In our weekly meetings, while we talk about several topics, nothing more dominates the conversation then the renovation and how to improve. While several factors must come together for a property to provide consistent cash flow, none is more important than the renovation, which sets up the property for long-term success. The renovation is the most important part of our process to accomplish our Mission Statement of providing sustainable cash flow. While it is easy to be captivated when evaluating the sheer purchase price vs. cash flow numbers of a deal, if you are not considering the overall condition and age of major systems of the home, those projections are likely unachievable without a solid rehab designed to reduce vacancy and maintenance. Equity achieved by doing the bare minimum renovation will almost always be taken back in the form of reduced cash flow through excessive maintenance and higher vacancy. The reason we say higher vacancy is because your home will be competing with better homes in the area–we make sure your home is putting its best foot forward to attract qualified tenants. Good homes attract qualified tenants, dated homes attract what is left over.
If you are going to leverage a home, you are leveraging everything in that home, thus it makes sense to purchase a well renovated home where deferred maintenance items have been addressed. A $5,000 roof on a leveraged purchase only cost you $1,000 with your 20% down purchase. A roof installed after your leveraged purchase will not only cost you the full price out of your pocket, but also property management maintenance fees too.
Our renovations focus on increasing cash flow by addressing deferred maintenance, replacing items on the back end of their lifespan, adding upgrades that are more tenant-resistant and providing a great-looking property that prospective tenants will not want to move into, but stay while they are in the tenant stage of their life .