but you're getting it.
When you approach any home rehab, be honest with yourself. "Would I live here?" should be the first question to ask yourself. The second is, what's my ROI? Temper that with what is competitive in the marketplace.
Lastly, the element of time is essential when rehabbing your property. Every day you're doing the rehab, you're losing $75-$125 in lost rent, and in just two weeks, you've lost $1050-$1750, something to ponder when you're going to do it yourself on weekends.