INVESTMENT RETURN KEY TO FIX-UP
Investors who intend to make any serious money fixing-up rundown houses must police themselves against “over-fixing” and fixing stuff that doesn’t count for much! For example: Don’t waste time changing the wallpaper or redesigning the hallway. It’s not cost effective! It’s easy to fall Into the over-fixing trap and it’s the easiest path I know of to the investor’s poorhouse
Fixers must learn to concentrate their time and money on things that clearly have proven pay-back value. Improvements made on the basis of personal taste are generally not worthwhile. Don t ever forget it’s your customers (tenants or buyers) you’ll need to satisfy!
A difficult lesson for many investors to learn is it’s unwise to provide too much house for the money! You’ll soon go broke if you keep trying! Many tenants can afford to pay $450 rent, but that’s their limit! Your goal, as a profit-motivated Investor servicing these tenants, should be to provide the very best $450 rental house you possibly can and still earn a profit, of course!
Cheap foo-foo frills can raise rents.
If you over-improve and spend too much money fixing the property, chances are the deal won’t be profitable!
It’s my policy to give my tenants everything they can pay for with as many frills as I can. When I rent out my $450 houses I want them to be the very best $450 houses available. Obviously, they won’t be as good as my $600 houses-and they shouldn’t be!
Important: what you see first is what you fix first. The quickest and most impressive changes you can make to an ugly property is to clean up and fix up the outside. First impressions mean everything. Don’t even go inside until you clean up the yard and paint the house. Start watering the lawn to revive it and change the ugly image of the property. Where appropriate, I like to add inexpensive trees and shrubs. Get the kind with red berries and sticky thorns so the kids don’t pull them up. I also like plastic shutters that clip on the front windows. The dollar returns are highest outside.
The only rule I have concerning frills is they must be “cheap frills.” I generally install economy drapes and traverse rods on my street side windows for appearance. I don’t like to look at wrinkled sheets, Indian blankets and confederate flags when I drive by. In the other rooms I use “K-Mart” grade or equivalent curtains or miniblinds. Attractive window coverings allow me to charge about $20-30 more per month rent. My total cost recovery requires less than six months. Another “FooFoo” frill I use is inexpensive ceiling fans with multiple light fixtures. I always provide fresh shower curtains with every change of tenant.
“My total cost recovery requires less than six months.”
Fixing rundown houses is about 90 percent common sense and 1 0 percent skill. The basic “how to” skills you’ll need can be easily learned. One method is to spend some time asking questions and watching free video slides at your local “Toilets Are Us” supermarket. Giant handyman stores are in competition to sell you fixtures and building supplies. They are happy to show you what materials to use and how to use them. If you forget the instructions on the way home, you can look at the pictures on the back of the box. Learning to do fix-up today with ready-made replacement parts and all the help available is much easier than it was 20 years ago.
Fences will generally bring in $20-$40 more per month in rents than comparable houses without them. Secondly, they are fairly-rapid pay-back improvements. As a rule the entire cost of rear-yard fencing will be returned from higher rents in a period of 24 to 30 months. These numbers are based on average size yards, requiring 120 lineal feet of standard board and post construction. When you consider the quick payback and the fact that fences are almost maintenance free for ten years or so, it’s obvious they are well worth spending money on.
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