The big question with any rental purchase walk through is what to fix / repair versus what to leave alone. In this rental walk through with Sam Primm of FasterHouse, he explains what he would fix or repair versus what he would just clean and leave alone.
Sam has a rental portfolio himself so he understands that fine line between under fixing or over fixing up a new rental buy.
You have to think of each rental property as a business. You are looking to attract the best possible tenant with the least amount of capital to get the best return on your money.
Transcription:
“Hey, its Sam with FasterHouse here. Today we’re going to be walking through a possible rental purchase here in Hazelwood. We’re gonna:
- Walk through the house,
- Check out the quality and conditions of the house,
- Talk a quick budget, and
- Kind of talk about where we’re at with our offer.
So, walking in here, this is the main living space area. It’s in pretty good shape, it looks like the outlets are rounded so that’s something that could be grounded legally or illegally but that’s nothing we check in with. The floors are in good shape, it looks like they could just be sanded and stained. The windows are a little older, but they are vinyl and they do operate so that’s something we do not mess with.
Walking in the kitchen, the kitchen is open and clean. We see the appliances are outdated so we’d probably just rip out this kitchen and redo the whole thing. For a small kitchen it’s probably about $5,000-$6,000 dollars but other than that we would leave the floor and leave everything else. We would probably replace the fixture of the fan but it’s probably $5,000-$6,000 with the appliances, new countertops, and new cabinets.
The hallway the floor is still in good shape. A sized house like this is 960 square feet so probably $2,000 for say for a refinished budget cause the kitchen you wouldn’t be touching.
The bathroom is a little outdated but in good shape. We wouldn’t mess with any of this. It’s not the prettiest, but everything’s in good shape. A single valve there which is good, so the plumbing been updated in the last 15-20 years probably. Other than that, we would probably paint it and replace the vanity and probably a new toilet but other than that we would leave this alone. So, I’d probably budget $1,000 to $1,500 in here.
Looking at the door, they match the non-painted style and the trim is good, the doors are all in good shape, they’re not the white doors that we kinda like but we would probably leave those.
Master bedroom, everything’s good in here just paint and floors. The other bedroom, same thing we’ve got the closet sliding doors. Probably a new fan in here, and this room the same thing.
So, judging by what we saw, we’ve already been downstairs the tank is clean, systems are in good shape, exterior, the mass is 10 foot up, the electric mass so that we wouldn’t touch, the exterior just needs to be power washed.
So just a quick budget, $2,000 in floors, $5,000 in the kitchen so that’s $7,000. $1,500 in the bathroom and probably $1,5000 miscellaneous. So, $10,000 is a pretty decent budget. We would probably say $10,000-$12,000 just to leave some room for fluff in there. I think $10,000-$12,000 will get this thing up to really good rental quality.
So, this is a really good property, Hazelwood West so someone in the office might want to keep this as a rental.
But if not, check out https://www.FasterDeals.com, FasterDeals on Facebook, if this makes it that far we will be posting it on Facebook.
If you need funding, go to https://fasterfundslending.com or FasterFunds Lending on Facebook and we can get you lined up for a money purchase.”
Evaluate The Rental Competition
One of the best ways to judge what needs to be updated for your giving area is to look at images of other competitor rental properties using Zillow, Hotpad, Craigslist or any other site that has rental listings
Check out how the bathroom(s) look. What type of quality are the fixtures? What type of bathtub or shower do they have? Do you need high end tile for your area?
Next look at the kitchens of your competitors. What type of counter tops do you see? What type of cabinets? What are the color schemes? What type of kitchen layout do you see?
Take note of the different floor coverings throughout the rental houses. Are they wood floors, carpet, vinyl, ceramic tile? Each type of room might have different types of floor coverings. For example kitchen floor versus the family room versus bathroom.
Next what are the overall color schemes of the rental houses? What type of window treatments do they have? What type of trim? Do they have base trim and crowd moldings?
After writing down or taking a mental note on what your area competitive rental properties have, you can easily decide what needs to be fixed or updated in the rental house you are considering.
Which in turn will help you come up with the offering price to start with. This is a business that is intended to make money so you need to factor in all your expenses when purchasing a rental.
While you are surfing the web on rental sites also make notes on the amount of rents landlords are asking. Will that amount work with your numbers. By that I mean will the typical rent amount cover your taxes, insurance, principal, interest, management fees, surprise funds, long term big item funds, etc…?
When considering that next rental property follow Sam’s advice and do your homework. Does it make sense? Will it cash flow from the first day?
Financing Your Rental Purchase
If you are interested in learning more about rental properties and how to purchase them (including the finance part) check out another video walk through where Bryan Schroeder walks through a rental house using the BRRRR method with his numbers.
To find out more how to initially purchase a rental property that needs a little work before it is ready for a tenant contact us and we would be happy to explain your different options for purchase / fix financing. Or just give us a call (636) 223-4262