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?

Categories
Landlords

Do You Have to Allow Emotional Support Animals in Your Rental?

Source: Unsplash

Many landlords don’t allow any pets in their rentals.

Usually, it’s because the pets might destroy the home and jack up property maintenance costs with broken lamps, scratches on the wall, and leaving their smell in the carpets and furniture… These make renovations a hassle for landlords and also eat into the tenant’s security deposit—and nobody wants either of those.

But what about emotional support animals (ESAs) and service animals? Should you allow them in your rental properties? Conversely, is it legal to ban them from your rental properties, if you want to?

The answer is complicated because ESAs and service animals are technically not pets in the eyes of the law.

This doesn’t mean that you need to accept tenants with ESAs and service animals. However, it still prohibits you from denying applications due to animal assistance or implementing pet policies on the tenants.

With many regulations surrounding the topic, this article summarizes the important laws landlords need to know from the three following authorities:

We’ll show you the landlord obligations these governing authorities have and guide you on how to approach tenants with ESAs or service animals.

Laws Surrounding Emotional Support Animals & Service Animals

ESAs and service animals are legal assistants for individuals with disabilities and special conditions based on the FHA. Though they seem similar, there is a nuanced difference between the two animals. While ESAs are companion animals prescribed by a mental health professional, service dogs are assistance animals trained to do specific tasks that help a person with disabilities.

As a landlord, you don’t need to concern yourself over differentiating between the two. The bottom line is that both are considered medical devices instead of household pets, with similar laws that protect them.

Since they’re medical devices, these are some of the implications for landlords:

You can’t discriminate against them.

Rejecting an applicant just because they have an ESA is a type of discrimination. Even if the reason is that they did not disclose their ESAs before your approval (which they’re allowed to do), you’ll find yourself in a lawsuit if you try to rescind your approval.

The only time you can refuse is if the animal poses a direct threat to the health and safety of others. Even then, you’d need to show proof that they are indeed a threat, beyond their breed or size. 

You can’t implement pet policies.

When it comes to tenants with ESAs, you can’t implement pet policies against them, because they’re still medical devices, instead of household pets. So even if you are allowing pets in your rental, you can’t charge these medical devices with extra rent, a pet deposit, or fees to cover possible property damages.

Think of it this way: You can’t charge a wheelchair fee to a tenant just because it might scratch your hardwood floors. Likewise, you can’t charge an ESA or service animal fee, either.

You can’t decline reasonable accommodations.

Regardless of your pet policies, you may have to make “reasonable accommodations” for tenants who rely on their ESAs. The situation is similar to how the ADA requires rentals to accommodate wheelchairs. 

There are a lot of reasonable accommodation requests tenants with disabilities can ask for. Still, one of the most significant impacts to landlords is the obligation to waive any no-pets policies for tenants to live with their ESA or service animal.

The process typically goes like this:

  1. A tenant who is blind approaches a landlord with their seeing-eye dog.
  2. The tenant asks for reasonable accommodations on the rental property, such as lower doorknobs and light switches for their service dog to reach with its mouth.
  3. The tenant waits for the landlord’s response. Landlords must act promptly, as an unjustified delay is equal to failure to deliver reasonable accommodation.
  4. Landlords evaluate requests on a case-to-case basis, but always with the criteria that the accommodations should bring tenants closer to an equal opportunity to use and enjoy the rental.
  5. If the accommodations are reasonable, the landlord is then required by law to grant the tenant’s valid requests.

Another point to note is that tenants with disabilities are allowed to make property modifications for full enjoyment of the premises. For example, they can open the closed patio for their emotional support labrador to leave home and look for help in case of an emergency.

As the landlord, you won’t have much control over justified fixes that help a tenant function better with disabilities. While it might seem inconvenient, think about it this way instead—by making your unit more accessible, you’re actually expanding your potential tenant pool in the future. You’re also within your rights to make the tenant revert the unit back to its original condition upon MoveOut (at their own expense).

Conclusion

After scanning through laws and requirements, it seems that the simple answer is yes—you do have to allow emotional support animals into your rental property. And if you don’t, you could face some unpleasant repercussions. 

The main reasons are that:

  • The law prohibits you from discriminating against and denying tenants who have ESAs.
  • ESAs are medical devices that tenants with disabilities need and rely on every day.
  • ESAs are part of “reasonable accommodations” that landlords are mandated by law to grant.

Stay on the right side of the law and be more compassionate towards people with disabilities by welcoming ESAs and service animals as extensions of their owners—your potential renters.

Do you have any other reasons to allow ESAs and service animals in rentals? Drop your thoughts below!

Categories
Wholesaling

3 Ways to Run Comps for Wholesale Deals

New investors are attracted to real estate wholesaling because it’s an investment strategy that doesn’t need a large amount of upfront capital. Moreover, wholesaling real estate helps newbies become more familiar with the industry and gain valuable negotiation skills.

So, if you’re one of those aspiring beginners, you’re in luck. This article will teach you an essential skill that every successful wholesaler perfects: running comps to price your wholesale deals correctly.

What are Real Estate Comps?

Comparable sales, or “comps”, refer to recently sold houses similar to the property you’re interested in wholesaling. They are similar in terms of:

  • Neighborhood or location
  • Property size (square footage)
  • Property condition and age
  • Property type (e.g., single-house home)
  • Property features (e.g., a garage, swimming pool, and number of rooms)

Real estate comps can either be calculated manually or with online tools, as we’ll discuss later on.

Why is Running Comps Important?

To understand the importance of running comps, we have to review a typical wholesaling process:

  1. A homeowner decides to sell their distressed home to avoid foreclosure.
  2. They approach a wholesaler (or the wholesaler approaches them), and the two of them decide to put the house under contract. The value the wholesaler typically pays is 60-70% of ARV (after repair value), minus the estimated repair costs (ERC)..
  3. After agreeing on the terms, the wholesaler finds an eager buyer to sell the contract at a higher price—that is, at or nearer to market value.
  4. The buyer checks out the house, runs the numbers, and sees that it’s a good deal. They will then  agree to purchase the property, and the wholesaler will assign the purchase contract to them.

The homeowner is glad to have sold their house; the buyer is thrilled to have acquired a profitable fixer-upper project. And, of course, the wholesaler is satisfied to have facilitated the transaction, since they pocket the difference as profit.

So, where do running comps come in?

Running comps is part of determining the ARV or the market value of a fully renovated home. This is important because it helps you price the property correctly.

If the price tag you put on a contract is incorrect, one of these two situations will likely happen: 

  • If you price it too high, it won’t attract or convince any buyers.
  • If you price it too low, it won’t give you the margin needed for a significant profit.

Instead, you need to figure out the ideal selling price for you to find motivated buyers and earn a decent wholesaling profit. With this goal in mind, let’s get into the details of how you can run comps yourself.

3 Ways to Run Comps for Wholesale Deals

We’ll show you three simple ways on how you can pull up comps on the internet. Then, once you’ve done your research, our advice is for you to drive by the comps to verify their details.

Method #1: Using the MLS

A multiple listing service (MLS) is an information database established by cooperating local real estate brokers to provide data on properties for sale. Only licensed real estate agents and brokers that pay a membership fee can access an MLS. That said, if you know somebody who can access one for you (or you’re a licensed individual yourself), it’ll offer you the most comprehensive list of properties in a specific area.

Here’s how you can use an MLS to run comps:

  1. Select your property type.
  2. Enter the address of the property you’re wholesaling.
  3. Define your radius. You can start with 0.5 miles and adjust according to property density (e.g., if there are too many properties within half a mile, narrow down the coverage).
  4. Change the “sold” parameter to sold within six months.
  5. Input the size range of your property (the parameter can be 300 square feet above and below the property you’re wholesaling).
  6. Plug in the city and zip code of the property. You don’t want to consider the properties in another city or state, even if they’re within the radius you’ve selected.
  7. Tap the “count” button, and the comps will show up.
  8. Pull up the map to see if any comps are near a feature or school, as they will likely jack up the ARV—even if they’re only a street away from your property.
  9. Assess the property condition and features of the comps, singling out the ones most similar to your home. Make sure to look around the neighborhood using Google Street View to match its location to yours.

Once you’ve narrowed it down to a couple of comps, you can send the results to yourself via email. 

Method #2: Using Real Estate Websites

If you can’t access the MLS, the next best thing is to use real estate websites. They may not be as exhaustive as an MLS, but they can certainly help in pulling up comps.

Start with these three websites:

  • Zillow: Plug in your property’s address, filter the results to recently sold in six months, find the location of where your property would be on Zillow’s map, and use the same criteria as the ones listed in the MLS process to find your comps.
  • Redfin: You can also pull comps on Redfin based on recently sold houses. They use the data that real estate agents use to estimate the “lowest published error rate” in the market. And, unlike other appraisal estimators, Redfin Estimate considers all the homes on the MLS for an accurate property market value.
  • Homesnap: Yet another option is the Homesnap app, which provides the ARV of the properties listed on their platform. The number they give is usually a mid-price between the highest and lowest value. Homesnap also gives additional information like school ratings, average days on the market, and market scores.

These are just three of the many real estate websites you can run comps in. Others include Trulia, Realtor.com, Property Shark, and RealQuest. It’s best to run comps on more than one of them, so your ARV is based on various properties listed on each website.

Method #3: Manual Calculation

Lastly, if you prefer to run comps yourself, here are the steps for you to do so:

  1. Look at the properties within 0.25 to 0.5 miles from the home you’re looking to wholesale.
  2. Find at least three comps of similar property size, type, and age. The more comps you find, the more accurate the results would be.
  3. Single out the homes that have sold in the last three to six months. The idea is to determine the average purchase price under current market conditions.
  4. With the comps you’ve identified, calculate their average price per square foot.
  5. Multiply the number by the square footage of your wholesaling property. Now you have your estimated ARV or fair market value.

Running comps manually does take more brainpower, but it’s always helpful to keep these steps in mind, even if you’re planning to run comps with online tools.

Conclusion

And there you have it! You now know how to run comps for a wholesaling deal. You can use any or a combination of these methods to identify the ideal price for a specific home—even if you’re not so familiar with the local area’s property values.

By knowing how to pull up comps three different ways, you can adapt to any situation whether the home is in a remote location, volatile market, or has the most unique of features. You’re now equipped to analyze and correctly price any wholesaling deals you come across for a successful investment.

We’ve also done another article on how to get started with wholesaling real estate, should you want to educate yourself further on the foundational pillars of the trade.

Do you have any other ways to run comps? Share with us below!

Image courtesy of Ron Lach

Categories
Shortterm Rentals

Best Practices to Optimize Your Airbnb Listing

Wondering why your short-term rental on Airbnb isn’t performing as well as you hoped? 

You might think real estate knowledge is all you need to run a successful Airbnb, but there’s a lot more to it than that. The secret to having a highly-ranked listing and generating traffic on Airbnb is to use marketing skills, rather than real estate know-how.

But it’s not just about creating impressive listings with all the best features and amenities—you need to know how to rank well in search results. By doing so, more potential guests see your listing, and it’ll land you more bookings. And we all know more bookings mean higher profits.

So, to help you in this daunting task, we’ve listed the top ways to optimize your vacation rentals on Airbnb below. Use these ranking optimization techniques to get more people to choose your short-term rental units and see real results.

Tips for Higher Airbnb Ranking

In general, Airbnb recognizes good listings and rewards them with a higher search ranking. Airbnb does this because it wants the users (i.e. your guests) to have the best customer experience on their platform. After all, if they saw a dark basement suite with 2 stars review first, it wouldn’t reflect well on their own brand image.

As a host, your goal is to check off as much of these things as possible to have Airbnb rank your listing higher:

  • Ask for Positive Reviews: According to Airbnb host Nick Child’s data experiment, the average Guest Satisfaction score that shows up on the first page of search is a whopping 83.7%. This means that the more positive reviews you get, the more visible your rental will be.

So, provide your guests with the best experience and encourage them to leave a review after their stay. You want to have as many 5-star ratings as possible to appear on top.

  • Use Instant Book: Instant Book is a feature Airbnb has been pushing to make booking faster and easier for guests. More importantly, Airbnb confirmed that Instant Book is part of their search algorithm, and 50% of its bookings are via this channel.

Additionally, the Instant Book filter might be turned on by default for most guests. With the filter activated, guests will only see the listings that have Instant Book turned on. In other words, your rental might not show up if guests don’t turn off their Instant Book filter.

  • Respond Quickly: You’ll need to have a 90% or higher response rate to use Instant Book. This means that responding within 24 hours or less will boost your search ranking on the platform.
  • Hasten the Booking Process: Since Airbnb prioritizes ease and speed of booking, you should also gain their favor. The faster it is for a guest to finalize a booking with you, the more priority you’ll get on Airbnb’s search algorithm.

If you’re not sure how efficient your process is, evaluate how long it takes for you to finalize booking with a prospect. If they ask a lot of questions and can’t complete the booking within 24 hours, you need to improve your listing and hasten the process.

Improving your listing by adding all features and amenities offered (e.g., wifi, Netflix, cable, water heaters, etc.). That way you’ll reduce the time spent answering potential client clarifications.

  • Keep Booking Commitments: Because Airbnb prioritizes reliable hosts, you should only accept bookings you can commit to.b Every time you cancel or reject guests, Airbnb will see you as an unreliable host, decreasing your visibility on search pages.

One important thing is to ensure that your listing has all the details and considerations listed. That way, the only guests who’ll book with you are the one who agrees to your terms. It’ll be easier for you to accept them since expectations are all met.

  • Update Your Calendar Regularly: Airbnb checks if you’re updating your calendar regularly because they want guests to have an easy time booking a place. Don’t miss bookings when your unit is available, and remember to update it right away when a booking is confirmed.
  • Post Shareable Photos: We all know that good photos attract guests, but what you might not know is how important shareable images are—the types that guests can send to their friends before booking. The more they share your photos, the higher traffic you’ll get, which results in Airbnb prioritizing your listing on search.

Post photos that highlight the features of your listing, photos that aptly describe the place, and ultimately, have the highest chance of being added to the Wishlist feature or shared on social media.

Issues that Lower Your Airbnb Ranking

In contrast, Airbnb also sees “bad listings” and tries their best not to show these to their audience. Moreover, Airbnb also has some features that, when ignored, will lower your search visibility.

Make sure that you don’t do these things, or else you’re jeopardizing your ranking and preventing yourself from attracting guests:

  • Booking Cancellations & Rejections: As we said already, Airbnb wants to prioritize reliable hosts. This is the reason why they’re constantly pushing hosts to achieve the Superhost designation, and will deprioritize any hosts who have a high cancellation rate.

It’s difficult to stop guests from canceling. However, by updating your calendar and including all important details in your listing upfront, you can significantly reduce the chances of guests canceling a booking due to a myriad of reasons.

You also need to make sure you’re not rejecting guests because it will also make your rank go down. Every action you take on Airbnb factors is tracked and being factored into your performance.

  • Extra Charges: Extra service fees and additional security deposits will affect the amount of traffic your listing receives—especially if you’re charging more than other hosts. Once your booking rates drop, your search ranking will fall with it.
  • Too Strict: Flexibility is another factor to consider. While you might want to limit a guest’s stay to just a few days, like the weekend or weekdays, that excludes a lot of people. If you’re more flexible, you’ll appear in more searches. 

Summary

Use all our tips and tricks to optimize your short-term rental listing on Airbnb and help you generate more profits. When you’re a stellar host, your guests will thank you and appreciate it. While some see Airbnb as a means to make money, it’s also a way to provide others a lovely place to stay and create lasting memories when they visit.

Remember that it all boils down to providing a great experience for your guests. Impress them, and you’ll have plenty of people hoping to stay with you. 

Any other tips we’ve missed? Drop us a comment below on what’s worked for you with your Airbnb listing! 

Image courtesy of Andrea Davis

Categories
Flipping

Top 5 Mistakes Novice Flippers Overlook (And How to Overcome Them!)

Reality TV shows may paint a picture of how easy it is to flip a property, but the actual reality is much more complicated than that. Unfortunately, beginner real estate investors often jump into the business without knowing anything about real estate and how it works!

In a nutshell, house flipping is buying a distressed property that you repair and sell for a profit. It’s one of the best ways to earn money from real estate, whether you do it full-time or only as a side hustle. In fact, flippers can make up to $25,000 profit on a typical house in the City of Detroit (provided, of course, that you follow the right advice). 

But like any business, house flipping takes knowledge, planning, and hard work to be successful. Without the proper guidance, you’ll only lose your hard-earned cash. 

So, here are five common mistakes that novices overlook and how you can avoid them altogether.

#1 No Market Knowledge

There’s more to house flipping than what you may know. One of the biggest mistakes new flippers make is buying a property that falls within their budget but is unfortunately located in an undesirable market. As a result, they end up stuck with a home they don’t need, with all their savings tied to an undesirable property.

Solution: Work with an experienced, local real estate agent who knows the real estate market well and can show you the ropes. Experienced agents will know things such as current market prices, what buyers are looking for, and the latest trends in the neighborhood. Then, continue learning by talking to other investors and following real estate investment blogs (like this one!).

#2 Investing Too Much Time and Money

The whole point of house flipping is to earn a good return on investment. But that is impossible if you spend too much money upfront. Moreover, time is also of great essence in the flipping business. On average, it shouldn’t take you longer than 1-2 months to sell it. The longer a property stays on the market, the more you have to pay taxes and maintenance. This increases your capital expenditure and squashes your potential flipping profit.

Solution: Follow the industry’s 70% Rule, which says you should only pay a maximum of 70% property value minus the repairs. This rule is significant for new investors who don’t have extra money to cover a project that goes sour.

For example, let’s say the property value is $200,000 after $10,000 of repairs. In this situation, you should spend no more than $133,000 to purchase the home ($200,000 – $10,000 x .70 = $133,000). If you spend too much money, you won’t be able to sell it for a significant profit.

On top of this, ensure that you work with a professional contractor before you purchase the property. They can inspect the home for you and provide an accurate repair cost for your budget.

#3 Overestimating Your Skill and Knowledge

Are you tempted to save money and repair the distressed property yourself? Keep in mind that so many things can go wrong if you don’t have the necessary knowledge and experience. It only takes one bad swing of the hammer to do irreversible damages to the home!

Solution: Start slow and look for homes that require minimal repairs (remember the 70% rule). You can gradually take up more complicated projects as you increase your knowledge and experience. Alternatively, work with a licensed contractor to flip the home for you so you won’t have to update the wiring and plumbing on a 60-year-old house.

#4 Miscalculating Cost of Repair

This is the most common mistake! 

One thing that most of the flipping & improvement shows get right is the “unexpected repair”. The demo crew opens a wall that exposes dry rot, termites, a major plumbing issue, etc. 

Miscalculating the cost of repairs can make your expected profits disappear. 

Solution: Look for projects that don’t require much work and talk to a trusted contractor to help you bring the home up to suitable standards. Also, build in 10-20% Cost Overrun in your repair budget. Don’t go overboard!

#5 Overvaluing the House

Finally, one of the classic rookie mistakes is estimating your sales price at the highest price possible. While this does happen, and it’s great when it does, you’re better off being a bit more conservative on your estimated sales price. 

Solution: Consult your real estate agent to land on a realistic price based on market analysis and careful consideration of the competition.  

Conclusion 

Home flipping is still a lucrative gig, provided that you are willing to invest the time and effort. While the concept is as simple as selling for a profit as fast as you can, there are so many pitfalls that can derail your efforts and put you in a financially difficult spot. 

Instead, learn from the mistakes of others! Avoid the top five mistakes novice flippers make to become successful flippers without burning cash.

Need more help in flipping houses? Feel free to get in touch. I’m more than willing to help you in your journey to become a successful house flipper.

Image courtesy of Sebastian Herrmann

Categories
Wholesaling

How to Dominate Wholesaling Houses in Your Area

While you might be tempted to cover areas beyond your local real estate scene, it’s possible that you’re already sitting on a wholesaling goldmine—and you just didn’t know it!

Here are the signs of a market that’s ripe for a booming wholesaling business:

  • Overwhelming amount of cash purchases
  • Abnormally fast sales
  • Houses getting multiple offers
  • Escalation clauses (to avoid getting outbid)

If your local area has all these factors, you’re in a great place to become a wholesaler.

Read along to find out the two-prong strategy that will help you dominate your local real estate market and build a successful wholesaling empire—right where you live.

Search-Optimize Your Wholesaling Business

Aside from doing offline marketing, there is also a world of possibilities online. Not only are geographic boundaries removed, but the internet also enables you to effectively target and reach your audiences with SEO (search engine optimization) tools.

Check out these online marketing platforms for real estate wholesaling:

  • Wholesaling websites
  • MLS (Multiple Listing Service)
  • Online forums and auctions sites

All of these efforts hinge on the fact that we do practically everything online nowadays. Your customers are more likely than ever to search online for new properties.

Your goal is to be visible and easily accessible via an online search. This is where keyword research comes in. By knowing what keywords to target, you can also maximize your reach on search engines, gain valuable traffic, and generate qualified leads.

Do a simple test to see how your business currently ranks in search engines:

  1. Search “real estate wholesaler [location]” on Google.
  2. Look at the top results.

Does your name or business appear? Where do you rank versus your competitors? Who shows up before you do?

Well, you need to beat them.

Optimize your searchability by choosing keywords that your buyers will search for, then incorporate them in your blog posts, listings, and website.

Here are some keywords you can consider:

  • local real estate wholesalers
  • house wholesalers near me
  • local cash buyers in [area]
  • local house sellers in [city]

For in-depth SEO strategies and more information on how keywords work, you should also check out Reibar’s article on keywords that real estate investors should be targeting.

To boost your online presence further, you can also pay to get increased visibility in highly competitive markets. Paid advertising involves platforms such as Google AdWords and Facebook Ads.

Network to Outshine Your Competitors

Given the wholesaling potential of your area, you might be competing with a lot of other investors. It’s definitely not bad for business, but marketing will be a challenge.

In our article on the best places to find wholesaling deals[1] , we mentioned a couple of offline marketing methods such as:

  • Driving for Dollars
  • Bandit signs
  • Direct mail campaigns
  • Networking
  • Newspapers

All of these methods are effective in finding wholesaling deals, but networking is the most important strategy when trying to dominate a market.

The good thing is that all competitive areas have an REIA or two in the community – Metro Detroit definitely does.

REIAs are a great place to start making your presence known—the goal is to establish your wholesaling business to outshine other wholesalers and be the go-to property supplier for the local area. REIAs give you access to a whole group of people for:

  • Building an active cash buyers list
  • Developing strong and reliable connections
  • Boasting your overflowing housing inventory

You can also team up with Bird Dogs or acquisitions managers who are interested in the local market. The more properties they bring you, the more inventory you have to sell to cash buyers.

Conclusion

The key to dominating your local wholesaling market is good marketing—both on-ground and online. By networking closely with the community and optimizing your online presence, you’ll set yourself up for long-term success wholesaling in any competitive space. Ultimately, you want to establish yourself as an expert—and building your credibility with a great online presence and consistent quality service is how you do this.

To succeed even in these uncertain times, go through our wholesaling trends and insights that have surfaced during the pandemic. Get a good grasp of the present and future of wholesaling real estate to dominate the business in your local area—and beyond.

Need help in beating your local competition? Get in touch with us! Our team is more than willing to help.

Image courtesy of Andrea Piacquadio


Categories
Landlords

Top 11 Amenities Renters Can’t Resist

Everyone hates going to the laundromat. Lugging a bag of dirty clothes to a laundromat even only 10 minutes away is the kind of hassle people want to avoid. And once you have the luxury of in-unit laundry, it’s hard to go back. 

When you’re trying to make a rental unit more appealing to potential tenants, you need to keep in mind what they’re looking for. For some tenants—it’s in-unit laundry. 

Every renter has a specific thing they want in a home, whether it’s granite countertops or hardwood floors. Whatever it is, highly-requested amenities are often deal-breakers. And these days, search filters on websites are getting increasingly specific.

When tenants search on popular real estate websites like Apartments.com, Zumper, RentCafe, or PadMapper, they have plenty of filters to choose from. As a landlord, you need to know exactly what makes your rental irresistible to potential renters. 

Writing an excellent listing and taking high-quality photos can help, sure, but the key to securing long-term tenants is by giving them a place with something no others have. They may even stretch their budget if it means they get to have the rental of their dreams.

So, without further ado, let’s dive into the top amenities renters just can’t resist.

11 Amenities and Features Renters are Searching For

These eleven items come from my experience running a property management company as well as data from industry-standard websites: Zumper and Apartments.com. In other words, you can be confident that these are the kind of features you want to use to attract interested renters.

  1. Air Conditioning: Heat and air conditioning come at the top of the list according to Statista. The law doesn’t require cooling systems, but many tenants want it. Not surprising given that a large part of the US gets hit with sweltering temperatures throughout the summer. After all, nobody wants to be stuck lying awake at night with loud fans blasting beside them.
  2. Central Heating System: On the flip side, many different regions of our country also deal with the coldest of winters. While all states require heating systems, they don’t require central heating—which is what most renters prefer, according to Zumper.
  3. Plenty of Parking Spaces: Another one of the most searched items is parking. Renters want to have a parking space reserved for them and others when they invite over company. Assigned parking is especially popular in urban areas where space is limited, and covered parking is sought-after in places that get rain or snow all year.
  4. Flexible Pet Policies: If there’s one thing we all have in common, it’s that we love our pets. Most of us have one, too, as a survey showed that 96% of Americans had pets before, and 72% of renters still have pets! If you’re not allowing pets into your rental, it may be time to reconsider.
  5. Dishwasher: As they say, the kitchen is the heart of every home. So what do renters look for in a rental? A dishwasher. It’s even the 5th most popular amenity according to the same 2021 survey from Statista. Even Zumper reports “dishwasher” is one of their top 10 most-searched terms.

By buying a mid-range dishwasher for even $500 to $1000, you can up the monthly rent by $50 or even $100 per month and make it back shortly—especially since a good dishwasher should last about 10 years. If your unit is on the smaller side, there are still options like countertop dishwashers that can attract tenants too. 

  1. Outdoor Spaces: Something that was a “nice-to-have” before is now a “must-have” after the pandemic. Zumper saw the search for “outdoor space” catapult by +143% after COVID-19 meant many of us were trapped indoors. Terms like “roof deck” and “balcony” also increased as people realized the importance of having accessible fresh air and open spaces.
  2. In-Unit Laundry Equipment: While others may argue that doing laundry is relaxing, Zumper data indicates that most renters want to turn an afternoon in the laundromat into a press-and-wait task at home. 

Having an in-unit washer and dryer in your unit makes their inevitable chores more convenient. It can even allow you to charge $100 more on rent! Especially when considering they cost anywhere from $300-$2,000 each, it’s logical that the rent will go up to cover the cost.

  1. Hardwood Floors: Nobody wants a carpet that reeks of pets or spilled liquids. They’re a pain to clean, and expensive when they need to be replaced. Instead, renters want beautiful hardwood floors that look better, last longer, and are easier to maintain than shag or wool.

Of course, if you’re going to splurge on flooring, you need to be sure you’re renting to tenants that will take care of it. Otherwise, you risk an even more expensive renovation. For C and D rental properties, this might not be the best choice.

  1. Furnished Homes: People hop from one city to another way more than before, which translates to a higher demand for furnished rentals. Not only is lugging furniture a hassle, but moving can cost up to $2,300—more than two month’s rent in the City of Detroit. 

If you do decide to go the furnished route, be sure to get it insured in case anything goes wrong. It also opens up the opportunity to charge far more if you accept short term renters, but it will still boost the price for long term rentals too. 

  1. Granite Countertops: While this is not a necessity, it’s a luxury that many enjoy. An updated kitchen is especially attractive to younger renters, since 76% of Millenials say that they enjoy cooking. Boosting the value and the appearance of the kitchen will help you stand out in a competitive rental market.
  2. Modern Appliances: If the toaster is old and broken or the microwave is stained or smells, it’s probably time to upgrade. Small changes like this can be a great way to subtly impress a potential tenant and help them justify their monthly payments. 

Of course, sometimes things can go missing or be taken, so this will depend on the type of property and type of tenant. If you’re renting out a high-end apartment to working professionals, then it makes sense. But, if you’re renting a basement suite to university students, then you could skip this.

Conclusion

These eleven amenities mean you have plenty of ways to entice prospects into renting your property—and maybe even increase your profits.

Keep these home features in mind when you’re upgrading the rental, revamping advertising materials, or expanding your portfolio to include more properties. They’ll give you a far more competitive edge in the market and attract serious renters looking for a perfect match.

Any other highly-requested amenities we’ve missed? Comment them below!

Image courtesy of Patrick Perkins