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Drawing from our experience renovating over 600 rental properties, we’ve refined our process to achieve a simple goal: maximizing rental income while minimizing renovation costs. Here’s our approach:
Standardization
We’ve standardized major renovation components, which allows us to:
- Generate renovation lists using software
- Enable bulk purchasing for vendors, reducing material costs
- Decrease overall costs and renovation times
Renovation Item Selection Process
Initial Estimate
The initial estimate can be based on MLS photos or a on site evaluation walk-through. At this point, we don’t care about the total cost, we care about getting a comprehensive list of items that should be considered. From this, we create a comprehensive renovation estimate including all potential improvements.
Due Diligence
Within the due diligence period after the property goes under contract, we conduct physical and cosmetic inspections and obtain quotes for all items. We then hold a team meeting as illustrated below. These meetings typically last one to two hours because we walk through every renovation item and discuss its impact on probable rent and time to rent. Note that we may decide not to complete an item during the initial renovation but may need to do it in the future. For example, if the property you purchase has laminate kitchen counters in good condition and the competition also has laminate counters, installing granite or quartz counters isn’t a good use of your money. However, when your property next goes back on the market for rent, we’ll need to reevaluate its condition versus the competition. At that point, you might need to install granite or quartz counters.
Vendor Options
There is no obligation to use any of our preferred vendors. However, if you choose an alternate vendor we will provide video updates. However, you will have responsibile for dealing with your selected vendor concerning any issues or delays. We will provide standardized component information to the client’s preferred vendor(s).
Benefits of Our Approach
Cost Efficiency
We standardized major renovation components in 2017. Standardization has multiple advantages including:
- Standardized materials: Because our renovation vendors know they’re going to be doing multiple property renovations each month, they buy the major materials in bulk as opposed to buying them at retail. For example, we use one color one commercial grade of LVP from one manufacturer. So instead of our vendor going to Home Depot or Lowe’s and buying LVP and retail packaging, they buy truckloads directly from the manufacturer and store it in their own warehouses.
- Reduced material delays: Before we standardized major renovation components, material shortages often caused delays. Now, because we use the same components repeatedly, vendors keep them in their warehouse and can start renovations immediately. This virtually eliminates material-related delays.
- Oversight: A skilled team member visits your property every other day during renovation and sends you a progress video. They don’t just record people working—they evaluate the quality of work being performed. Our team members know how to do all the work, so they can spot quality issues immediately. When we observe any problems, we involve the renovation manager right away to correct the situation.
Summary
Having completed hundreds of renovations, we’ve developed processes and oversight procedures that deliver the quality we all want in a timely manner. Every day your property is in renovation is a day it’s not generating income. Time is truly of the essence.
