Renovation Gurus

Real Estate Investor Rehab and Residential Renovation and Remodeling

Tag: Flipping

Real Estate IQ – Residential Rehab Budget How-To

 

WHY RENOVATION GURUS?

“Just like a home, businesses also need a solid foundation in order to produce quality work. With honesty, consistency, affordability and integrity as the pillars of this company, we pride ourselves on offering clients superior renovation services. We are honored that you are considering us for handling your invaluable assets and will strive to uphold an unmatched level of work.”

– Renovation Gurus

 

 

Items That Are Easily Missed on a Rehab Bid – Part 2

Ron Carlson continues this two part series over items that are easily missed when a bid is being created. The majority of theses items are smaller but they can add up quickly.  A few items Ron talks about are the prep work that goes into a painting project, driveway repairs, sprinkler systems, etc. Listen in to hear the full list of items that are most commonly missed!

Watch the video here: https://flipnerd.com/show/rei-classrooms/items-easily-missed-rehab-bid-part-2/ 

 

FULL TRANSCRIPT:

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Ron: Hey everybody, my name is Ron Carlson and I’m with Renovation Gurus, and I am a general contractor in the Dallas/Fort Worth area, and today I will be your host in the REI Classroom. I want to talk to you today about items that are easily missed on a rehab bid. This is part two of the one of two series of items that are easily missed.
Mike: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.
Ron: So, continuing on from my prior discussion, items that are missed, trash and debris haul off. It is unbelievable how much trash and debris you’re going to have at a property. It’s one of those things that’s almost impossible to calculate, but rather, you’re just doing a small little paint job or you’re doing a full rehab, you have trash. Trash will be at the house. Calculate for it, and probably calculate extra for it, because you will have way more trash on a rehab than you could possibly think or imagine.
Landscaping, a lot of people miss, especially the major items when they’re doing, let’s say landscaping lights or the trim. Some people will put mulch on there, but then miss say, the landscaping trim bed or stones or rocks, bushes, things like that.
A lot of people will put to paint a property, but they forget that before you paint a property, you have to paint prep. So, a lot of times you need plastic. You need masking tape. You’re going to be taping off some of the wood, maybe taping off the trim, depending upon if you’re doing the doors and trim a different color. You have a lot of masking tape and a lot of plastic, and with the paint prep also comes the texture, the hole patches, that type of thing. That is an additional expense on top of actually painting the house itself.
Broken rafters, a lot of times, especially in Texas where we are, it looks like the property has foundation problems, and it might, but sometimes that causes broken rafters. Broken rafters typically look in a house as if it’s just need some sheetrock damage, or it looks like somebody might have fallen through the roof, something along those lines. But the rafters are actually broken. It’s a structural problem most of the time and very easily missed because the rafters are typically covered up by insulation inside of the attic.
Mailbox, whether it’s at the front of the house or it’s at the street corner, it seems that people walk past the mailbox, and it doesn’t even exist. It has no address on it. The mailbox is absent, but most houses need a mailbox.
Driveway repairs, you can pull into the driveway. Your car will be sitting on a bad driveway, and you don’t realize that it needs a driveway, whether concrete or asphalt or stone or whatever it is, but sometimes we just overpass the driveway because we’re so excited to look at the interior and exterior of the house.
On a final clean, a lot of contractors, when they do a final clean, they do a construction clean, and that does not include windows. If you want your windows clean, make sure that your contractor is bidding you up properly to clean both the inside and the exterior of the windows. Some contractors will only do interior or only do exterior, and you need to make sure that’s on your final bid.
Numbers on the driveway, numbers on the house, numbers on the mailbox, for some reason, the address is missed. Sometimes they cost $3, or $4, or $5 per number, and you know, depending on what you do, spray paint them or you get the numbers, they’re missed. And it’s one of those little things that you can add to your house that’s going to make it pop when the buyer walks up to the property.
Sprinkler systems, they’re always hidden in the garage. They’re always hidden in a closet. For some reason, we miss sprinkler systems completely, and you might want to look one, to see if a property has sprinkler systems, and two, get it tested.
Smoke alarms, every smoke alarm in the house, if it has a battery, you need to replace the battery, and we miss them. You need them in the rooms. You need them in the common area, and you need them in the hallway. If the hallway turns, you need another one.
And hardwired is the best way to go, but we always miss smoke alarms and then fire extinguisher. You should have at least one fire extinguisher if not two. Some cities require it in the garage and under the kitchen sink. Those are just a couple of items that are easily missed that you might want to budget for in your rehab.
My name is Ron Carlson. I’m with Renovation Gurus. You can reach us at 855-99-GURUS or email at admin@renovationgurus.com.
Mike: Are you looking to change your life through real estate investing? If you’re interested in either getting started or taking your business to the next level, please check out FlipNerd’s private program at theinvestormachine.com. This is the most robust real estate investor coaching, networking, and mastermind on the planet and designed for your success.
If you’re ready to roll up your sleeves, ready to take personal responsibility for your own success, and ready to dive into a world-class instructional coaching program that provides you step-by-step instruction to help you achieve financial freedom, then you should apply today. Spaces are limited and candidates are only considered after an application and interview process. Our 12-month investor program is unparalleled. Think you might be a fit? Learn more today at theinvestormachine.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.
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Flipping: What Repairs Are Most Important?

Are you looking at flipping a house and worried about what repairs will pay off and what repairs will be a waste of money?

It’s true many repairs are expensive and result in little if any return on investment.  However, there are other repairs that are extremely important to increasing your return and helping the home to sell quicker.  A quick sell avoids monthly fees that can be costly to the bottom line.  The choices you make during renovation will determine the amount of money you make in the end.

According to Remodeling magazine’s annual cost vs. value report, some of the best renovations are those done on the exterior of the home—siding, paint, window, and door replacements.  This is because exterior renovations can immediately improve a home’s curb appeal.  Curb appeal should never be underestimated.  It can make a potential buyer fall in love with a house before ever stepping in.  The first impression is always the most important.  Buyers usually believe that homes that are properly maintained outside, will be properly maintained inside as well.

Renovation projects with the BEST ROI:

Attic rooms: According to Remodeling, you’ll recoup 73 percent of your investment when turning the attic into a bedroom. However, this also ranks as one of the most expensive projects, averaging $50,148 nationally. An additional bedroom adds square footage and any extra square footage will increase the selling price.  Extra attic space could also be turned into a media room, office space, or even a playroom.

Paint: Paint is a cheap and easy upgrade. If the walls have a lot of minor flaws in them, use flat paint. Otherwise, use eggshell. Always use earth-tones for best wide audience appeal.

Kitchens: Kitchen remodels return only 66 percent on average.  However, kitchens are typically the first room a homebuyer looks at.  Kitchen remodels can be expensive for typical homebuyers and an outdated kitchen can scare buyers off.  For flippers, getting a great contractor with great pricing and access to high quality materials at a discount is important.  Just don’t go too far with a kitchen remodel as you don’t want to price your home out of the local market.

For instance, you don’t want to gut the kitchen if it is in decent shape.  Sometimes basic updates like upgrading appliances, putting in new, brighter LED fixtures and refinishing surfaces works well enough.

Baths: Investing in a bathroom remodel yields a 62 percent return on average.  The first thing to consider is to increase the size of the bathroom.  A full bathroom is more desirable than a half bath.  Potential buyers like larger master baths with two custom sinks and a custom shower with bright lighting and mirrors.  Again, bright lighting can go a long way.  LED fixtures are cheaper now than when they were first introduced and can make an immediate impact.

It is important to get help or pay attention to the latest trends in decorating.  Bathrooms can easily look outdated so you need to make sure you have a good, modern plan.

Flooring: in most flips, it is advisable to use laminate hardwood flooring in the major living areas, and carpet in the bedrooms. Laminate hardwood flooring is
difficult to tell apart from real hard wood. It is not only more durable and scratch resistant; it is also less expensive.  Each house is different so be open to ideas (stained concrete, alternative floorings, etc.).

Landscaping: It is amazing what rocks, trees, and shrubs can do to increase the perceived value of a property. A good rule of thumb is to budget 1% to 2% of the final expected sale price of your home for landscaping.  Plant a couple flats of fresh flowers the day before putting the house on the market. This simple, inexpensive final step can help put extra cash in your pocket.

Back patio: The patio is an often overlooked but very important area. A simple $1500 deck with two chairs, a small table and a couple of glasses sitting on the table paints an awesome picture in the head of the potential buyer.

A picture of an upside down house

Renovation projects with the WORST ROI:

Home offices. A number of people work from home, but most don’t need a full-blown office. If you do convert a spare room to an office, opt for removable furniture rather than built-in cabinets. Built-in furniture gives the buyer fewer options with what they can do with the room. A home-office remodel recoups only 43 percent, on average.  It would be better to leave the space open so the buyer could convert it into a room that suits their needs.

Sunroom additions: You may recoup some if you live in a region where the sunroom can be used all four seasons, but in most cases, adding a sunroom will get you nowhere near a dollar-for-dollar return. Sunroom additions were among the lowest on Remodeling‘s list in terms of recouping costs—46 percent. Rarely do homebuyers list a sunroom in their top three desires when house shopping.

Garage: Other than paint, do not spend much money here.  A few cheap hooks for tools, such as a rake and shovel work great.

Remember:

What’s popular now changes about every five years—contractors call this “stylistic depreciation”—so consider the latest stylistic trends.  Check out the local do it yourself centers for design ideas.  Read magazines and catch up to date on the latest.  Many people believe they are great designers but honestly there is a reason potential buyers turn their noses up when seeing the results.  Ask others for input and list your strengths and weaknesses.  If design and managing contractors is not your strength – get others to help.

Also, don’t get carried away and do too many renovations. When you are done remodeling the home, it should have a price on par with other houses in the neighborhood.  You shouldn’t be flipping the most expensive house on the block.

Most importantly, if you are a real estate investor your time should be spent on finding the next house to purchase and flip and arranging financing.  You don’t want to get too involved with renovations (especially if that is not your core strength).  Some investors have a great do it yourself attitude, but the truth is an outside company with contractors can often get better pricing on both material and labor.  A great renovation expert can save you time and money and get the job done right the first time.  They will also be aware of the latest design trends and are also very quick.  If you would like to help from the best in the business, call Renovation Gurus today.