Posted by Tony Colella on June 16, 2006 at 12:25:40:
There is a fine line when it comes to ammenity creap (as we call it). All housing, hotels etc. face this balancing act. As long as we are adding things that actually make us money, provide ongoing cash savings, limit repairs (or make the easier and faster) or we have proof that they cause a destinct reduction in vacancy or vacancy time, then it is a good add on.
Look forward to meeting you at the boot camp.
Tony
Ready, Fire, Aim ! - Posted by Tim (NC)
Posted by Tim (NC) on June 13, 2006 at 11:20:18:
I had my offer for a land/home deal accepted yesterday and I need some advice with improvements and repairs. I know it would have been better to get everything planned before placing the offer but if I waited until I had all the answers before doing anything, I’d never get off the couch. Here’s an outline of the deal. It is a 30 yr old 3br/1ba 28X45 on 0.33 acres of land that I’m gettting for about 65% of tax value.
The owners built a heated 10X30 addition along the back that looks solid but is unlikely that they took out a building permit had their work inspected. Do I need to get this addition inspected by the county prior to closing or should I just look at this as a bonus. Can this be an issue during an appraisal or future tax revaluation?
The kitchen has a small counter with a sink but doesn’t have any cabinets. Should I install some used cabinets to make the kitchen more tenant friendly?
There is not a brick/block foundation. I would like to refinance in about a year. Should I go ahead now and do the foundation or wait until the bank requires it next year?
The only bathroom comes complete with a thick culture of black mildew around the perimeter of the yellow tub and scummy shower door. I think I could spend a day replacing the caulking and cleaning the crud and still wind up with a 30 year old tub. The sliding shower doors and their tracks will always accumulate crud and need continual attention. I’m considering ripping the whole mess out and replacing it with a newer white tub and matching surround. I’d put in a washable shower curtain like what you normally get in hotel rooms. Is this a waste of time and money or is this considered a landlord friendly improvement?
I appreciate your comments and look forwart to meeting with many of you at the August bootcamp.
Regards,
Tim
Re: Ready, Fire, Aim ! - Posted by Tony Colella
Posted by Tony Colella on June 13, 2006 at 16:50:55:
Hey Tim,
65% of tax value may or may not tell us that much as we invest based upon cashflow - After the cost of fix up, which it sounds like you have a good deal of.
Landlord friendly repairs are more important to me than tennant friendly. I let tenants buy shower curtains or I put a cheap $4 one from wal-mart if necessary. I don’t clean shower curtains and neither do tenants in many cases. They get tossed out before the next tenant arrives.
As for the addition. I have bought many properties with harry homeowner improvements. I cannot speak for you or the inspectors but as far as I am concerned I am buying as is with a significant discount. I make certain that the improvement is safe and landlord friendly. It needs to be appealing of course or the cost of removal built in the purchase price and terms.
Mold and mildue will build up in houses left vacant for an extended period of time. Outdoor type bleach and water mixture does wonders. I then determine if a leak is present and make any necessary repairs.
If the tub is intact then I would bleach and caulk atleast for the first tenant or two and then reavaluate. Kitchens and baths are the most costly and time consuming remodels. Get some cash flow first if you can.
The same may hold true for waiting on the “permanent foundation.” Most banks will require but not all do. We have done refi’s without the block foundation.
I am a believer in not spending money that I don’t have to. If I can build up some cash flow first I would do that.
Tony
Re: Ready, Fire, Aim ! - Posted by Tim (NC)
Posted by Tim (NC) on June 16, 2006 at 10:52:01:
Thanks for the advice Tony. I agree that spending less money is the best course but, I’m still a newbie (just a couple Lonnies), so it still isn’t clear when the money needs to be spent to get a decent tenant and when the money is wasted creating the “doll house”. Experience is a great teacher but it is also expensive. Looking forward to you and Scott accelerating my experience level at the boot camp.
Regards,
Tim