New Construction Choices: Rental Vs Flip

[Jonathan Z.]

My partner and I have recently decided to hold a new build that we were originally planning on flipping. Our plan is to refinance the property and leverage the equity (and also take out an equity line incase we may need it at some point) to fund future investments.

Are there any changes in the construction itself that someone who has done this before could recommend we make to make it better for rentals? It is a two Family 3bed/2bath + 2bed/1bath split in an up in coming suburb of Boston, MA.

Thanks!

[Mike Wood]

@Hanna C.

To address some of your comments.

Recessed lighting - I use recessed lighting everywhere but bedrooms.  In bedrooms I put a single ceiling fan with light. This is a personal choice, as I do not like dark houses.  The recessed lighting will add costs, as they can easily cost $50/each.

Drywall - My houses use a level 3 finish.  Nothing too fancy, as the use of paint rollers will add some minor texture.  I do not let the drywall guys apply any texture, due to repair concerns.

Bathrooms - I use tile for the floors and tub surround.  I use decent fiberglass tubs (American Standard).  Basic toilet and a wood vanity with solid surface top. I try and avoid particle board vanities, as the water will eventually cause issues.

Floor - I have used vinyl plank flooring on one of my units. It was previously carpet, and I pulled it and replaced with vinyl.  Not a bad product if that is the look your going for.  On my new units, I am installed hardwood floors, that the renters see the value in them and I can get more rent.

Cabinets - I use the flat packed plywood and hardwood cabinets from China.  There are tons of cabinets places around me, and the prices are better than the big box stores (we do not have Ikea).  Ikea does have more modern design choices with cabinets, but I prefer real wood over particle board.

I try and select trim that is simple and easy to clean.  A baseboard with tons of grooves might look great new and clean, but after a few years all the grooves catch dust and dirt and its a pain to clean.  It is also harder to paint when the unit needs another coat.

On the outside, I dont want anything that requires regular maintenance.  Generally, the renters are not paying attention to things, so anything that needs maintenance will usually go longer than it should.  I have stopped using any wood trim on the outside of houses.  All exterior doors use PVC frames, so that I dont have to worry about the paint flaking off and letting water in.  I have had to replace almost every older door frame on my units that was made of wood.  They start to rot out at the bottom. When I replace, I use the PVC door frame parts.  I am torn about composite decking.  I have used it on some projects, not on others.  Price is a big driver on that.

As for hardware, I dont go fancy. The exterior door looks are the Smartkey locks, so that they can be easily rekeyed.  Other than that, pretty basic stuff.

I use the cheapest mini-blinds they sell.  They are going to break and get damaged. Not doubt about it.  No need to spend $100 per window, when you can get them for $5 and they are super easy to replace.  I install mini-blinds on all windows. I dont not have to worry about tenant putting up and taking down curtains.

I install in unit washer/dryers.  It allows me to get a better rent price and attract more renters. 

I use low end SS Frigidaire appliances.  I like the look of SS, as do most of my renters.  With the Frigidaire brand, there is only a minor cost upcharge from basic white/black.

The two times that are likely spurges are hardwood floors and granite/quartz countertops.  This is driven by the market and the type of renters I am going for. I can better tenants and more rent.

Hope this helps