I'm not sure why the title of this article, Rehabbing Houses for Sale or Rent, makes me think of the old Roger Miller song King of the Road, but it does. Maybe it's just the words Sale or Rent. Or perhaps it's because I actually wrote alternative lyrics some time ago, that started something like...
"Rehab for sale or rent
An extra deposit for a pet
No smoking cigarettes
Best deal on the internet..."
Anyway, yes, I'm weird. And old. And I have been inspecting properties for Rent for the last 3 years. <<
So, what gives with this whole rehabbing houses thing? Glad you asked. From here we'll focus in on why a house rehab is vitally important, regardless of whether you're renting out your house or selling it, as well as give you some Hot Tips!
Renters Will Notice
Diving right in, the first thing I want to mention is that: Renters will notice if a halfhearted job is done on a house rehab. Usually, it's cleaning which is the culprit, first and foremost, but there are other things too.
Here’s a list of the most common gripes I hear from new residents after they have lived in a detached single-family house for a couple weeks:
- This, that, and the other thing was clean, but this thing was not.
- The paint is splotchy (spot painted but an imperfect match).
- The appliance does not work right (be it the oven, furnace, dishwasher, etc.).
- The carpet is not brand new. (Add to this that some folks will actually trot out something they read on an internet forum. Example: that there's some law requiring carpet replacement every X amount of time. X being yearly, every 3, 5, 7 years, all of which is inaccurate).
- I don't know why I have to maintain the yard; I never did in the apartment complex I lived in.
- and many, many more.
Addressing common home-renter concerns
When discussing these, understand that some of the above items are entirely and wholly valid gripes! Others, not so much.
A house should be spotless. This, in my opinion, is the single most difficult thing to attain. And is the most critical item in rehabbing houses. More on that later. Paint ought not to be splotchy and ought to not have mismatched spots.
Carpets must be clean, although it may have some wear and imperfections. A resident takes possession of a property as is, and if they are wise, they view it first, then decide. At move-in, the resident ought to note anything not quite perfect, such as carpet wear. By the way, a property owner ought to be able to get 8 to 10 years of use out of the carpet, a benchmark we use in relation to carpet life.
Maintaining the yard in good condition is covered in the lease agreement, and if it isn't, shame on the property owner/manager. If the landscaping is not part of an HOA, which takes care of it, the maintenance is usually then the responsibility of the resident. However, many owners opt to provide a landscaper, because, let's face it, a resident rarely has the same vested interest as an owner.
Quick story here: My step-daughter and step-son moved into a rental some time ago, and the step-daughter asked me to come by and check it out for any problems. I know the neighborhood and build quality there, so I was not concerned about anything in that regards, meaning the physical plant. Having worked as an insurance inspector and a bank REO inspector in the area for years, my real concern was obvious breaches, such as lacking stuff, poor paint, and cleaning.
The property owner relied on the prior residents to prepare the house for the next, just as the ones before them had. I figured light bulbs, paint and cleaning would be sub-par. I was shocked that there were only a couple bulbs out, and the paint was really good looking! Also, at first glance, the cleaning looked spectacular! So, into inspection mode, I went.
The prior residents were smart. They clearly understood that first impressions are the most important. I entered the front door was very impressed by how the house presented. However, I knew what to look for. The first couple rooms I saw were goose eggs as to issues but delving deeper I found gotchas. You see, as much care as the prior residents put into the first couple rooms, it came at the expense of the next 5 rooms. Focus faded, attention to detail dropped off. In other words, these were not professionals who cleaned the house, despite the first impressions.
How does professional cleaning affect rehabbing houses?
You see, once a resident finds that one thing which annoys them, they will never un-see it. Once they find the second, third thing, it then can become some sort of a quest. It just so happens that cleaning is simply the most natural thing to foul up, and the single easiest thing to pick apart, particularly if the house has been on the market for very long, meaning many people have trudged through viewing it. I have arrived at properties countless times to find that someone has used one, or even all of, the toilets after they were cleaned. That is plain rude!
A professional, versus Joe Shmoe, or the property owner even, will take the cleaning to a higher level, BUT ONLY IF YOU MAKE THEM DO IT!
Related Article: How to Find A Honest Contractor: Tips for Choosing the Best
Doing It Right
We spend a lot of time and resources training our cleaners, and as often as not, that training comes courtesy of call-backs to complete inferior workmanship. The way to avoid that is to do it right the first time.
I have heard the phrase "cleaning is so very subjective" so many times in the last couple weeks that I almost want to rip my own head off and stomp it. Clean is clean, and that is that.
Painting is an area which gets overlooked much of the time and ought not! When an owner does work on a house, more often than not they hold up to getting a new resident into a house will be the paint, more so than anything, including cleaning.
"You mean like TV? Or some special paint that is high def?" Nope, I just liked the subheading title High Definition, as opposed to the definition, such as defining painting issues. Three recent properties had issues that I will explain here, and each is an amalgam of issues from various properties strung into each instance.
Property one was occupied for nearly 3 years by the recently vacated residents. All the walls were flat paint when they moved in. Flat paint really cannot be cleaned, which is why we recommend semi-gloss. Some owners refuse to use semi-gloss, and as such, flat walls require painting more often.
I inspected the property and found that about 90% of it needed paint, which is costlier than painting it wholly. That and the flat paint everywhere sealed the deal. The owner apparently sent someone with a magic eraser to "clean up the paint." Flat paint. They said the house was now move-in ready. I knew this would not end well. I looked at the property again, and in the immortal words of Homer Simpson, "Doh!" After sending the owner pictures of the walls, they agreed to have the walls painted.
The owner opted to do the full rehab, paint, cleaning, repairs, the whole ball of wax on their own and not use one of our contractors. In this, we do require a rehab agreement, meaning the owner signs a form agreeing to have all the work done by a certain date, with ample time allowed. That permits us to be able to set 41a strong occupancy date. A prospective resident wants to move in with the 5th; we can tell the resident whether the home will be ready or not.
Half the paint was done, and about half the cleaning was completed when we were told the house was "move-in ready."
So now I'm going to ask you to use your imagination: you rent a car from ACME car rentals. You get in, and there are fast food wrappers on the seat, it smells of smoke, the tank is nearly empty, and the car does not start. What is your impression of ACME Car Rentals going to be? Are you going to feel safe and secure during the rental span? Next time you'll opt for a Hertz, or Avis, or an Enterprise rental, no?
How is that any different with a home rental? The car ought to have been prepped right, and a rehabbed house ought to be prepped right.
The owner opted to do the rehab to save a few bucks. Fine and dandy. They went, and spot painted all over the walls with the wrong shade of paint, so they had to paint again. Not only that, but they did not clean very well, and the rehab time went a week over. So, the owner saved $500 by not using a professional. The rent is $3,000 a month, which equates to $100 a day. So, the owner LOST $700 to save $500. Not only that, but we had to intervene and bring in cleaners to finish the house at the owner's expense, at the cost of $695!
This section will be included in a later article in more depth but suffice it to say we do not bake cakes nor take showers when we are rehabbing houses. That means that we may not catch something, but we will correct any valid issue as soon as we are made aware of it.
The carpet is not brand new
This is a little tricky, in that it requires a judgment call when inspecting a property. Rehabbing houses as a whole can be tricky, and the carpet is a double-edged sword. Tile and laminate flooring are about three times more costly but offer a longer lifespan. However, not every owner can afford to utilize these materials! That being said, not every rehab should, or even warrants, replacing the carpet. And tying into the top of the page, sometimes there is erroneous information out there. I have had residents tell me more than once that there is some obscure law out there that says carpet must be changed 'x' often. "some guy told my uncle's wife's cousin that a lawyer said so, and..." Not true. However, the carpet in a rental must be clean and can show some wear, but it must be documented!
Rehabbing Houses for Sale is Different, and the Same in Many Ways
Many times, houses for sale are put on the market "as is" meaning basically that the seller is saying that "there are issues, but I do not want the expense of correcting them." In this case, the owner will take a beating price-wise more often than not, with the seller demanding concessions. Sometimes these concession requests can get out of hand. A recent example I heard of was the buyer asking for $20,000 off the price to cover about $4,000 of refurbishment. Can you also hear the words "go pound sand" resonating?
On the other hand, a well prepped and presented property can help it bring more on the open market. A parallel: you're buying a model and year of a certain car. The dealer has two identical cars, with nearly similar mileage and service records. One $100 more than the other and is clean. The cheaper car is dirty. Which do you think will sell quicker? And which one do you think will result in more haggling? Which will bring the better price?
Moral of the Story:
First impressions matter. I suppose I could have boiled this entire article down to that sentence, but hey, what fun would that be?
If you are looking to rehab your rental property or put your home on the market, Management One can help. With over 30 years in the property management industry and nearly 50 years in Real Estate, we know a thing or two about getting you top dollar for your property.