In what is arguably one of the most bizarre real estate markets in history, finding good deals is like finding toilet paper and sanitizer during a pandemic. The good news is, if you actually land a good deal, there has never been a time in history when it has been easier to sell.
“If all you have is a hammer, everything looks like a nail.” This statement by Abraham Maslow pretty much sums up how most newer investors look at flipping houses. HGTV has made aspiring real estate moguls think that every house must be given the Chip & Joanna treatment in order to have a successful buy/sell transaction.
Well, I hate to burst your bubble, but if you actually find and close on a good deal that needs some work, the more money you put into it, the less profit you are likely to make. This is especially true if you are a newer investor without much experience in managing a rehab. Unless you are simply doing carpet, paint and fixtures, you will likely make more profit by simply cleaning out, cleaning up and listing a property for sale, as-is. This is called wholetailing.
A wholetail is the perfect way to disposition a property in an extreme sellers’ market. Period. Less work, less holding time, less risk, and still good margins. Cosmetically distressed starter homes in good areas are the holy grail of real estate deals during housing shortages like the one we are in now. They can be sold to both investors and DIY homeowners who really want to be in a certain part of town or a specific school district. At Red Ladder Property Solutions, these types of properties are ones that we prefer over all others.
Instead of giving yourself brain damage by figuring out what wall you can move or whether you should go with quartz or granite, grab some cleaning supplies and gas up the lawn mower. That’s almost all you are going to need in order to make a good profit.
Check back with me when we fall into a recession, and I will go over how superior rehabbing is…
Let’s face it, real estate investors have different needs for their jobs than most other people. If someone looked in my truck and saw the stuff I bring along, they might think I am a serial killer or a doomsday prepper. But it’s really just items I seem to always need for rentals, flips and showings. Since we started buying houses in Omaha, the back of my truck has a lot more stuff in it.
Smartphone – This one goes without saying. Podcasts, calculators, maps, apps, emails, texts, camera and video – everything you used to have only on your home or office computer. Could you imagine even leaving the house without one anymore? I am a Samsung guy, even though my wife and daughters are Apple Snobs. I personally think Samsung’s cameras are superior.
Notebook and pens – Old school, yet so valuable. Get in the habit of writing down the date, name of the person on the phone and the address of the property you are talking about right away before you forget. It helps so much later on when you are trying to read your chicken scratches (unless it’s only me?). Make sure to have some good quality pens available too. My go to’s are the TUL medium point gel pen, and the Moleskine Classic Hardcover notebook.
Flashlight – If I had a nickel for every time I have stood in a pitch black basement with no working lights… A good quality Maglite is a must have item for checking out sketchy properties. It can double as a handy weapon in a pinch.
Change of clothes and some grubby shoes – Do as I say, not as I do. I have walked my fair share of disgusting hoarder houses with flip flops and nice clothes on. Don’t be me. Throw a change of two of clothes into a gym bag along with a set of shoes that you don’t care about and thank me later.
Toilet paper – How bad you have to go is inversely proportionate to the availability of toilet paper. Vacant homes never have toilet paper. You would rather have it and not need it than need it and not have it. You’re welcome.
Toolbox (tape measure, drill, screwdrivers, pliers, wrench, sawzall, hammer) – If I only did this early on in my career. Having simple tools available is such a life saver. You will ALWAYS need a tape measure, so put an extra one in your glove box.
Lockboxes – 250? 300? Don’t mind me, I am just guessing how many lockboxes I have bought over the years. The number is large, whatever it is. Do yourself a favor and get a box or 2 of them from Amazon.
Ozone Machine – If you have never heard me mention the words, “Ozone Machine”, then we are probably not that close of friends. If you plan on buying any houses that people, pets and/or microbes lived in, invest in an ozone machine.
Broom, dustpan and trash bags – You know what sucks? When you have a house listed for sale or rent during the winter or spring and people track in dirt and sand and trash blows into the yard. It makes a bad impression. Bring some light cleaning supplies along to reduce your DOM when you are listing something.
Gloves, sanitizerand masks – Get some decent heavy gloves, some small bottles of ‘tizer, and buy a pack of disposable masks. This was a good idea long before our friendly neighborhood coronavirus stopped by.
It seems like spring is still a smoking hot time for selling houses fast in Omaha, even in the midst of a zombie apocalypse and countrywide protests. But, it is still crucial to keep an eye on your bottom line when selling your house. These are some inexpensive improvements you can make to the exterior of your home to bring in a horde of buyers.
Add Mulch and Bright Flowers in the Spring and Summer
Adding some dark brown mulch and some bright, hardy flowers just makes a house feel like home. Daylilies and Lavender are impossible to kill, which comes in handy when you have a brown thumb like me.
Paint the Front Door a Bold Color
A pop of pastel is popular now, and can be eye-catching when potential buyers are driving or walking by the house. Cheap, fast, easy – exactly what you want in a project.
Mow and Edge the Lawn
Getting an unruly yard under control by mowing regularly is fairly obvious, but don’t forget about edging. It makes for sharp lines to add a nice finishing touch on your lawn. This is a great bang-for-buck improvement you can make for very little expense.
Adding Shutters or Painting Existing Shutters
Shutters are not all that expensive, and can really add some curb appeal when you are selling a house. It makes a plain, boring exterior look really sharp.
I would be remiss if I did not mention exterior paint for adding curb appeal. It makes a huge difference, but just make sure you choose your color scheme wisely. Remember, you are not going to be living in the home, so the name of the game is to appeal to as many buyers as possible with your color choices.
If you have a typical starter house in the Omaha area and you are getting charged more than about $2500 to paint the exterior of a house, you are getting ripped off (unless there is a LOT of prep or sanding involved).
I personally think that pressure washing blows away almost everything else in ROI. It makes a dramatic difference in almost every material on the exterior of a house. Not just siding, but sidewalks, decks, fences, driveways, even roofs can be pressure washed.
Bust out the ‘ol pressure washer for a day and you are going to put extra thousands into your bottom line. I just bought this one and have used it on several projects. It works great and should be sufficient for almost any home project.
Garage Door Bling
Blown your budget and don’t have much left for the outside? Don’t worry, we have all been there. If your loose change won’t cover a fancy carriage door, you can spend under $50 and add some hardware to your boring old door to make it look like there is a nice, new Tesla parked inside.
What are your favorite ways to spruce up the outside of your house?
Ahhh. The Smell of Money. To real estate investors, that smell is usually pet urine, decay, mold, smoke or some other strong odor that makes most retail buyers run for the hills. Now that you own the aromatic abode, how do you sink the stink? We are going to cover the 2 most common sources of bad smells and what to do about them, but first a word from our sponsor. Just kidding – I wish. But seriously, go buy one of these:
Every serious real estate investor needs at least one ozone generator machine. These things work great at drastically reducing the amount of even the strongest odors like smoke and herds of animals in the house. I buy the exact one shown above off of Amazon for about $90 (it is closer to $60 during non-pandemic times). If you get one, make sure to get one with a “Hold” setting so that you can keep it running overnight at vacant properties. They come in all different sizes and price points, but they pack a punch, so you may not need as large as you think. And don’t run it while you are in the house, genius.
Also, unless you are into buying ozone machines about every other month like me, include “Pick up ozone machine” on your honey-do list before you sell the house. I am probably on machine #10 because I always forget to grab them when the rehab is done and the house is pending sale.
*Disclaimer: I am not a healthcare professional, so please do your own research on what is safe for you to use based on your health situation and desire to live dangerously.
The Mother of All Odors. Cat urine is one of the worst, strongest smells on this earth. There is a reason that smelling salts are made of similar molecular compounds as cat pee. Is there a cat currently sitting there peeing on your floor? No? Then, your first step is to locate the source(s) of the smell. It could be in the carpet, the pad and even the subfloor if it got really saturated. Don’t forget about kitchen cabinets!
Cats also like to spray walls, so check out the drywall about 2 feet up from the floor. Turn the lights off, take a black light and shine it on the floors and walls to see what you are dealing with.
Warning: You cannot unsee this once you have done it. You have been warned.
For areas that have a small amount, douse it liberally with urine enzyme remover and wipe down/soak up as much as you possibly can. Let it dry out, and do it a few times to be thorough. There are several popular brands of enzyme removers, so choose one with good reviews and follow the directions on the product.
If you have ever bought a house like The Cat House, you will want to grab a dumpster or five, because you are going to be chucking some carpet, drywall and subfloor. In cases of serious mental illness, disability or pet neglect, owners just let their pets go in the house repeatedly and never clean it up. Cats in particular like to go in the same place, which means that it can soak all the way through the carpet and pad and into the subfloor. Yay.
When in doubt, throw it out. Home buyers and tenants can be REALLY sensitive to smells. And let’s face it, as investors who look at a lot of stinky places, we tend to get desensitized in the olfactory zone compared to normal people. You don’t have to replace the entire subfloor or drywall all the way up, just the saturated sections. You can seal the rest with a heavy coat of primer.
Have I mentioned ozone? You should be running that bad boy pretty much the whole time you are not physically in the house. I would buy stock in ozone companies if I had any money left over from buying cat pee houses.
Once you have tossed out the worst of the stank, sealed in the rest and put the pretty new carpet in, you should now have a house smelling like a field of daisies that an FHA buyer will write an offer over asking price on.
Let’s start with the obvious – air that sucker out. Open a lot of windows and get some good airflow running through the place.
For professional smoker homes, you have to get the nicotine residue off of the walls, trim and ceiling before you even think about painting. One tried and true way to scour walls and woodwork is using TSP (Trisodium Phoshate). This stuff is powerful, make sure you read up on how to best use it.
Your next investment is a high quality oil-based primer. DO NOT skimp on this part. Paint is porous, so you can’t just paint over smoke saturated walls and call it good. It will smell fine for a couple of days, then come back with a vengeance once the smell bleeds through. Kilz, B-I-N and Zinsser all make good odor blocking primers that can seal in strong smells. Oil based = strong fumes. Plan accordingly with proper ventilation and PPE.
For surfaces that cannot be painted (carpets, curtains, etc.), it is normally best to ditch the affected materials and start over if enzyme and ozone is not working.
You will also want to vacuum out your air ducts, and don’t forget to give your furnace’s A-Coil (evaporator coil) a really good cleaning as well, as it can be a hidden pocket of odor (and hair).
While you are going through all of these steps, you will want to run your ozone generator after you finish up work for the day on the house.
Now that you have cleared the air, move on to your HGTV design and try to forget that all of this smelly business even happened.
P.S. – See below for a noteworthy unpaid product placement
BioSafe makes a pretty cool technology which uses a cold fogging technique that releases a mist which kills airborne contamination and microorganisms. It is non-toxic and environmentally safe. I have not yet used the product myself, but I know several investors who have used it and swear by it. At the time of this blog post, I have heard that prices are around $.10 per sft in the Omaha area. I plan on trying it out soon – it sounds like witchcraft to me.