Rehabbing an investment property doesn’t have to be a scary proposition. When you’re preparing to get your rental property fixed-up for potential tenants, there are some important points to keep in mind. Ronnie talked about a few of the rehabbing do’s and don’ts in one of his earlier blog posts. This episode of the Real Estate Guide 2 Success podcast goes deep into the topic of property renovating so you can learn the how-to’s straight from an experienced and proven investor.

Many new investors make the mistake of treating their newly purchased property as more than what it is, an investment property. Investors who are just starting out will make the mistake of rehabbing a property as if it is their personal home. This attitude generally will lead to spending unnecessary amounts of money on repairs and upgrades that are just not required. How you plan and execute your rehab strategy will have a direct impact on your bottom line and the success of your business.
When rehabbing your investment property, treat it as a business deal. As an investor, you must think profit first. Don’t spend more money on the property than the area can support in rent. The amount you spend on your rehab will have a direct effect on your mortgage payment. Higher rehab costs will result in a higher mortgage payment. Remember, the rent you charge must be comparable to other rents in the area, it must be high enough to make the mortgage payment and it should yield a monthly profit for your business.
The highest grade carpet will look and feel good but there are less expensive grades that will serve the same purpose. You don’t need to spend extra money on ceramic tile. Use less expensive vinyl products that have a ceramic tile appearance. Use basic lighting and plumbing fixtures rather than more expensive pieces. Basic fixtures still look nice and will meet the needs of the renter. Always keep in mind that your investment property is used for one thing; making you money.
Your property is not only an investment unit, its’ part of your business. Always conduct your business wisely and with strong business ethics. You will make all the necessary repairs for your tenant to live safely and comfortably in the home. You want your property to be appealing to renters, but you don’t have to go overboard. While it’s important to add your personal touch, you must also make smart financial decisions in order for your business to survive.

Years ago I received a call from my realtor about an investment rental property that came across his desk. I was one of his best investors, so he called me first. When I saw the outside of the property it was clearly a big home in a decent area. I immediately wondered why this property was still available.

Once the realtor opened the front door I immediately understood why it was still on the market. There was a stench of urine and other foul smells I still can’t describe!! It was so bad that my realtor wouldn’t even go in the house! I figured if he wouldn’t go in, many perspective buyers definitely wouldn’t enter either. So I held my breath and ventured past the door.

I took a quick look around and realized the property was not in bad condition. It was on the market for $60,000. Betting that no one else could stand the smell, since I was about to vomit, I submitted a bid for $30,000. The next day my realtor called and said, you just stole that property. The property was worth $80,000 with only about $12,000 needed for rehabbing. I only won the bid because I was willing to endure what others would not.

Sometimes buying residential investment properties is a lonely road. Always be willing to go the extra mile. You might have to walk it alone, but you’ll receive the benefits alone too.