The bathrooms are the next on the list and, again, a checklist is created. Then I look at all the hardware in the house, which I know is really easy. And then I look at how significant the flooring is in terms of needed work.”
Seasoned pros like Mr. McGillivray and Mr. Gulaty often determine their budgets before they even buy a property. Says Mr. Gulaty, “I already have a rough idea as to how much it will cost me to upgrade the unit and how much extra rent I can get through the upgrade.”
Mr. Brennan says his renovations move much more efficiently with a master list of potential items. “I’ve created a master list of 95 per cent of the things you may need as far as supplies for a renovation, from screws to flooring to faucets. It’s much easier if I have a process, if I already have a very good indication of all the items I may need and I have a good understanding of what the prices are.”
And for the more junior or novice investors, Mr. Brennan says it’s easy enough to walk into any hardware store and familiarize oneself with costs.
Similarly, there is an abundance of resources online by searching "contractors’ costs," which will garner a wealth of information on costs per square footage or per item on a variety of home renovation projects.
Where to start? Whether you are a landlord who rents or are looking to flip a house, you will likely start your renovations in the kitchens and bathrooms. However, the methodology behind the renovations may be as varied as the projects themselves.
For example, Mr. Henderson has a philosophy by which properties should be renovated to attract the best tenants. He suggests three things to enhance the property, in whatever part of the house/unit it may be. His philosophy looks at the ideas of "space,:" "personalizing the property" and "cleanliness."
Space, he says, can come in the form of an open kitchen and living room, as is the trend among homebuyers these days. “The open concept can be done, but you don’t have to be highly skilled to do it,” notes Mr. Henderson. “In my experience the cost of putting in an open concept kitchen in order to attract a good tenant is worth it.”
In order to personalize, he says items like a new tub or toilet allow tenants to feel the property is theirs and not a property that has been rented out hundreds of times for the past number of years. “We could totally redo the bathroom but these cost-effective tips are the way to go if you are on a budget,” adds Mr. Henderson. In terms of cleanliness, Mr. Henderson says changing old carpets between tenants diminishes the potential for allergies, health problems, and shows sensitivity to people’s health concerns.
Mr. Gulaty agrees that kitchens and bathrooms are the place to start and says tenants often do not have much by way of imagination.
“Even if they see a kitchen and bathroom, if the rest of the place is not in good repair it’s still going to be a hard sell,” he says. “What I often do is if I am working on a unit and it doesn’t show well I will take [the tenants]up to a completed unit to show them this is what it will look like when it’s finished.”
There are also differences between the work done on a single-family home versus a multi-family unit, Mr. Brennan notes. For example, appliances for a single family unit might be purchased new for top rent. But, adds Mr. Brennan, a multi-family residence might get used appliances. Also, a nicer faucet would be added to a single-family.
Part of that planning, according to Mr. Brennan, is knowing well in advance what you may need for repairs or renovations. To a small investor every penny counts, and he says knowing projects ahead of time will allow investors to seek out sales and promotions on the products they need ahead of the renovation stage.
Another piece of advice for investors includes knowing your limits and ensuring you don’t pick the most difficult project around, says Mr. McGillivray. “I could give you every checklist and every piece of information about being a real estate investor. But you’ll never actually understand something until you try it. Don’t jump into something that is overwhelming.” He adds that picking projects within one’s comfort zone will allow them to do many renovations themselves and save costs.