Real Estate Podcast

Episode 218: Rehabbing Rental Properties

brrrr method david dodge discount property investor michael slane podcast real estate 101 real estate coaching real estate investing real estate investor real estate tips wholesaling wholesaling real estate Sep 22, 2022

Show Notes

Do you want to learn how to Rehab in a Cost-effective way? Let us join David and Mike in Discount Property Investor as they talk about the differences between rehabbing to sell a property and a rental property. What are the materials and the costs needed when rehabbing each area in a house?

Things that will cover in this episode:

  • Difference of Costs when Rehabbing
    • to sell a property
    • for a rental property
  • Ways to be Cost Effective
    • Keep it Simple

Episode Transcripts

Welcome back to the Discount Property Investor podcast. Our mission is to share what we have learned from our experience and the experience of others to help you make more money investing like a pro. We want to teach you how to create wealth by investing in real estate, the discount property investor way. To jumpstart your real estate investing career, visit, the most complete free course on wholesaling real estate ever. Thanks for tuning in.

David: Alright guys, welcome back to the show. Today, Mike and I are both here and we're going to be talking about rehabbing, specifically rehabbing rentals Mike or rehabbing.

Mike: Rehabbing rentals is what I was thinking man. I think that's a good topic for today.

David: Okay, I like that idea.

Mike: And we can talk about kinda the differences between rehabbing for rehabs and rehabbing for rentals because there are some subtle differences.

David: Okay.

Mike: Are we live like you wanted to do Dave?

David: Nah, just recording.

Mike: Oh man, I thought we were doing live.

David: You told me not to.

Mike: I said do it.

David: Too late, too late.

Mike: Guys, this is only for you guys on the podcast. Podcast exclusive today.

David: That's right.

Mike: I love it. Alright, so we're gonna talk about rehabbing rentals. Let's talk about the big difference between rehabbing to sell a property versus rehabbing to make it a rental property. In my mind, the biggest difference is the finish level, meaning I'm not going to put the same type of materials in my finished products. You still want the same contractor in my opinion, you still want to use similar contractors with high-quality work and affordable rates and the fastest service. Again, you're never gonna get all three but again, you want to use the best contractors you can find. You want licensed electricians, you don't want to have any fire risks or you know, code issues. You want quality contractors. It's mainly in my brain comes down to your materials and what you're going to actually do to the property. So, material selection. Let's walk through a house virtually or at least in our brain and the first thing you walk in and you step on inside the house is the floor. So, what kind of flooring am I using in our rentals Dave? You know the answer to that.

David: Durable flooring. Flooring that's typically inexpensive, durable, waterproof, hopefully scratch resistant so we use a lot of like vinyl planks that kind of click in. We also use some peel and stick tile that's groutable for the bathrooms. We try to avoid ceramic cuz it can break and we will do some floor refinishing and/or hardwoods, but our preferred flooring of choice is vinyl planks that come in I think 3 ft planks and they click together. The coolest part about these is you can cut them with a razor blade so you do not need any special tools or saws to do, you know certain areas that may require some unique cuts, you can cut them with a razor blade so anybody that you know, not half started can install these including myself. Sometimes I question myself's ability to do stuff like these but these are very very easy to use and Mike, you know more about this than me, what is the cost of these vinyl planks? I know they probably vary and then of course you got to pay to install.

Mike: Yeah, let's talk about it. So, the vinyl plank I like again, kinda like Dave said, they're very durable, they hold up, they don't get scratches easily, they don't show the wear like carpet. So again, that was the old thing, you throw the carpet in the bedrooms or you get cheap carpet for your rentals you know, but then you end up replacing it or you're having to clean it, it's just disgusting. Carpet is gross in rental properties, people always have dogs or cats even if they're not supposed to. Again, the carpet just don't do that, we do hard surface everywhere, this luxury vinyl plank is a little bit softer because it's vinyl or it can be.

David: Right.

Mike: So, you're gonna get just a very very durable, livable flooring and it's usually going to cost between $2 and up, we'll just put it like that, per square foot. So, $2 a square foot is a pretty decent price, we get some of it on sale sometimes a little bit cheaper maybe as low as like a dollar fifty a square foot and then we have our guys install it like Dave said, all it takes is somebody with a little bit of common sense and a razor, they can cut the floor to fit pretty much anywhere. They can do around the door frames pretty easily, it's much easier than doing tile or any other type of flooring.

David: And fast.

Mike: It is fast.

David: Yeah, and you only need like one guy to do it really, essentially.

Mike: Yeah, I mean we had our contractor Dale, he did was a Gast, 2412 Gast. He did the entire upstairs in like two days.

David: Right, by himself.

Mike: It's super easy to- and it looks great. We've got pictures if you check out our YouTube channel, I guarantee we're gonna have- we've got Gast on there by the time you listen to the show, you're gonna see that property, so we walking around that one. So, that's one of the first things that we do.

David: The flooring.

Mike: It's the flooring.

David: Usually it's the biggest, you know the biggest, not necessarily a project but the biggest square footage, you know, in terms of what you're doing. Paint, that's easy, that rolls on but-

Mike: Yeah, well and cost wise, flooring is expensive.

David: It is.

Mike: $2 a square foot, a thousand square foot house, I mean that's 2 grand right there just for materials. Then, you gotta pay the guys to install it as well. So again, flooring can be expensive which is why you want to use something that's going to last for more than one tenant. Again, if I was going to sell this house or we're going to flip it to rehab it, maybe you throw carpet in the bedrooms because again, a lot of people like that, it makes it softer. I mean, it's a little bit more livable, people you know, when they you know, get out of bed, it's nice, it's warmer when you have wall-to-wall carpeting. So again, a lot of people like carpet in the bedrooms.

David: Yeah, all my college rentals have carpet.

Mike: Do they?

David: In the bedrooms. Really, in most of the house except for the kitchen and the baths. Everything's carpet.

Mike: Yeah, gross.

David: Yeah, but we clean the every year. You know, we've replaced it a couple times obviously but I feel like you can get at least 6-10 years out of carpet if you're tenants don't destroy it.

Mike: Just rash it, yeah. I was gonna say depends on what kind of tenants.

David: Depends on the tenants, right, but typically you know, if you're replacing your carpet every 2-3 years, something's wrong.

Mike: Well even- yeah. I mean again, in 6 years out of carpet, that's great but man when you're not living there, that 6 years goes pretty quick on your rental.

David: Yeah, it does.

Mike: Oh man, I feel like we just replaced that. That is a couple thousand dollars. So again, it's never a fun bill when you have to do it again and I'm not saying this luxury vinyl, we've only been using it for a few years now, it's advertised to hold up much better and we've seen it turn over on some of our units and again, like I said, it's in great shape. So again, we want hard surfaces, easier to clean, quicker turnovers.

David: Let me ask you this. Is it vinyl or is it PVC and/or is that the same thing?

Mike: You- I have no-

David: That's above both of our heads, cuz I see on the packaging whenever I help pick it up and/or go to the property and it's sitting there, that sometimes it'll say it's like, it's made of PVC. Either way it's very durable.

Mike: PVC.

David: I think it's just a type of plastic.

Mike: Polyvinyl chloride.

David: Okay so-

Mike: Vinyl.

David: Vinyl. Wow, so that's the same thing. Okay, there you go, that makes sense.

Mike: Similar, for sure.

David: Yeah.

Mike: Scientists, we don't really know what we're talking about. Clearly, it's a thousand different things.

David: (C2H3Cl) to the nth power it looks like. That's our formula here so.

Mike: There you go.

David: Either way, luxury vinyl planks are the way to go for rentals. Start with the floors. Mike, what's next? Typically the walls.

Mike: I'll tell you walls man.

David: I'd say walls too man.

Mike: So this is what we're gonna do them.

David: Paint them up, clean them and paint them.

Mike: Every property we buy, we're ripping out the carpet, we're making sure the floors are flat, we're putting in our luxury vinyl, we're going to paint them. What I recommend if you're going to be doing this to multiple properties, pick the grey that you like the most. Grey is everybody's color right now unfortunately so you're gonna paint everything gray, but no, pick your grey and stick to it. So whatever grey you're going to use, just keep the same paint color. That way you know what it is when you have to go back into that rental and repaint it. You don't have to repaint everything or you don't have to repaint it as well, meaning you don't have to go in and trim everything up again. You can literally just go and roll any of the walls that need some touch up on it. So again, pick your paint, we're going to paint everything. The other thing we do, we like to kind of upgrade our light fixtures in all of our rentals, this helps us get a little bit higher appraised values cuz what we're doing, we implement the BRRRR strategy and we buy them, we rehab them, we rent them out and then we refinance them so we're trying to increase the value or the appraised value of our property so that we can get most of our money back. We like to upgrade our light fixtures and it's a relatively inexpensive thing that just makes the house look nicer. So, mentally if you walk into a property and you've got a nice vinyl floor that looks like wood, a lot of the times, we've got wood pattern on most of ours and you've got white trim, white doors, grey paint and a new chrome or bronze light fixture. You've got- it feels like a new property. I mean, it feels like it was updated or rehabbed. That doesn't cost that much for bedrooms guys, this is cheap. Bedrooms, family room, dining room, none of that stuff cost that much money. Again, we're talking flooring, paint, couple light- a light fixture needs room, maybe a hundred bucks per room.

David: Yeah, light fixtures are cheap and they make a world of difference. Another thing that can make a house look really up- not necessarily updated but make it look cleaner, newer and worth more money I think is really what I was kind of looking for like it's going to help on your appraisals is swapping out those nasty yellow or off white outlet covers and outlet switches. Depending on the condition of the actual outlets and switches, you may have to swap those out too, right? Covers are obviously going to be cheaper cuz you don't need an electrician to do that, you just unscrew one to two screws.

Mike: I'm glad you said that, yeah.

David: One to four, might be even six on a big one, couple screws though, right? In and out, doing the outlets- doing the actual switches and the outlets themselves, I've done it before but I wouldn't recommend you do it cuz I've gotten bit by that hotline and it's just anything electrical, it's probably not a good idea for you to be messing with. So, my advice for you to be- for you would be to hire an expert, maybe even somebody that's licensed and/or has insurance on their business. That'd be the ideal way to go about doing it. I don't think you need permits to swap out outlets, but don't take my word for it.

Mike: I was just gonna say check your local.

David: Check with local cuz each place could be different. Some places may say nah, we don't care. Other's say if you touch anything electrical, we want to know about it.

Mike: Even the light fixtures.

David: Even the light fixtures. Right, so that's another great point. Check with your local people, they may say hey, you can put a ceiling fan in no problem, we don't need a permit for that but you never know and Mike whenever- Mike- me and Mike, Mike and I don't ever want to be giving advice that's going to be counterintuitive to the laws or your safety or anything like that guys. We want to be as ethical and moral and straightforward as we possibly can.

Mike: And just as helpful. So, and that's what I was glad you were gonna say that is that yeah, the covers and sometimes we'll do that on our rentals. We'll literally just change the covers and they're white and then the outlets are little bit faded, a little bit yellowish looking because they're older or that ivory you know.

David: Yeah ivory. Right, great point.

Mike: So, it doesn't look great but it still- it kinda looks better.

David: It looks cleaner, yeah.

Mike: It just looks cleaner.

David: But I really love the light fixtures guys, that just like- flooring, paint, light fixtures, boom. I mean sometimes that's it, we're done, right? At least on the inside. Now on the outside, we're going to always want to like clean up the gutters and the exterior experien- or the exterior just view from the street, a curb appeal so we want to do any cleanup before we- we're not typically planting flowers, let's put it that way.

Mike: Addition by subtraction.

David: There you go.

Mike: I like that.

David: But we will remove what looks ugly so we're going to make it prettier by just cleaning up the outside.

Mike: I'd say 9 times out of 10 properties that need a little bit of work are just overgrown, like literally it's- nobody's done anything landscaping wise in years so literally just ripping everything that's next to the house out and maybe just dumping a couple of barrels or wheelbarrows full of mulch.

David: Yeah, or even the bags.

Mike: Couple bags of mulch.

David: Get bags of mulch for 5 bucks, 50- or not 50 like 20 or 30 bags of mulch goes a long way. That's like 80 bucks, 100 bucks, right? So, that goes a long way. It may not look great forever but you know, you're gonna get yourself couple-

Mike: It's addiction by subtraction in my opinion.

David: Addiction by subtraction right.

Mike: Clean everything out, yeah outside overgrown, you're not- you don't necessarily want to add. Plants get expensive, trees are expensive.

David: Yeah.

Mike: Like there's no reason to be adding that stuff in. If you're tenants want to do that and a lot of them- I mean, not a lot but some of them do. They like to garden and put stuff in, more power to them.

David: Right.

Mike: Again, but don't spend the money on it, clean it up by removing things that are overgrown, trimming back any bushes or hedges that are overgrown. Again, just addition by subtraction outside is my motto or mantra, just take stuff out, clean it up. Similar thing goes for- I'm gonna go back inside, a lot of times in basements is addition by subtraction. More often than not, we really just want to clean up basements, just get stuff out of the basement so you don't necessarily want to spend a ton of money building walls and constructing things down in the basement. Finishing basements, you don't get the same return as you do on other projects. So, that's outside, we talked a little basement, we talked most of the main rooms, let's talk kitchens and baths real quickly.

David: Yup.

Mike: Kitchens are definitely I'd say probably the most difficult thing to manage in terms of what to do for a rental versus a flip, a flip is easy. If you're trying to get a full high ARV, you're just gonna gut it, pull all the cabinets out, open up walls.

David: Here's the way I look at it: what in this kitchen hasn't been either added or updated in the last 2 years? 2. If it's beyond that, pull it all out.

Mike: Pretty fair.

David: Put it in, right? Otherwise that means it's basically new. If it's a couple years out and it's a flip, you know, 9 times out of 10, you're going to gut it all the way out. It will obviously depend on the current condition. There have been flips where we'll leave countertops, Hilltop, I'm sorry we'll leave cabinets and we'll do just the countertops but we lost money on that.

Mike: It doesn't go well usually.

David: That was one of two deals that we didn't make money on out of 500 guys. Yeah, typically though, gutting the kitchen is the way to go and just starting over.

Mike: You know, I want to just harp on this real quick. You know why we didn't make money?

David: We paid too much.

Mike: We did not buy it right. That's all that I'm saying.

David: Yeah. That's why we always not make money which has only happened twice.

Mike: We tried to cut corners and we couldn't make money on the deal, we lost money cuz we paid too much for the house, every time.

David: Yeah, we though that the rehab would've been less and we thought our ARV was higher. Either way, we paid too much however you look at it. You always make your money when you buy, you get paid when you sell. Love it, you know.

Mike: Alright, so let's go back to kitchen. So it's difficult in our rentals to really decide where to draw the line. My brain, at least more recently anyways things, thinks: if I can save cabinets, I don't wanna replace cabinets. If they are closed- if they have the ability to be safe, meaning the doors are in decent shape and they still swing, they're not falling off, same thing with the drawers, especially if they pull out and stop and they close easily, I want to keep them. I do not want to replace cabinets, it's just an extra cost that I just feel is not worth spending. Couple reasons why, one, when you pull out the cabinets, that means you're going to have to redo all of the plumbing underneath too under the sinks. I don't want to do that.

David: Basically means you're going to need a permit.

Mike: Yeah, and I again, I want to do as little as possible. What can you do though to clean up the rentals? We love painting the cabinets, so you got two options. If it's wood and it looks kind of clean, send somebody in to clean clean clean it and then add some polyurethane to it. So, that's gonna make it look new then you can add some new handles on it so you're talking-

David: Yeah, shine it up baby, shine it up.

Mike: Mayne 150, 200 dollars worth of materials in cabinet or in handles and in the polyurethane. The other option is to paint them and add new cabinets. So, white is very popular for current kitchen cabinets, we put a lot of white cabinets in our flips and our rentals when we have to put new cabinets in, guess what? It's very easy to paint old cabinets white, cuz again it's matching so the back gets painted and the doors get painted so then they are white, new, either chrome or stainless or the-

David: Hardware.

Mike: Exactly, hardware on it. Done.

David: And pro tip on hardware guys, hardware is expensive.

Mike: Give it away man.

David: Man, so like Mike, you're the one who orders it. Is it Amazon that we go through? We buy most if not all of our hardware on Amazon, not only for the rentals but the flips too. Some hardware's five or six dollars a pop, so if you got thirty cabinets, that's you know, 5 dollars times 30, you're looking at a hundred dollars in hardware and that might not even include the drawers or whatever else. So, we buy it off Amazon, we're getting it for like maybe one or two bucks a pop and there's really no reason that hardware should cost that much, crazy.

Mike: Well, and here's the thing, we are more of a quantity type of operation meaning we want to do more than one rental and we want to do more than one flip so we're not spending a ton of time going in and picking out specific materials for a specific project. So, we found we like the bulk- I just think of two different types of cabinet pulls: you either got a bar or the little knob so that's all I really look for and we know that the chrome ones are about three bucks a pop or five bucks a pop at the hardware stores, whereas if I go on Amazon, I can find a similar one, now it's hollow inside, still metal, but it's about a buck. Like to me if I can get something that looks like it's worth about six or eight dollars for a dollar, I'm going to do that every time, so we order in bulk all of our pull cabinet pulls from Amazon. Super easy, done. So again, you take something for a couple hundred dollars worth of materials now becomes maybe a hundred bucks worth of total materials and you've got almost a brand-new looking kitchen.

David: I like it.

Mike: So kitchen, next thing is countertops and appliances, sometimes we do that, sometimes we don't. I prefer if we're gonna keep cabinets, to try to keep the countertops, but if they're dented up, if they're old laminate, get them out of there. Put in a new countertop, couple hundred bucks

David: Now appliances, we like to recycle if it's a rental property, so if we have them- if we buy it with appliances that aren't terrible, we're going to keep them. If they are really bad then what we'll do is we'll buy a set of appliances that all match at a discount. Basically we'll go to a discount place or we'll go to Home Depot, Lowe's and we'll look for sale that has something run in or you can get the microwave, the dishwasher, the stove and the fridge. Sometimes we will actually exclude the dishwasher on purpose, some of them have them, some of them don't. Also, the garbage disposal is something that sometimes in a rental we won't add cuz it just creates a maintenance item. Every property I turn over I feel like I- there's glass or plastic or something in those garbage disposals. Almost every time I'm in a property I reach my hand in there just to check them out and there's something in there almost every time so you can eliminate that completely by just removing the garbage disposal.

Mike: Yeah, and that's a good point Dave so we- I forgot, I mean when Dale goes in and does some of the rental work, if we're playing around with the sink or anything under there and there is a garbage disposal, we're taking it out.

David: Take it out.

Mike: We're never gonna leave them just because like you said, it's just a problem. It's another appliance they're going to call you about and you're gonna have a work order on.

David: Right.

Mike: They don't need it.

David: But we do buy the appliances, let's say that we get a house that has them and they're great, we'll keep them, but if we get a house that doesn't have them at all or they suck, we'll take them out and we will try to find cheap appliances that all match. That's really kind of where we're at. We don't go- we buy the lowest.

Mike: No.

David: One or two up but-

Mike: It's usually one grade up from like the lowest- if you're going new, like a home- a big box store, yes then we're going to go like one grade above the cheapest cuz normally the cheapest ones, they're there for a reason.

David: Yeah, they suck.

Mike: It's the budget one that is- it's just not gonna last quite as long. So, you wanna get maybe one step up from that and that's usually what we do. One thing I wanna say on countertops, I forgot, I saw this in one of our Facebook groups. People were talking about the countertops and they put in a laminate which is a cheap- you know, it's the wood with laminated top over it if you're not familiar with laminate, it's probably- it's when you knock on it, it sounds like wood.

David: It's basically most countertops that you would buy at Home Depot or Lowe's.

Mike: Or granite is going to be your laminate countertops.

David: Sometimes they look kinda like granite but it ain't.

Mike: This is exactly what they were talking about. They were talking about how the countertop, it didn't match up, the pattern didn't match up and should they be upset with the contractor, and my thought was you have no idea what you're talking about. This is a laminate countertop, of course, it's not- the pattern of the stone isn't going to match up.

David: Oh, like on the corners?

Mike: Yeah.

David: Yeah.

Mike: It's a laminate countertop, if you wanted some-

David: They didn't cut it in an L, they had two long pieces and they cut 45's on both and they connected them.

Mike: Yeah, and they were upset that the contractor did it. I'm like man you- if you wanted to match up-

David: Yeah, that's just inexperience.

Mike: And that's what we do is we take- we have a more solid pattern. It's a pretty black pattern is my preferred. I know Bill uses more of the marbled ones like the gray and white, I just prefer the black cuz there's almost no pattern to it so you just got bam, just always matches up.

David: Yeah, it always matches.

Mike: It always looks clean.

David: Right.

Mike: And again, so that's what I prefer, but everybody's got their own preference. Why do we not use granite? Just cost.

David: Yeah, it's just cost. Sometimes we'll use the thin granite if we're trying to get a higher appraisal on it, but typically we don't.

Mike: Pretty rare.

David: Pretty rare, exactly.

Mike: I mean, it's pretty rare we're gonna put granite in the rentals and I know some landlords that are very different and they say, oh, I put it in all of them cuz it holds up and it's never going to get whatever, well people can chip granite.

David: Yeah, oh yeah.

Mike: People don't take care of it, you can mess granite up.

David: The guys putting it in sometimes break it.

Mike: Yeah.

David: Yeah, totally.

Mike: Again, that's just-

David: If you ever have anybody getting up on the counter and standing for any reason, you're gonna have you know-

Mike: 100%, or if they again, who knows? I mean, big old heavy-

David: And don't try to tell me you don't stand on your countertops. Come on, I feel like-

Mike: Everybody does.

David: I feel like I'm up on my counters at least once a month trying to dig to the back of a cabinet or something right? Like come on. Or if we're drinking and it's friday night, you never know.

Mike: People are sitting up there.

David: Somebody may be up there, right.

Mike: Exactly.

David: So yeah, just go with the durable stuff. That's the kitchen though, let's not overthink it. Next is the bathrooms, we've already talked about the floors and the paint. Toilets, you know, you can only clean a toilet so much so if you're buying a property that's disgusting, swap it out, you know.

Mike: What's funny all these too is that-

David: And they're cheap.

Mike: Well, and they've changed. It's so funny because toilets used to be all these little circular things. Now,  almost all-

David: Elongated bowls.

Mike: Elongated bowls with a little bit higher seat height.

David: It's more comfortable.

Mike: It's much more common, it just looks like its been updated.

David: Yeah, they hold more water, but not only in the reservoir, but in the bowl itself, I don't want to get too detailed here.

Mike: But they flush better.

David: But they flush better, that's the point, right. So toilets, you're talking you know, a couple hundred bucks, swap them out if they're gross. It's not even worth trying to clean them sometimes. Vanities also are really inexpensive and depending on the size of a bathroom, sometimes you can put in a smaller vanity but it has a bigger bowl meaning that the size of where the water is collected may not even be smaller but the vanity itself is, so it can make a bathroom look larger. Regardless, vanities, they're really inexpensive so I'd say replace the toilet, replace the vanity if it needs it of course. Last but not least, we have our tub, our mirror and our lighting. So, mirrors are cheap, if we buy a house and it has a mirror, we typically don't replace it. Why would we do that unless it's broken or dirty, right?

Mike: And if you're talking about just mirror.

David: Just mirror.

Mike: Right.

David: Right.

Mike: But then sometimes, it's got a wood frame around it that just looks old or is a funny color, you can pop those out like you said.

David: Pop them out.

Mike: Relatively inexpensive, 1500 bucks.

David: Or just paint it whenever you're painting the walls, maybe if you gave it a white trim or something like that, right? The light fixtures, we probably had already done with the rest of the house, we won't need to mess with that. All bathrooms should have a fan, that's one thing that we look for when we're buying properties not only to rent out but o flip is does it have a fan and is that fan vented properly. You're not really supposed to vent a fan up into you're attic, it's actually supposed to be vented through the roof, so just kinda be aware of that. If you do have a fan that's vented up into the attic, you may have mold issues. Last but not least in the bathroom will be the tub and the walls, so sometimes when we're buying properties that we decide to rent or they've already been rented for several years, they may not have had any major renovations done and they may have those old green or yellow or pink tiles. I think it kinda depends on where you live you know cuz there's older parts of the country that had maybe been doing more construction during those fads then, you know, maybe other parts like I doubt you're going to see a whole lot of those pink tiles up in- you know, maybe though, like on the West Coast, maybe.

Mike: I bet I've seen more of them.

David: Maybe you do, yeah that's true, that's true. Either way, we can glaze those tiles and we can also glaze the tubs, assuming the tub is a ceramic tub and really what that means is if you have these old pink, orange, yellow gross looking tiles and/or a ceramic tub that maybe got some rust on it or it's just starting to just look dirty, you can clean them up, sand them down and you can actually paint them with what's called a glaze and all it is is a paint that dries rock hard so you can't necessarily like scratch or chip it is as easy as you would like some paint on the walls. It's not a latex based paint, it's something else like a ceramic base paint or something.

Mike: I honestly don't know. All I know is that it's-

David: Maybe an epoxy based, who knows, but it dries super rock hard and it's also really really good for water resistance. Like if you throw paint- or water on a wall with paint on it, you do it a couple times eventually that water is going to get through that paint into that wall. Well with this particular type of glaze, it's water-resistant type paint so it can make a old tub or old walls in a bathroom look brand-new with just a simple coat.

Mike: Right, so that is good for a cosmetic, so then here's the fine line difference on that. If the tub and the tile are in decent shape, like it's not falling apart or like mold eating through it, just looks absolutely terrible, then this is a great option. Another way this can help you save money though is if maybe a couple tiles have falling off but it doesn't look like there's water damage or anything behind there, you can get mismatched tiles, meaning-

David: Miscolored.

Mike: Mismatched colors.

David: Yeah.

Mike: Get them put in and then have it glazed and it's all going to be white or grey or whatever color you opt for.

David: And typically the guys you hire to do it, they have like 40 tiles in their truck, you know, of different sizes to where if they needed to patch a couple, they can make that work, but that's a great point Mike or you can just go buy the same size tile, who cares what color it is, and then you're going to glaze all of those tiles. So, start with the toilet and the vanity, if you have to replace them, go for it. Also, whenever you pull the toilet up, it's a great time to put the flooring in the bathroom. You can always use the vinyl planks and cut around it, but it's going to look the best if it's sitting on top of it, it's also going to be the most secure, it's not gonna be wobbly. Start with the flooring and then do the toilet, maybe the vanity, glaze the tub and/or the walls. If, as Mike said, they're in great condition and it's ceramic and you can do so. If it's like a plastic tub, or maybe a fiberglass tub, you maybe able to bleach it and clean it real good, otherwise you may have to just pull it out and swap it out, put a new one in. Tub surrounds are also really great ways to save on the costs. You can sometimes put tub surrounds in over existing ones or you can just rip them out and put them in and basically you just use like some really.

Mike: Construction [inaudible].

David: Contractors grade adhesive and caulk, that's it. I mean, it's very very very simple, you can probably watch a couple YouTube videos to learn how to do it and be a pro that quick, it's nothing to it.

Mike: One thing I did which I will never recommend is using someone like a bath fitters.

David: Yeah, you're just going to pay more than you should.

Mike: Thousands of dollars. Now again, if you have a tenant living there and they're saying oh this is really bad yada, yada, you don't have many options if that's your only bathroom and you need to get a new tub in, like, it's very very difficult to have- I mean, it'll just be impossible.

David: Well, just turning over a bathroom in one or two days is tough, especially if you're ripping out a tub because typically the tub-

Mike: Is wall-to-wall in most of these little bathrooms.

David: Yeah, and you gotta think typically, the tub is sitting on the subfloor and the ledges of it are underneath the tile and/or-

Mike: The drywall.

David:  The drywall and/or the surround, so basically what I'm saying is if you have to rip a tub out, you're basically gutting that part of the bathroom, so gutting the rest is either going to be simple or you know, so on so forth but-

Mike: Right. So, love those bath fitters guys when you absolutely need to.

David: Need them, right.

Mike: But it's gonna cost you significantly more, and again, it's just not, in my opinion, quite as good as having a new tub installed.

David: Yeah, the last thing I would really mention Mike, and you may have some other things of course would be, you know, maybe a couple water fixtures, if necessary, you know, they're kind of like light fixtures. Usually your water fixtures are going to be a little bit more expensive than your light fixtures, not necessarily, but they will make a big difference. If all the faucets in your house are 60 years old, hey maybe it'd be a good idea and a time to go upgrade or update some of those faucets. You know, you're not typically going to have a lot of water fixtures which is a good thing.

Mike: Well, and that's-

David: At least not as many as light fixtures unless you have a 47 bathroom house.

Mike: So, relatively inexpensive and we prefer to use the name brands so we like to use the-

David: Kohler's.

Mike: Kohler's and the Moen's cuz again, buy it for looks, buy it for life, that sort of thing. They just last a little bit longer, like they hold up better. So, there's nothing worse than when a tenant moves in and then they've got a leaky freaking faucet 6 months later, 3 months.

David: Yeah well, and the thing that sucks is it's in our best interest to replace those because some tenants won't call and then you got a- and then it's leaking under the cabinet and then before you know it, that whole thing's rotted out.

Mike: Or you're paying the water bill or the sewer bill.

David: Exactly.

Mike: So, I literally went into a property that I was selling, this was the little [inaudible] one I just sold, and it was in one unit and I thought the sink was on, just running water.

David: And it was just- that was in the off position.

Mike: Yeah, and I said hey you got a leaky sink or whatever. He's like oh yeah, I was gonna call about that, I forgot.

David: And how long has it been running? A year?

Mike: Couple weeks, yeah like Jesus. Again, not even the just you're wasting water thing like what?

David: Did he not pay the water bill? Is that why he didn't care?

Mike: No, cuz it was an apartment building.

David: That's why he didn't care.

Mike: Don't care at all, like how do you not care at all?

David: I don't know. So yeah guys, other that though like you know, last- the other thing I would say maybe and this isn't even necessarily required but baseboards and doors. You know doors, relatively inexpensive, they can be. Baseboards are going to typically cost a little bit more cuz it's going to be kind of laborious but you know, if you are using the BRRRR strategy let's say for example, and you don't need a new bed, you don't need a new kitchen or new bathrooms, but you have to do some updates, you know, to show the bank that you have made significant updates to the property, putting in new doors and/or you know, trim like the the door frames / baseboards can really really make a house look great. Now again, not required, Mike and I don't do this on every property. In fact, it's probably only like maybe 1 in 5 to 1 in 7 that we're messing around with the doors and the baseboards, but it is a great way to make a property look new and updated for relatively inexpensive.

Mike: So, it used to always be the six panel doors would be-

David: Yeah, like $40 for a six panel door.

Mike: It used to be like the cheap doors or the flat ones, so a lot of times you just got a solid flat door, it'd be like a cheap one in an older home. So, six panel is always- my dad used to always talk about them, it was 15-20 years ago he was like oh, we gonna get- add six panel doors, it looks so nice yada, yada. Well, it's funny because it's changed now. Six panels-

David: It's flip flopped.

Mike: Six panel doors again, are relatively inexpensive but again they look better than the flat doors, but for our flips, six panels aren't what we use anymore. I feel like it's the two panel or I don't even know know what they're called, that's what I was googling.

David: Yeah, it's something just a little bit different.

Mike: Well, it says two panel shaker or what's this? This is a four panel slab so, and then, I think- what do you have in your house? Don't you have the ones where it's kind of round looking on the interior?

David: Yeah, mine are two panels shakers.

Mike: Yeah, it's two- is it shaker like that?

David: But they're solid though, yeah.

Mike: Yeah, so anyways-

David: Solid wood doors, right.

Mike: On the rental?

David: You pay a little more for the solid core.

Mike: Right, on a rental though, if you're going to do upgrading the doors, probably 6 panel again, just because they're rela- they're pretty abundant at your big box stores so that makes them relatively inexpensive and easier to find. So, the six panel look is probably what you're going to go for and again, it does look nice. It's just not- it's not the high-end like you would for maybe a flip, so these are perfect for your rentals.

David: Yup, and that's it guys. I mean again, look at the curb, you know, look at the house from the curb, does anything major stick out? Right? Mike said it really really great earlier, we are going to do addition by subtraction, I think that was how he worded it. So, what that could mean too is like if it has shutters and they're all like paint peeling, you might be better off just ripping the shutters off the house than trying to go paint them, sand them, replace them, you know, it's just it's going to depend if there's fade marks behind them or not. You know, if it's on brick, maybe you just pull them off, you know. So, the idea with the rental is to update / upgrade the property but yet be cost-effective and keep the cost on your mind. When we're doing our flips, 30, 40 grand, that might be a light rehab, you know, like we might easily spend 50-90 grand or more in some cases.

Mike: Oh, we spend a lot yeah.

David: Yeah, but like on a rental though, I mean, our goal with a rental is you know, keep it somewhere between like 5 and 20, you know.

Mike: Exactly. I'd say 15k is a pretty good rental number.

David: Sure, but there are some you can buy and get into for less 5 grand.

Mike: 100%.

David: But yeah, you're going to see less of those, but yeah 5-20 is kind of where you're going to want to be. You want to shoot for materials that are going to be somewhat bulletproof, you know, not completely of course, but like have more resiliency to wear and tear than the other materials. So, like if we ever are doing drywall work, you know in a particular place, we'll opt for the thicker drywall in some cases because it's going to be more bulletproof. We're going to use the floors that are going to be scratch and dent resistant aka vinyl planks, you know versus the hardwoods. The rentals, they don't have to shine per se to be able to get them rented whereas those flips, they do because you're selling them.

Mike: I like that-

David: So, your different accents.

Mike: Yeah, you're kind of putting lipstick on it versus giving it a full makeover.

David: Right, giving it a bath man, just like giving them a bath.

Mike: Yeah, clean it up. Clean that thing up.

David: Yeah, exactly. Whereas if you do the full makeover, you're often gutting stuff down to studs / subfloor / breaking concrete out to run new drains and new plumbing and-

Mike: Adding bathrooms.

David: Adding, yeah exactly. It's a whole different ballgame especially on the outside. You know it's a rental, we're going to add by subtracting, but if it's a flip, we're gonna not only subtract all the stuff that sucks, we're also going to add stuff to make it look better. You know, mulch, maybe plants, you know sometimes we'll replace soffit or gutters just because they're ugly. They may be just fine but hey for 2 or 3 grand, we can add some really nice clean ones and it may be worth it. So, you're going to have different approaches to the rehab for a rental, and rehab for a rehab. Keep it simple though guys, don't overdo it. That's probably one of the biggest mistakes that I made in the beginning of my landlording endeavors was I would go in and I would rehab a property as if I was moving into it and you know what? It's okay, cuz I still own a lot of these and when I go to sell them, I'm going to get a little bit more money than I would have if I would have done a , you know, a slightly lower grade rehab but it's not- you don't need to do it. So, if I were to do it again, a lot of these rehabs that I did in the very beginning, I was putting in ceramic tile and I was going and buying that faucet that was $260 that was like beautiful, and at the end of the day, one that was 120 would have done just fine you know. So, don't over rehab your rentals I plead with you.

Mike: Yeah, that's the- I'd say that's the biggest thing. Make it nice so that- I think, here's a great way to look at it Dave: not like you're going to live there, rehab it to where if you had to live there.

David: If you had to. There you go.

Mike: It would be-

David: Would it be sufficient? Yeah.

Mike: Yeah, because again, we want nice homes for people. We're not trying to be a slum lord.

David: No.

Mike: But if you had to live there-

David: Yeah, but you're talking a difference of 15 and 25 thousand on your rehab budget by having nice materials, like the labors going to be pretty fixed, maybe a little more for nicer materials cuz they may require a little bit more time to work around or work with, definitely tile you know. But in the scheme of things though, that's a great way to look at it Mike. If you had to live there, would it work for you? Don't rehab it to move in cuz that's kind of how I was looking at all of mine.

Mike: Me too.

David: I'm like man, I don't want to live in this place like this. Like, let's do this, this, this, this and this and before I knew it, I had 10 things that weren't even necessary that were just getting updated. Again, not a terrible thing but if I could do it over again, I wouldn't do that. Mike, you want to close us out? Any final words?

Mike: Let's just go back to you make your money when you buy. Make sure you guys buy at a discount. Buy good deals.

David: Buy good deals. Make your money when you buy, you get paid when you sell. Signing off

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