DIY Projects You Can Do in Your Rentals

If you are an active real estate investor, it is likely you have rental properties.

When getting your rental properties to cash flow, you need to save money whenever you can. If you are just starting out, it is possible to do quite a few things yourself to save on your maintenance costs. Below are some of the things we see real estate investors self perform:

Drywall Patches Between Tenants

Painting

(while certainly not a fun gig, if you have the patience, it can save you quite a bit of money)

Mini Bathroom Remodels

If you’re looking at ways that you could possibly look to increase rental rates, consider some upgrades. A little can go a long way to what a renter is seeing.

Carpet Cleaning

Renting a carpet cleaning machine from a local vacuum store or big box like Home Depot or Loewe’s.

Minor Landscaping

Curb Appeal like adding mulch can make your rental property more desirable to tenants

Replacing Light Fixtures

We hope that these ideas get your mind working to see how you could possibly save money by self performing some improvements to your rental properties between renters.

what is an accredited investor?

As you are getting started real estate investing, you might be seeing offerings for passive investment.

Some of these investment offerings require their investors be accredited. So what does that mean?

The full requirements are linked here:

Electronic Code of Federal Regulations

For an individual to be considered an accredited investor:

  • their net worth (not counting their primary residence) is $1,000,000 + OR

  • they make $200,000/year in gross income in the past 2 years OR

  • they make $300,000/year in gross income filing jointly with a spouse in the past 2 years

These rules exist to help protect investors who could be “duped” by investment offerings, hoping that investing in these types of offerings wouldn’t be catastrophic for the average individual.

It is still very possible to invest in real estate without being accredited, but certain offerings are only available to those individuals.

Do I Need to Become a Real Estate Agent to Invest?

At TABS, we meet many new investors who frequently have questions about how to get started in real estate investing. A frequent question we receive is “Should I become a Real Estate Agent?”

Our Answer….it depends (I bet you didn’t see that coming)

Here are some pros

  • automatic access to MLS

  • access to view properties without scheduling with a real estate agent

  • saving on paying commissions to a real estate agent

With that, there are some cons

  • In Colorado, you are required to “hang” your license under someone for a period of 2 years. That company will likely have requirements that they be paid sometimes a monthly fee in addition to a cut of all sales. They will probably also have sales requirements.

  • You’re new. So you would be learning two new trades rather than relying on the expertise of an experienced real estate agent. An experienced agent can help you navigate a decent deal, can offer up suggestions on what repairs buyers are looking for, can appropriately help price a home. They also have contract and negotiating experience that could be of help.

  • There is more potential for liability with a license. A license requires insurance, which can create a target if someone is looking to sue

We hope this helps you make your decision.

Case Study - Riverwood New Construction

New Construction in Riverwood Neighborhood of Breckenridge, CO

Finished Home

Finished Home

Vacant Lot with Trees and Boulders

Vacant Lot with Trees and Boulders

Basic Info

  • Purchase Price Land $487000 in October 2017

  • Sold Newly Constructed Home for $2,995,000 in January 2019

Market Value of Property

Case Study - Welby Fix n Flip

After

After

This property was purchased at the end of June 2018 for $195k by an experienced flipper. This borrower requested a hard money loan amount of $180k. Rehab for the property was $35k. The flip took 4 months.

Basics

  • Source - Referral to Borrower

  • Status - Estate

  • Condition - Poor / Hoarder Home / Arson Property - see below before picture

full gut - during construction photo

full gut - during construction photo

Obstacles

  • Title took a good deal of time to close because several deceased persons were on title. All parties of the transaction had to be patient to await clean title from seller’s representatives.

  • Gas and Electric had been off at the home for a significant amount of time that Xcel required the borrower to obtain new service as if the home was newly constructed. This line item was over budget as that was unforeseen for the borrower.

before

before

condition at time of purchase - hoarder home

condition at time of purchase - hoarder home

Home Value

IT'S OUR BIRTHDAY!

how to secure vacant properties

Keep Your Investment Safe

Investment Property with Security Door

Investment Property with Security Door

  • Maintain proper insurance - vacant property policy

  • Cover street viewable windows - there are inexpensive options if you do not want to install permanent coverings

  • Alternate lights left on - can be done physically or devices set up

  • Lock Gates

  • Make sure all doors lock. Add piece of wood to sliding glass doors

  • Keep construction supplies & equipment out of view

  • Post beware of dog sign

  • If vacant during winter, winterize the home to avoid potential damage

  • Perform regular maintenance

  • Post sign for a security company even if there isn’t an existing alarm

Hold It or Fold It - Getting Started with Rental Property Evaluation

If you are new to real estate investing, there are some things to consider when buying an investment property.

First - Consider the location of the property. Is the property in a desirable part of town? Is it an area with with many tenant opportunities? Is it near public transportation? The area will also determine what the property can rent for. Be sure to look at what neighboring properties are renting for and note their condition.

Property Due Diligence -

Repairs : what repairs will you need to make in order to make the property rentable? If you are used to flipping, there are different repairs that will be necessary if you are now planning on renting. Such as being able to get away with not including some appliances when flipping, but needing to provide those to make tenants choose your property over others available. What repairs are necessary for health and safety of your tenants and to limit your liability as the owner?

Holding Costs : what will insurance, taxes, vacancy, utilities, etc cost you over time? What will you need to reserve for any repairs?

Financing : what financing are you able to get? how much will you be required to put down? and after all of that, will the property cash flow. Not only will you want your investment to cash flow, but your lender will feel more comfortable providing financing to you if your investment “pays for itself”. Hopefully in addition to the monthly cash flow, your property will appreciate over time. This will allow you to sell for a profit on top of it generating monthly cash flow to you over time.

You will hear us preach this time and time again. But money is made on the buy. Make sure you do not get excited about a seller, wholesaler or agent’s sexy numbers of what you can rent a property for. Be sure you do not overpay for the property.

Be a good landlord - if you can keep tenants in the property for long periods of time rather than needing to get new tenants constantly, it will make your life and your wallet better.

TABS provides financing to landlords in Colorado. And our management team has been a landlord - we are happy to counsel you if you are just getting started.

Good luck!

what should you diy?

As a Flipper, it is beyond important to keep costs low. One way of doing that is to perform some work yourself. If you happen to have a career in construction, this is a no-brainer. But for many flippers, this might be your first experience building something yourself. Working for you is the ability to access tutorials online or in person. YouTube has endless videos for just about any piece of the rehab project and Home Depot offers free classes if you found a topic of interest to you. Always consider if your work will not be up to the quality necessary for the home to fetch top dollar. Some ideas for just getting started are below, but as you educate yourself more, the options are endless to how you can save yourself money. 

  • demolition
  • light landscaping, tree trimming, lawn maintenance, clean up
  • some painting
  • install hardware on cabinets
  • install doors
  • hang mirrors
  • install towel bars
  • post-construction clean up
  • light staging

costly mistakes in fix and flipping

costly mistakes to avoid when investing in fix and flips in Colorado

At some time or another, an investor can fall a pray to common and costly mistakes. The fix and flip business is an area where you will find a considerable amount of chances for such mistakes. When it comes to investing in a fix and flip business (and with any other business), knowing what to do and doing what you know is the key aspect. Besides, it is also important to know what you shouldn’t do if you expect sustainable progress and write your success story in the business of fixing and flipping real estate.

-          Mistake 01: Having Unrealistic Expectations

The old saying is right, you shouldn’t be counting your chickens before they are hatched. There are considerable number of house flippers who spend too much of money and time on repairs with the expectation of compensating all that money from the selling price of the property. This is a very risky approach; you should always try to save money in all the possible ways without overspending. This doesn’t mean, however, that you should settle for cheaper, low quality materials; look for shops that sell materials for cheaper prices. You can expect discounts on bulk purchases. Try to initiate a partnership with a building materials supplier on long term basis. It is important to invest in fixing what will add value to the home. Make sure that the areas of the home that you are rehabbing will provide you with the value return on the sales price. In an existing home, there are any number of improvements that one can choose to make, but not all of them are considered equal in the way of a return on investment. There are many other ways for you to implement cost-effective strategies other than spending money hand over fist!

-          Mistake 02: Not Researching Enough

Some novice fix and flippers tend to focus on cheap fixers without paying much interest to the other facts. Just because you find a property for a very cheap price, that doesn’t mean that you can keep a huge profit margin when selling it back; you should do proper research about the area. The average property prices of the neighborhood, the willingness of the people to purchase properties from the respective neighborhood, the ability to match the average selling price once the repairing costs are added are some of the major concerns you must be aware of. Check out our other blogs to make sure you are evaluating all of your holding costs on a property correctly. Be conservative in your estimates so that you can have a positive end result.

-          Mistake 03: Avoiding ‘Creativity’ Factor

Impression does mean a lot when it comes to real-estate field. No matter how valuable the property you are going to sell, without a good impression, you can’t expect your buyers to like it and agree with the price you offer. With simple yet creative tweaks, you can give a whole new appearance to the property and increase the value significantly. However, being creative is not spending large amounts of money; it is something you can do by making the most of what you already have. In fact, the profitability of the flip and fix business depends on the way you utilize available resources. Make sure you also use the right Real Estate Agent to sell your property - you want them to be an expert in the neighborhood and prefer them to have buyers already waiting for a property to be delivered in that area. It is shocking to see what home staging can do for buyers. There is a reason that national home builders have model homes. Treat your home like a model to drive traffic to your real estate investment. 

You don’t always have to spend a ton to increase the value of a property. It is all about being creative and thinking out of the box.