When looking for a rental property, Brandon Turner at BiggerPockets.com actually proactively looks for problems. He says it’s entirely possible to buy a rental property that is 100% finished and great, and perhaps for you and your business model, that is what you should do. But for Turner, he wants to find problems that he can fix. If he buys houses that have problems, he finds those problems got him a better deal.
“It’s simple: when most people encounter the following eight problems, they turn around and walk out the door, repulsed and say, “No way!” I walk into that same property, take a look around, and start to get excited. In fact, it’s hard for me to be excited about a property that doesn’t have problems! It’s the fear of dealing with problems that drives most people away, and with less competition, I know I can find better deals.”
The Bigfoot Smell
Bad smells are one of the easiest problems to fix in a property but one of the things that drives away 99% of the competition. Bad smells are generally caused by the following, none of which are difficult to solve:
The Hidden Third Bedroom.
Two-bedroom homes, generally, are not a good buy for a rental property. However, there is one case where Turner gets very excited about buying a 2-bedroom home: when there is a hidden third bedroom. For example, an ad for a house said it was a two-bedroom house with an office. The office was fifteen by fifteen and was more than big enough for a third bedroom. The people looking for three bedrooms immediately passed on the house. Turner says as a 2-bedroom, the property was worth about $90,000. However, as a 3-bedroom home, that same house was worth closer to $115,000.
Ugly Countertops and Cabinets.
Most people don’t realize how easy it can be to transform an ugly kitchen into a modern, beautiful one with just some new counters and a fresh coat of paint on the cabinets.
The Bad Roof. Turner likes finding properties that are in desperate need of a new roof, because it scares off a lot of the competition, and getting a new roof is not a difficult process. He can usually get the current roof removed and a new one put on for less than $6,000, and it’s completed in just one or two days.
Mold is one of best problems I look for when buying a property. Mold is a scary thing to the average consumer, maybe even to you, but it shouldn’t be. Mold is not a random occurrence. Eliminate the moisture, and you eliminate the visible mold! The only mold I would really worry about is mold in basement walls. It indicates water is seeping in through the foundation. Fixing a bad, leaking foundation can be incredibly complicated and expensive, so unless you are more experienced, I would steer clear of those issues.
Homeowners want open floor plans. Properties that are severely compartmentalized are not as desirable to the average homeowner. In a rental property, you can pick up a house for less than other similar homes, but it might not rent for any less. Compartmentalized properties can be “opened up” fairly easily to modernize them. Usually, for less than $2,000, a contractor can go in and tear out a wall to open the property up, increasing the desirability, and thus, its value.
Landscaping is not a terribly difficult or expensive thing to clean up, but the bad condition can drive away the bulk of the competition and help you snag a great deal. It’s amazing what a simple cleaning, mowing, and edging can do to a property, and typically for less than $1,000, a problematic landscape situation can become a nice yard.
Junk, Junk, and More Junk.
I bought my first house with the basement filled with small rooms filled with things the owner collected. Every kind of screw, nut, and bolt sat in jars on shelf after shelf. It was impossible to see the size of the basement. A few drop boxes and manual labor and I could see the perfectly good basement.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple truth about your home and how we can help you sell it fast to resolve any situation.
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