Categories
Flipping

9 Best Ways to Remodel Bathrooms for a Fix-and-Flip Project

Bathrooms are one of the most popular rooms in a home to renovate, and it’s clear why. People spend hours in their bathroom every week getting ready, cleaning it, and practicing basic hygiene. In fact, a study in England found the average adult will spend 416 days of their life in the bathroom. 

Given the importance of a good bathroom, it goes without saying that prospective buyers of your fix-and-flip home will scan bathrooms and make quick judgments on them. Well-maintained bathrooms with new fixtures and updated features can often seal the deal for residential properties.

Moreover, compared to kitchens, most properties you’ll come across will have more than one bathroom.

For instance, the City of Detroit is known for its affordable housing stock (you can snag great homes for as low as $40k). But look at how many Zillow listings in the city have at least three bathrooms:

Especially if you have multiple bathrooms like this in a property (like in multifamily buildings), you need to have a strategy in mind when approaching bathroom renovations. Remember, good outcomes are a result of good planning. Poorly planned bathroom remodeling projects can quickly turn into a financial nightmare—stalling the project’s completion and depleting its potential gains.

So today, we’ll show you 9 specific steps to use as you remodel your bathrooms. Use these for a flip that’ll sell in seconds—without going over your renovation budget.

1. Replace Cabinets? Just Reface Them

Ever heard of refacing kitchen cabinets? You can do the same thing to bathroom vanity cabinets. It’s easy, and it saves you a ton of money instead of replacing them with new ones.

Here are some general steps to go about it:

  1. Sand all exterior surfaces
  2. Make veneer cuts to cover the existing cabinet
  3. Paint the cabinet with contact cement to give it a milky glow
  4. Apply the veneer to the cabinet
  5. Trim the loose edges and add the molding
  6. Lastly, install doors and some drawers

Aside from refacing the cabinets, you can also save a couple of bucks by covering up dents and holes in the wallboard with wainscotting. It looks brand new without replacing anything.

2. Be Cheap, But Don’t Overdo It

You may be tempted to cut down costs as much as possible. And avoiding expensive features, like new bathtubs, showers, toilets, and sinks can save a lot of money.

That being said, you should steer clear of rock-bottom offerings that will turn off most home buyers. Everyone can tell if a bathroom is renovated with cheap materials. Plus, it’ll wear out sooner and actually cost more to maintain in the long run, which is something rental investors, in particular, will be wary of. 

Instead, find the sweet spot of quality and functionality without steep price points.

Check big box stores like Home Depot for bathroom remodeling bargains. They’ll have everything from faucets to large mirrors, so you’ll have a wide variety of products (and prices!) to choose from. If you go with higher quality brands, you’ll also get hardware with lifetime warranties for your faucets and showerheads, which is a nice perk to pass along to potential buyers.

3. Keep the Throne Glistening

The toilet is the main feature of any bathroom. Every potential buyer and investor will expect it to be clean, sparkling, and fully functional. Any amount of rust or grime could turn them off from considering the property at all.

One pro tip we can give you is to replace the toilet seat. We know, it’s really simple. But this crucial DIY can change the entire look of the toilet, making it look brand new without spending tons of money on replacing the entire bowl. 

It’s inexpensive and does the job of impressing prospective buyers.

4. Save with Laminate Flooring

If you’ve been in the industry for a while, you probably know that laminated floors have a bad reputation for being boring and dull. However, for a flip-and-fix project, laminated floors for bathrooms check all the boxes.

Here are the advantages of choosing laminated flooring:

  • It’s inexpensive and easy to source.
  • It holds up against moisture and stains.
  • It’s pretty easy to clean and maintain.
  • It’s extremely durable.

You don’t have to use laminated flooring for the entire property, as that can lower the value of the home. But, installing laminate in your bathrooms is a great, affordable decision.

5. Refresh the Bathtub

Does the house come with a bathtub? Great!

Is it in good condition? If not, there are ways to fix it.

With good refinishing, you can turn any old tub into a new one. Try using special paint to cover up cosmetic blemishes. If the task is too much, you can also contact a professional bathtub refinishing company, like Permaglaze or Miracle Method, to do the work for you.

Refinishing will always be cheaper than replacing the tub. The finished result looks like new, without the “new” price tag, and that keeps both you and potential buyers happy.

6. The Devil’s in the Details 

Ensure that you repair or replace essential fixtures like door hinges, doorknobs, towel racks, showerheads, all the faucets, and even the toilet paper holders. These are all inexpensive and do wonders when it comes to making a bathroom look more high-end.

Another pro tip is to avoid polished chrome or polished brass finishes. The style is outdated and can look quite cheap. Instead, try going for brushed nickel, stainless steel, or matte black to create a more modern look.

It’s even better if you can match the fixtures for a consistent “branding” or design. Spending a few extra bucks for matching fixtures will look more impressive to prospective buyers and investors.

7. Clean Out the Caulking and Grout

Caulking and grout—especially in bathrooms—can look dirty over time. So, ensure that you clean or replace them to brighten up the bathroom and give it a refreshed look. You can do it yourself with a toothbrush or hire professional cleaners to scrub the corners throughout. 

If there are any signs of mold or mildew in the shower, you can also create a DIY bleach solution to remove it. Here’s how to make it yourself: 

  • Mix 1 part bleach with 10 parts water.
  • Put the solution in a spray bottle.
  • Use the spray bottle, soak the affected tiling.
  • Spray more on visible areas like light-colored tile grout or caulk.
  • Be patient and wait for at least five minutes to let the solution sink in.

Are you pressed for time? You can also contact professional cleaning services in your area to clean your bathroom for you. It’ll cost you extra money, but it certainly saves you a lot of work.

8. Don’t Fix Anything That Isn’t Broken

For a fix-and-flip project, it’s always better to keep everything that’s still functional.

If the toilet isn’t dripping, don’t replace it. If the bathtub isn’t leaking, don’t change your entire plumbing system. Is there any mildew or moldy spots? Clean them up and open the windows to ventilate the place. 

Basically, don’t fix anything that isn’t broken. Every upgrade should be necessary and add value to the property. If you spend too much, that will eat into your profits when you go to flip it. 

Moreover, moving or replacing the plumbing system is crazy expensive. Just use HomeAdvisor’s calculator to see how everything adds up. Given that you want to protect your flipping profit at all costs, don’t replace or move the plumbing system unless absolutely necessary.

9. Add Extra Lighting Fixtures 

With everything spick and span, ensure that you put enough lights in the bathroom to show off its design. Flickering or struggling lights can turn off prospective buyers and investors. After all, no one wants a dimly lit bathroom. 

Make sure you also replace the light bulbs with a higher wattage, especially if your budget is pretty tight. Add ceiling lighting and some vanity lights if you can afford it, too. This will brighten the space and make it feel bigger.

You’ll be amazed at how a simple light improvement brightens up a small space.

Conclusion

Now you’re ready to renovate that bathroom and improve your profits on your next fixer-upper. By following the tips in this article, you can boost your profits by impressing prospective buyers and investors with a great bathroom. Set the tone for the rest of the property with a clean, freshly renovated bathroom. 

Remember to reface instead of replacing, never sacrifice quality for lower cost, avoid over-renovating, and pay attention to the smallest of details. All of these tips help you bring bathrooms up to par without eating into your budget

Anything else we’ve missed? Comment your personal tip down below to help other flippers!

Categories
Landlords

Why Cheap Houses Aren’t Always Profitable and How to Buy Ones That Are

If you’ve been participating in real estate forums and websites for a while now, you’ve likely noticed that new investors are often interested in buying the cheapest house they can find. In addition to getting a better Rent-to-Price rate, they believe that buying cheap will save them money on closing costs and property taxes. But there’s much more to investing than the purchase price of a home.

Cheaper houses may seem appealing on paper (or laptop screens), but it’s important to consider all the implications that come with them. And if you still decide to buy one, you need to understand what you’re getting yourself into.

Otherwise, you risk buying an asset that actually loses you money instead of bringing in a profit. 

Why Cheap Houses Are Rarely the Best Idea

The term “cheap” is relative to your perspective and can vary from market to market. Even so, whether it’s buying a home for $40,000 that rents for $700 or anything similar, buying cheap homes goes against these four pillars of conservative investment.

The 4 Pillars of Real Estate Investing

These are the crucial pillars you need to be aware of when purchasing a property:

  1. Capital Preservation: As a conservative investor, you want to protect your money and avoid loss within your portfolio. In exchange for large returns, you prioritize investment security and stability.
  2. Stable Cash Flow: You want to have the assurance of positive cash coming into your investment business. This way, you’ll increase your assets and have the funds for daily operations.
  3. Appreciation or Equity Gains: Aside from cash flow, you also want to gain equity as your property increases in value over time. This allows you to make a profit once you decide to sell.
  4. Tax Benefits: The biggest tax benefit of purchasing real estate is in the form of deductions. These come from property tax, mortgage interest, repairs, operations, and depreciation.

Why are cheap properties against these pillars? Well, it’s because they tend to come with a host of problems, some that you might not have considered. Here are a few problems and limitations you’ll face when going with a cheap property:

  • They’re located in areas leaning towards economic decline.
  • They have poorer tenant payment performance, leading to higher eviction costs.
  • They have higher tenant turnovers and RentReady costs.
  • They often come with underlying deferred maintenance issues.
  • They are harder to insure, since the cost of replacing the property often exceeds its insurable value.
  • They are difficult to secure lending for.
  • They come with limited exit strategies.

These reasons show why buying cheap isn’t always the smartest strategy. Going for a slightly more expensive property (like a Class C instead of a Class D) might take a bigger chunk out of your savings upfront, but it’s often a smarter choice in the long run.

Of course, if you’re still planning on purchasing a cheaper property, here are some factors you need to prioritize.

How to Approach Buying Cheap Properties

Not all cheap homes are traps, but you’ll need to know how to spot the good ones. You don’t want to end up with a decrepit building that eats up your savings. So, when buying cheap properties, make sure to do the following:

  • Invest in Up-and-Coming Areas: Cheap properties are often on the outskirts of town, so ensure that it’s an up-and-coming neighborhood with a growing population and economy. This way, the property will retain its value and increase over time.
  • Anticipate Necessary Repairs: Since cheap homes often come with underlying problems, you should work with a professional inspector and licensed contractor. That way you can easily manage the complications and accurately estimate necessary repairs.
  • Check the Neighborhood and Tenant Pool Class: Ensure that the area attracts quality renters who will follow lease agreements and take care of your property. Cheap properties are often in lower-class neighborhoods, which means lower-class tenant pools, as well.
  • Run the Numbers: Conduct proper real estate analysis to ensure that the numbers make sense. Here are a few calculations to get started:
    • Net Operating Income (NOI): This number should show a favorable balance of income and expenses. Compare the NOI to similar properties in the area to see if you’ll also have high revenues and small expenses. 
    • Cash Flow: How much money will you pocket? The monthly rent you can charge should be 1% or higher than the purchase price to indicate strong cash flow generation. Buying a cheap property that can only demand so much rent defeats the purpose of investing in one, as you won’t have the rent-to-price ratio you expected to enjoy.
    • Cash-on-Cash (COC) Return: The higher the COC, the more the property can pay for itself. A good rule of thumb is to have a COC that’s higher than 10%.
  • Have a Great Management Strategy or PMC: It’s relatively easy to manage Class A & B properties because the tenant pool is higher demographic. Class C & D properties on the other hand, require a LOT more attention to be successful. You’ll need a solid plan to handle the inevitable tenant issues or hire a great (not just good) property management company. 

There are many other calculations to run, but these three should get you started on the right foot.

Conclusion

Cheap properties can create significant profits and become excellent investments when done properly. But if it only sinks you into debt, you might look back and wish that you spent your money on a safer investment opportunity instead.

As always, we suggest you do ample research and consult with other investors. When you do go with cheap property, make sure your purchase gives you results that are worth the risk.

What’s your experience with buying cheap properties? Share your tips below.

Categories
Shortterm Rentals

How to Encourage Repeat Guests for Your Short-Term Rental

Investing in rental properties is one of the best ways to build wealth. That said, the market is getting increasingly competitive, especially when it comes to short-term rentals (STRs). 

While the STR industry took a hit during the height of the pandemic, research showed that many guests stayed longer in vacation rentals to fully take advantage of the work-from-home situation, and data forecasts expect the industry to resume its year-on-year growth starting September 2021.

Given the situation, STR owners like yourself need to grab the opportunity to attract repeat customers to grow with the market. For long-term rentals (LTRs), you only have to find a good tenant once a year. With STRs, however, repeat business is the only way to gain strong cash flow and secure business continuity.

As the industry resumes its annual growth, you need all the tips and tricks you can get to encourage repeat guests and remain competitive against other STRs, hotels, and home-sharing services. 

Here are a couple of ways to do precisely that.

Target Business Travelers

With COVID-19 slowly letting go and businesses restarting regular operations, a large portion of your guests will be business travelers visiting the area for work and extending their stay for leisure. In the industry, this is called ‘bleisure’ or ‘bizcation’ tourism

There are several ways to target business travelers, and these are some of them:

  • Promote a Work-Conducive Space: Apart from fast Wi-Fi connection and a proper desk, you can invest in a few essential devices that make your rental work-friendly. This includes a phone line, personal printer, and even a laptop. The more work-conducive it is, the more your guest will feel comfortable enough to extend their stay.
  • Promote Convenience with High-Quality Service: You’re competing with hotels that pamper their business guests. So, meet them head-to-head with convenience and good service to earn repeat customers. For example, provide quality bedding and branded toiletries. 

And since hotels offer concierges, it’s also worthwhile to provide daily housekeeping services to your guests. The absence of these amenities may not bother backpackers and frugal tourists, but it may very well be a deal-breaker for busy business travelers.   

  • Promote Easy Access to Event Locations: Business travelers look for an accommodation close to their meeting locations. You won’t be able to move your property closer to their venues, but you can certainly offer ease of transportation and accessible parking facilities.

If most of your guests don’t have a car (and won’t rent one either), consider partnering with a cab company to have pick-and-drop services included in your business traveler package.

Think of the things business travelers will prioritize and try to include them in your package. Remember that they’re working out-of-office and will gladly enjoy luxurious convenience.

Start a Referral Program

One great way to attract repeat business is by word-of-mouth referrals. To encourage this marketing strategy, start incentive-based referral programs for the highest chance of guests recommending your short-term rental to friends and business associates. 

Here are two of the many types of referral programs you can run:

  • Friend Referral Discounts: You can reward or provide discounts to customers who bring in more business. For example, offer guests a free night’s stay if they give you two weekend bookings by referring your rental to their friends and colleagues. 
  • Discounts and Rewards for Repeat Stays: You can also offer reasonable rewards and discounts to repeat guests to encourage them to return. If their experience with you is fantastic, there’s no reason why they’ll waste the opportunity.

Take inspiration from Airbnb’s Referrals 2.0 program as well. The platform got people to send customized altruistic invitations to their Gmail contacts, giving their friends a discount to travel. The email says something like “gives your friends $25 to travel!” which motivated people to refer Airbnb to their friends.

The program was so successful, it drove Airbnb’s first-time bookings by 900% year-on-year growth, and daily bookings and signups increased by 300%. When done right, Airbnb proved that referral programs could bring in guests and generate a lot of profits.

Promote Upgrades to Past Guests

Of course, you need to stay in touch and follow up with your past guests to keep them interested. There are two effective ways for you to retap past guests: 

  • Constantly Update Your Listing: Did you install new upgrades, features, or have new amenities for guests to enjoy? Whenever you add or improve things in your short-term rental, update your listing right away and update your previous occupants of the new changes.
  • Respond to Negative Reviews: Negative reviews aren’t so bad if you can use them as insights to improve your offer. Any pain points your guests experience are opportunities for you to improve according to their expectations. 

So, encourage all guests to leave feedback and respond to their concerns. Being proactive will also boost your referral program, as guests will undoubtedly recognize your willingness to give them the best experience.

From a business standpoint, it’s much easier to gain back previous guests than earn new ones. Therefore, identify and focus on the factors that will encourage guests to book with you again—and make sure that they hear about your upgrades. 

Focus on Guest Experience

Aside from providing guests with a clean and comfortable place to stay in, add small details that will enhance their experience with your short-term rental. Here are a few examples:

  • Detailed Welcome Packet: Ensure that your guests feel welcomed as soon as they enter the short-term rental. You want them to know how much you care about their stay.

For example, prepare a welcome packet or gift with all they need to know about the rental (e.g., Wi-Fi passwords and technical instructions) and throw in some pleasantries (e.g., free sunscreen or some chocolates) to welcome them in.

  • Send “Thank You” Notes After Their Stay: In the same way, make your guests feel appreciated once they end their stay. Give them something to remember you by even when they’ve moved on. 

For example, give them a hand-written thank you note, personalized thank you email, or even a small gift (possibly in exchange for feedback, too). As they say, how you end is as important as how you began!

At the end of the day, no amount of features or discounts can beat an amazing experience. So focus on providing your guests with the most memorable stay to have the highest chance of getting them back.

Conclusion

It’s not easy to encourage repeat guests. You’ll need to be persistent in figuring out which combination of strategies works best for your particular short-term rental. So, to get the ball rolling, try attracting business travelers, starting a referral program, promoting upgrades to past guests, and focusing on giving the best guest experience ever.

Before you know it, you’ll be fully booked with a long line of guests just waiting for the opportunity to book your place again!

Any other tips we’ve missed? What strategy works best for your short-term rental?

Image courtesy of Dan Gold

Categories
Wholesaling

How to Virtually Wholesale Real Estate

Like everything else, the real estate industry has drastically changed during the pandemic. The combination of people trying to avoid foreclosures and digital transformation allowing every real estate investor to tap markets nationwide has resulted in the rise of virtual real estate wholesaling—a trend that is likely to continue post-pandemic.

In fact, the National Association of REALTORS® said 51% of home buyers today found their home online—more than they do through real estate agents! This means there are many people out there who are willing to buy and sell homes online. Therefore, the virtual wholesaling process is an opportunity for you to take advantage of the digital transformation happening in the real estate industry.

Are you interested in becoming a virtual wholesaler? Here’s what you need to know.

The Benefits of Virtual Real Estate Wholesaling

Virtual real estate wholesaling follows the same idea as traditional wholesaling, except your involvement is completely done through digital means. Using digital technologies such as emails, digital signatures, and online databases, you can close wholesale real estate deals without showing up in person. 

Here are the three biggest benefits of this arrangement:

  • Expand to Multiple Markets: You can venture into multiple new markets without increasing your costs, making your wholesaling business scalable. Operate in the hottest markets, grow your buyers list, and even use digital marketing strategies to expand your business.
  • Save Precious Time: It takes weeks to visit all the properties you want to wholesale. With virtual wholesaling, however, you can check out multiple locations in a day. Chat with motivated sellers and make blind offers in varied investment areas easily.
  • Build a Virtual Team: You can build a virtual network to operate your wholesaling business online. Bring in real estate agents, virtual assistants, contractors, and vendors to help you analyze and close deals in all the markets you want to sell in.

All of these real estate investing benefits sound great, but can you really operate without physical appearance? Let’s take a look.

The Steps to Virtual Real Estate Wholesaling

Here are the points in the home buying process when physical presence is typically required:

  • Scouting areas with real estate agents
  • Negotiating with motivated sellers
  • Inspecting and conducting due diligence
  • Estimating the repairs
  • Signing documents

Your goal is to turn these points into digital processes. How? 

  • Use Websites to Find Profitable Areas: Use Mashvisor’s heat map for analysis. As they say, in the real estate industry, it’s all about location, location, location. You won’t need to meet with real estate agents when you can do initial research yourself.
  • Use Websites to Connect with Sellers: Instead of elbowing your way through the MLS, Mashboard provides homeowner data for you to contact the potential seller. Through this tool, you can get their property address, email address, and phone number to start negotiating.
  • Use Virtual Walkthroughs: Browse through Zillow and you’ll see properties that offer virtual tours. If the property you’re eyeing is there, book a digital tour to simulate a walkthrough and check the property out. If the property doesn’t have a virtual tour, you can tap your virtual wholesaling team to conduct due diligence.
  • Conduct Real Estate Analysis: Once you find a good deal, conduct real estate investing analysis to ensure that the after repair value (ARV) and estimated repair cost (ERC) is favorable to market prices. Run comps for the ARV through Zillow or Redfin, and use online calculators by Home Advisor or Kukun to get the ERC.
  • Use Digital Apps to Sign Documents: Got yourself a wholesale deal to close? Download Docusign and DotLoop to sign the real estate contract electronically, send it through email, and get the property under contract without any physical contact. 

Lastly, collect your wholesaling fee either by including it as a line item on the settlement statement, or having the buyer send you a check. Either way, you can do this without meeting anybody in person.

Conclusion

Becoming a virtual wholesaler allows you to tap into lucrative markets with tremendous flexibility and agility. As our world evolves into a highly digitized system, virtual wholesaling is your opportunity to take advantage of digital transformation and get ahead of your competitors—expanding your wholesaling business in all possible locations.

Any other tips or tools for virtual real estate wholesalers?