affordable tricks for renovation

[Mei Zhu]

Hello,

Just want to know if anyone have tricks of the trade they can share to get the most deals needed to renovate bathroom/kitchen?

For example, someone told me I can get cabinets replaced by going to Lowes and they will install them cheaper?

thanks,

[Stuart Udis]

@Mei Zhu A lot of investors look to the kitchens and bathrooms as areas to save and I believe its the wrong approach. First, whether you are renting or selling these are two rooms sellers and tenants place greater emphasis on when selecting their housing. Secondly, they are high touch rooms meaning they receive a lot of use and buying inexpensive materials will breakdown quicker. 

For illustration purposes the cheaper Delta fixtures most investors purchase at Home Depot or Lowes aren't sold at plumbing supply stores because Delta licenses these less expensive options exclusively to the big box stores (same is true for other manufacturers as well). These are not the same quality and break down much quicker. For an additional $100 I can buy a quality Delta kitchen faucet from Ferguson or other local supply houses  that will last me years.  Keep in mind, the inevitable replacement of the inexpensive option + the plumber's labor will be 3x the cost of the better option so I choose to spend the additional $100 on day one.  I used a faucet as an example because that is an item that normally breaks down first and often observe customers walking down the fixture aisle at HD or Lowes looking for the least expensive option, whereas purchasing inexpensive tile or other cosmetic items won't necessarily cause maintenance issues although I would argue will cost you revenue (more on this below). 

Secondly, from an aesthetics standpoint investing slightly more can make a huge difference in the way these rooms looks. Take a bathroom for example. They are generally small with limited floor and wall area. I am currently renovating apartments where most have smaller 5'x7' bathroom and the floor area is less than 24'. I used a $5/sf small format mesh backed porcelain tiles for the flooring whereas most in my market use sub $2/sf 12"x12" or 12"x24"porcelain or ceramic that makes similar bathrooms appear smaller. This cost me an additional $70/bathroom and my bathrooms will look far better than other units in my market. 

 Another area I willingly spend more on is counter tops. I will save money using simple white shaker cabinets that are available inexpensively in any market in the US, but will buy higher quality than the builder grade quartz. At the end of day, similar to the bathrooms, its not a lot of SQ. The sink cut out is the same, the undermount sink/install is the same and the difference between $45 and $60-$75/sf surfaces is not significant. I will balance this by purchasing hardware, light fixtures etc. on amazon. I can usually save a decent amount, especially if I keep eyes out for deals and buy when these items are priced most competitively and not necessarily when I need them.

Using the bathroom remodel apartment as an example, I will spend $1,500 more per unit than most of my competitors who renovate in the same market but that $1,500  (5% of my apartment renovation budget) gets me  oversized soaking tub in most units, nicer tiled bathrooms, counter tops that don't look like every other apartment in the neighborhood & a step up in appliance package and better quality fixtures. This particular building has (9) 1 bedroom units undergoing the same renovation with rents between $1450-$1800.  I estimate my absorption rate alone will make back at least 50% of the additional investment on the initial lease up and the rest within the first two years on saved maintenance costs and lower turnover. Utilizing the same approach can can assist with for-sale housing as well where you can decrease DOM and move your inventory quicker, thus saving on carrying costs.