Renting recent REO property?

Question

We recently paid cash for an REO in Debary Fl (just outside Orlando). We've decided that it would make more sense for us to rent it vs flip it. The question now becomes "how to we fix it up?". For example, we originally thought we would refinish 700+ sq ft of hardwood floors (some are in bad shape, but salvageable). The cost came in anywhere between $2100-$2500. I dont know if its worth putting that kind of money into a floor and then having renters. Another 300 sq ft room has wood paneling, but no drywall behind it....is it worth it to add sheetrock and rent? The ARV would be somewhere around $100-$109k, and similar homes rent for $1000-$1100/mo.

How much work do you guys put into rentals vs flips?

Account Closed · Answer

Would you pay $1100 for bad floors and skimpy paneling? How much did you pay? ,what repairs do you need? Is that close to ARV? Those answers are what you should have known before buying but now you have to maximize your rent and attract a quality tenant

Andrew Davis · Answer

Hey @Jason Prendergast

What was your plan going in?  What did you pay for it?  What are your goals and how did this property fit into them?  I think when you answer those questions, you'll be able to answer the questions you asked.

Logistically, if a property is going to be a long term rental I would tend towards tile and not hardwood, especially if it's going to cost you 2300 just to refinish it.

Keep us updated!

Dawn Vacek · Answer

Good Morning-I dont flip but I can tell you there are times to skimp and times not to.

For wood floors, steam clean them and put on rejuvanate (about $16/qt at home depot) which lasts about 6 months or mop and glow (which lasts about a week) to make them clean and shiny, if you really can't afford to have them sanded.  If you have a little more money ask about having them screened.  It takes off the surface of dirt and you can just nicely put poly over them.  A couple hints:don't try to sand floors yourself...you can mess them up forever and most do.

The tenants you get will be a direct reflection of how well you present the place.  I fix to the max and often do staging to help present a property in its best light.  The secret of the landlord business is having great tenants and the way to get them is having great property.

Look at your budget...this is a business.  You need to think through the whole picture...before you start.  That you are caught reevaluating your strategy for this property tells me you didn't do enough homework before you bought.  Learn your lesson.  No matter how successful, none of us has unlimited resources so taking the time to plan carefully and w isely is critical to your success.  Good luck

Scott Wagoner · Answer

Why are you deciding to hold and rent now? I'm just curious...usually I hear that from people that think they paid to much for the house and are going to try and "wait it out" for the market to come back in that area....And if that's the case, I really don't see Debary making a surge in price increases anytime soon. There are better ways to make more money than just renting.

Zach Mitchell · Answer

There are guys around Orlando who will refinish hardwood for $2.25/sf. I would definitely get another bid.

Jason Prendergast · Answer

Good advice.  We went into this place thinking we were going to flip, then decided its much better to rent.  budget is 25k, but can go up to 30k.  We purchased the home for $50k cash.

Steven Picker, we never planned to leave bad flooring, we would cover the bedrooms with carpet and tile the kitchen (I cant refinish wood floors myself, but I can tile if need be).

John Santero · Answer

I like to put my money in the places that give me the best bag for the buck and which saves me money in the long term. With that said- flooring is one, kit. cabinets and countertops is another and Lighting is the third.

I budget 5bucks a sf labor and mat for flooring- I hardwood all public areas (LR DR hall) ant tile wet - (kit & Ba) carpet the bedrooms at $12sy.

The cabinets if they can be redone great- if not replace. I tile the countertops with granite and put a matching wood trim. That brings your cost per Sf to $-10 dollars (depending on material- 12x12 granite is about $5 or less) you use 2 square and make your cuts at the ends where they will be covered by trim- real ez.

And the lighting is usually ceiling fans from walmart in the bedrms -about 30 bucks each.

I usually get over market rent for these simple upgrades

Good Luck.

Carl Stewart · Answer

I agree long term rental work better with tile

Renting recent REO property?

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