Why isn't the design aspect of REI discussed more often?

Question

I've listened to several podcasts, browsed the forums and read some of the books, but I've yet to find any real emphasis or discussion about the design aspect of real estate investing. It's true I'm a complete novice, but it seems like smart, economical, quality design should be a talking point whenever rehab or house appreciation is discussed. I'm curious to know why it isn't.

In David Greene's BRRRR book, he does outline a few house hacks, but those are mainly just tips to save money on materials not how to create a beautiful space that has sellers and renters knocking down the door begging to place an offer. Call me crazy, but my guess is that many real estate investors don't specialize in interior design which is why I'm curious to know why there isn't more discussion about design resources and adding a designer to your investment team.

I'd love to hear your thoughts, suggestions and if I completely missed some article, blog post or forum topic that talks about this very subject, please pass it along.

Dorene Mangels-Bacalhau · Answer

Why flippers don’t focus on getting a Designers help is possibly for a few reasons: 1)they don’t believe they need it 2)believe it’s too costly 3)they knock off popular selections or follow what a sales person steers them to buy. Truth is design is not cookie cutter & while some things might work in multiple applications the angle a designer brings is that the overall style of the house and the materials chosen create a fresh relationship that speaks to buyers. @Christine Heartsill brought it up it’s the WOW factor that’s needed. It’s not just the materials that are selected it’s the creative way a designer specifies the application and even without furnishings each room flows. Staging becomes the icing on top but the style and craftsmanship is a total package thanks to a designer’s input.

I love working with builders whether in person or remotely.

Christine Heartsill · Answer

Thanks for bringing this up, @Jocelyn Gardiner!  I have often wondered this also, and @Bill Brandt and @Taylor L. bring up some good points but also some misconceptions.

I think it's not talked about much because of the misconceptions...one of which is that everything has to be plain Jane neutral to sell because homeowners are just going to change it anyway...that belief will get many investors into some real hot water. In fact, I know of a big player here in Houston who lost NOT 10s of thousands of $$ but up to the tune of $200k on a couple of properties that he REFUSED to make sure the design (colors, kitchen layout, special fixtures, and finishes) set that property apart from the rest. He and I went round and round and I told him that he could spend a few thousand $$ to fix, instead, he chose to lose even more money on holding costs and lowering the price because everyone that walked into those homes walked right on out because they were just plain ugly.  I tell my clients "DON'T LET THIS BE YOU!"

Buyers are WAY too design-savvy today!  They don't want to walk a house and say "oh that light fixture is cheap and ugly, we'll have to replace that. Oh and this flooring is terrible that's gotta go. And why didn't they install the cabinet hardware, we'll have to find someone to do it for us after we move in."  Who wants that!?!?  They want to walk into a house and there be some WOW! factor that speaks to them on an emotional level and make that house their "dream home". You'd be surprised at the herd mentality of home buyers that latch onto certain design trends on the market today. It's pretty easy to give your flip character without turning off buyers.

I agree that as a designer, I can't go too crazy with finishes and fixtures that stand out too much but I certainly can, and do give the home some character, and that touch of WOW! factor that really draws them in. I also have a strong understanding of real estate and investing. Which if you do ever hire a designer, they MUST know and understand the goals and budgets of real estate investors so they don't design beyond what the market can bear.

Lastly, hiring a design not only helps increase the value of your property but they also save investors a TON of time.  If you just want to be a boring "builder basic" flipper, use the same fixtures and finishes for years and years but if you want to set your flips apart and help them sell faster, you have to mix things up a bit and picking those finishes is TIME-CONSUMING!  We help take some of that responsibility off your shoulders and leverage your time to go out and find more deals!

Hope that helped answer your question, Jocelyn!!

Bill B. · Answer

Interior design (unless you mean architectural design) like colors, floors, materials, etc are mostly meant not to turn people off. I’ve seen houses where people spent thousands adding a flashy backsplash, or “interesting” floor or recently “accent wall” and the first thing the new buyer does is remove it.

You’ve wasted money. And that’s when your potential buyer put in an offer anyway. What about the potential buyer that just walks out, or chooses something else instead. Your tastes are not the taste of the average home buyer or the average renter.

It’s like these ridiculous made for tv flip shows. Every few months you notice they all switch to some tile design, or new flooring, or some other such thing. That just happens to be advertising on that network. Every show switches almost at once.

If you’re renting stuff out, use the same fixtures, paint, flooring, etc, on every house. Your handyman knows what he needs to fix a problem and you have the supplies to fix problem.

You know why interior designers have jobs? Because everyone likes something different. Otherwise ikea or Walmart (depending on your budget) would sell “rooms” where you installed a package in to your room.

Jocelyn Gardiner · Answer

Thank you all so much for your responses. It's interesting to hear all the different points of view and what has worked and not worked in your experiences. One of my favorite parts in David Greene's BRRRR book is where he talks about the emotional response buyers need to purchase a property and I agree with Christine Heartsill, that people want to be wow'd when walking into what could be there future home. I realize this may apply more to the flipping aspect of REI, but after reading many of your comments, I feel like there is a niche here that could be filled by savvy designers who understand both the investors' goals and the power of provoking an emotional response from buyers.

Taylor L. · Answer

I agree, it's not a big focus of most RE investing books. Design changes and updates are one of the biggest ways we can differentiate a property and show off updates.

The construction team on our most recent syndication just updated the exterior and a few interiors with some new paint and a new sign. It makes a huge difference on the first impression you get of the property, not to mention how much more upscale the interiors are with some fairly straightforward renos. Common practice in the syndication world.

Reasons why it's not mentioned, just my impression

• Most real estate investors are not designers and aren't really qualified to exposit on the topic
• Design tastes change so quickly that anything written in a book changes by the time the books are printed
• Good design varies throughout the country, so it's difficult to say what works across the board

That said, I think that by noticing this hole in the market you are required to become the market leading expert on real estate design thought leadership! Fantastic topic.

Cody L. · Answer

To be frank, design (inside and out) is my company's biggest flaw.  I'm terrible at it, and I don't have anyone on staff good at it.  I have generic workers who can do whatever is asked of them, but they can only do what they're micro specifically asked to do.I've tried, to no avil, to find companies or people who do exterior / interior design as I'd love to give my portfolio a make over.  I have the capital and manpower to do it -- just not the design expertise.

Mike Dymski · Answer

It does not take an expert designer to sell or rent most B and C class properties (especially with current market conditions).  We put down LVP, matching paint, new fixtures and hardware, and a glass back splash and the residents absolutely love it.  I have worked with paint experts and had higher end flips staged...it helped (I think).

Jim K. · Answer

I think it also has to do with how design in marketed in the business. There are too many designers talking about how "this looks good" and how "this really makes me feel something" not to mention "this is really popular" and the omnipresent "I have impeccable taste," and not enough discussion about evidence-based results: "This design will help the house command a higher price when sold and this is my fact-based evidence to support this hypothesis." People buy McMansions, good taste need not apply.

Alexander Felice · Answer

design is subjective. So the more personalized you make something, the higher potential to disuade potential buyers/renters as to entice them.

For rentals, when you have a small one person operation who doesn't know anything about design, there is no possible return on investment for hiring it out.

Lots of flippers use designers and staging companies becuase there is a higher return on the sell side than the rent side.

Also, real estate is mostly dudes, what do us brutes know about making things look nice? ;)

overall I think there is potential in putting time and effort into good design if you have that skillset alreay. If you don't it's  I can't see it being something that will ever have a high enough ROI that would warrant spending time on it versus spending time learning how to properly underwrite, find deals, etc

Why isn't the design aspect of REI discussed more often?

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