Renovating Your American Investment Property - US REAL ESTATE TV


Uploaded by USRealEstateTV on 19.01.2012

Transcript:
Now rehab, this is just the Americana way of describing any kind of renovation, repairs
or maintenance work. Now, really the ease of finding a tenant is the main consideration
for renovation, so what you want to do is renovate these properties to such a level
that it’s going to make it appealing to a person to live in but you don’t want to
over do it, so that you’re over capitalizing , and really like eroding your yield. Do only
what needs doing. Then there’s the whole issue of structural versus cosmetic, now it’s
my personal view that you shouldn’t be getting involve in a property where they’re any
structural damage or things that need doing purely because the risks associated with the
cost can really blow out. I’m much more interested in houses that might need some
basic cosmetic work but nothing much more than that. In the foreclosure market, the
sort of state of the properties that you’re looking at can vary massively so, what that
means is that you can get homes that need virtually no work all the way through to homes
that need a complete renovation in terms of kitchen, bathroom and so forth. Your job when
you’re purchasing properties over there is actually to see and figure out how much
rehab you’re prepared to do. So, if you’re buying properties that are very run down,
then obviously they’re going to be cheaper but there’s going to be more work done and
you’re going to have less competition as well. If you’ve bought a property where
there’s little to know rehab, then you may have to do still some minimal rehab if the
property’s been sitting vacant for a while. Then you’ve got properties that need no
work whatsoever and you can start tenanting from day 1. Now, you can see by just doing
a simple walk through that you can get a pretty good gut feel as to how much work needs doing.
When you’re starting out and you’re investing in the US, I’d be looking at in getting
at least three rehab quotes for any particular job. Now the clearer you are on the goals
of what you want done, when you get your rehab done, the easier it’s actually going to
be. I would be really specific. I’d be specific about the timing that you want, the standard
that you want and all your expectations about how the job’s going to get done. Now, as
your basic standard for rehabbing you should really be looking at your section 8, now that
will tell you at a base level what they will require, if they are going to allow you to
put your property into the poll for section 8 tenants. We’re actually going to cover
in step 5 when we talk about building our team how we actually go about choosing someone
to work with but I guess the idea with this is do the basics and don’t be emotional
about it, you don’t have to live there, so you don’t need a granite kitchen. I would
actually be meeting the contractor and determining the work before you actually commit to the
purchase. So, this is what we were talking about earlier, should you skip the process
of actually going and inspecting the property yourself, and the answer is no, especially
because you want to get someone in there with you who’s going to tell you how much it’s
going to cost to fix up. I would draw up a schedule and I’d agree to sticking with
it. I’d make sure you’d get a written quote. Now one of the things that I’d heard
from a number of investors is that if the house is in somewhat in a state where there’s
a lot of stuff that needs throwing out, getting your mini skip or your dumpster up front and
clear out the house before you even start your work, now that can actually cost and
create a lot of efficiencies in a way that the rest of the jobs can get done. Repair
the roof first, this is obviously because if you’re living in a climate where it occurs
wet weather, and you’re going to be preventing any of the rest of your rehab work from being
damaged. You want to make sure you check on your major systems before you start other
things, so check your plumbing, your air-conditioning, also check your electricals. Burst pipes are
a huge problem in the colder regions and if you don’t get those checked up front then
that can actually cost your money down the track especially if you’re doing any plastering
work or things like that. Heating systems are crucial. The bottom line is that if you’ve
purchased a house in an area that experiences cold weather and it’s not working, then
no one will want to live there. You need to decide whether you need to replace the system
or whether you can actually have it serviced and just live with what’s there. So, I’ve
already said make sure your electrical systems are actually working as well. We talked a
little bit about basements in that last clip and the bottom line is that basements are
really valued for tenants. So, plastering or what they call it sheetrock, make sure
that that’s done only after all the systems, major systems are actually sorted out. You
do your carpeting and floors last, you want to minimize that. Now carpet is actually a
very cheap commodity or good in the US, so if you’ve got a property where the carpets
are maybe a little worn out, I’d actually consider replacing through out because it’s
not a big cost. Make sure you do not forget to schedule a professional clean. The bottom
line is you want your property looking as good as it possible can by the time you actually
start showing tenants through, but what I would say to you is shop around. I’ve seen
some quotes for cleaners which vary quite a bit and you want to make sure you’re getting
someone who’s specialized in this kind of work. If there’s any landscaping, which
hopefully with some, most of the properties we’re looking at, you wouldn’t have, but
if you do have that, you want to make sure that happens last.