If you’re like me, you hate losing income on your real estate investment. So you try to avoid things like evictions and vacancies. Another hidden “area” of loss of income associated with vacancies is the time when you are ready to rent / sell a new property, but in the meantime you are free (and not making money).
My first rehab …
My first rehab was the duplex we kept as a rental. We did all the work ourselves. I thought it was smart at the time, but since then I’ve learned that it’s not the best choice. As you can see, the total monthly rent for that duplex was $ 1110. So, during the six months, I missed $ 6660 in potential rental income during the refurbishment. On top of that, we didn’t advertise until the renovation was complete. In other words, it took another month to rent one unit and two months to rent a second unit. That’s an additional $ 1,665 worth of lost rental income. So we missed thousands of dollars by working ourselves without advertising until the rehab was complete. Assuming we hired most jobs and started advertising earlier, we might just miss a month or two of potential income instead of over $ 8,000 while we were refurbishing. Maybe.
Compare this with your recent acquisition. Picked up ~ 2,400 sq ft top / down duplex. We started the renovation two days after the store closed and have adopted most of our workouts. This is a complete refurbishment from framing, plumbing, electricity, HVAC, seat locks, paint and flooring. However, the renovation took four weeks, and from May 1st, we signed a lease agreement for one unit. The best thing was that the renovation when I actually signed an annual lease contract with the tenant was like this.
Yes, we rented this unit without going too deep into our refurbishment and actually without even looking at the property until the day the tenant signs the rental agreement. How did you do it? Please see below.
3 steps to rent (or sell) before rehab is complete
Establish a brand
Most buy-and-hold investors in the target market do nothing to set themselves apart from their competitors. They use common red and white “rental” signs that you can get at any hardware store. They do not establish a business or name around the rental property other than their personal name.
We saw this as a great opportunity to brand our property and stand out from our competitors. we I designed the logo I used blue as the primary color. This not only clearly separates our sign from other “rental” signs in the area, but also shows honesty and responsibility from a psychological point of view.
Related: Tips for building a brand in 2014
Create a reputation
Once you have a way to differentiate yourself from your brand, it’s time to build your brand’s reputation. We knew we wanted to be known for quality. This not only attracts higher quality tenants, but also charges the apartment a premium and provides the tenant with a positive experience. As a result, residents will actively discuss with their friends and stay longer in our property, resulting in lower vacancy rates.
We provide a consistent experience with our characteristics. This means using the same material and creating the same look / feel for each unit. This not only allows us to buy and systematize much of our process together, but also allows people to know what to expect from real estate. Below are some images of our unit.
Did you notice any similarities? What do you think the next unit will be?
In the example at the beginning of this post, I lost three months’ rent because I didn’t advertise immediately. In fact, it takes time to find a quality tenant. If you find that tenant, you usually need to notify your current landlord 30 days in advance (especially if they are good tenants). Depending on the time of notification, it usually needs to be 30 days before the end of the month, so it may actually be close to 60 days.
So we will start advertising right away. The image below was taken on the day the property was closed. The first thing we did was to put two custom “For Rent” signs on the property, along with a large “Now Leasing” banner. This property has been vacant for 12 years, so I started to get interested just by putting a sign on my house.
Since then, we have promoted our property elsewhere, including websites, newspapers, and social media channels.
that’s all. Three easy steps to rent or sell rehab faster.
What are your experiences with these strategies? Do you have any other advice?