Vacation rental investing is one of the hottest techniques in today's market. You're about to get an inside look at a complete makeover of one of my vacation rental investments. You'll go in the field with me, before and after the remodel, while I reveal tips along the way. This is a MUST watch anyone looking to own a vacation rental:
Details of the Deal
I sold a previous property to buy this one. Why? There have been a lot of changes occurring in the vacation rental industry. Tt has become increasingly popular, with a large quantity of people choosing to invest in and stay in vacation rentals. However, while a majority of vacation rental investments are not a cause for concern, there are some bad seeds that have made it intimidating to rent out your vacation rental.
Drawbacks
Some cons that I have seen with vacation rental that have caused them to be restricted range from rowdy parties that turn into crime scenes, the pornagraphy industry has sometimes used these homes for productions, or even blackmail to force a refund or the guests will leave a bad review. Unlike hotels, vacation rental home owners can't afford to refund a night when they only have such a limited number of nights they can rent out in the first place.
Also, unlike hotels, the rentals have the owners personal dishes and equipment that is at risk for being stolen by guests. The wear and tear that occurs to your property falls on you with every knew guest that you host. It becomes a downward spiral as you are booked back to back weeks, lacking the time to perform any major repairs to the home.
In business you learn lessons and must make proper judgements. The higher the price per bedroom, per night, the better the guests. If you have positioned your vacation rental as a nice place to vacation, your guests will treat it well and you are less likely to be blackmailed.
Vacation Rental Repairs
Let's look into what changes I made in my vacation rental investment to make it worth the nightly rate and bring in guests who will take care of it.
Improve the View
In order to cater to higher paying guests, improve the view! You want your guests to have a perfect view, and that starts with good quality windows. I can replace the panes or the windows in the unit to help improve the aesthetic of the rental. When it comes to condensation, fix those broken seals! Window cleaner can't help you there.
Keep the Flooring Consistent
In the unit that I invested in, I loved the tile, but it caused the unit to look dated. It was also inconsistent, with different tile being used throughout the unit. A wood-looking tile throughout was a good fit for this unit and elevated the space.
Popcorn Ceiling
Popcorn ceiling can be such an eyesore. I would highly recommend removing it and I even decided to add a barn board finish upon the ceiling.
If you allow a property to feel dated, it will be hard to convince a higher paying guest to see its value.
Kitchen Features
The kitchen in my vacation rental investment got a complete over-haul. I first replaced the counter tops with quartz, updated the all the appliances to stainless steel, and added in backsplash.
Most importantly, we are going to replace those cabinets. They really made the rental feel dated and is very difficult to paint over. They needed to be completely removed!
Bathroom Update
I carried the same tile used in the main living area into the bathroom. The countertops and shower tiles needed an update. Remember to replace the shower heads! Guests love luxury shower heads and can make a huge impact.
Bedrooms
The bedrooms only needed new light fixtures and paint. However, try to fit in more than one bed if the room allows. This will increase occupancy.
The Washer and Dryer
Guests really care about the washer and dryer. I made sure my unit had top of the line laundry room appliances.
Furniture Repairs
You've got to have great furniture to win over your guests, especially the females. They will notice the quality before booking your rental, so do not disregard this feature!
APCO-X Air Treatment System
You do not want your guests breathing in sick air. This is a high quality system that I invested in. It is worth it to spend extra so your guests can breathe clean air. Little did I know that after COVID-19, the system I invested in actually kills viruses! This really gave my guests peace of mind.
Wall Decor
I have pictures of my family around the house, one because it makes the rental feel like a real home, and two it makes the guests less likely to trash the house as it provides a good reminder that a real person owns this property and cares about it!
Get a Ring Door Bell
This will allow you to see who is coming in and out of your rental. The hope is that this will give you peace of mind when guests are staying in your rental.
Wifi Network
In my vacation rental, I use the Eero mesh wifi network. The wifi is extremely good but also under my control! I am able to control the wifi network from an easy app on my phone.
The Makeover Costs
Let's break down the renovation costs for my vacation rental.
Labor costs: 20k
Materials: 30k
Cabinets: 6k
Countertops: (+)2k
Glass (windows/showers): 10k
Furniture/Appliances: 27k
Total renovation costs came out to 100k.
Return on Investment
Purchase Price: 535k
25% Down Payment: 134k
Rehab Costs: 100k
Total Cash Out of Pocket: 234k
Estimated Net Cash Flow Per Year: 50k (20% ROI)
Estimated Property Value After Renovations: 700k
It turns out my estimate was way off. The property is worth closer to 900k!
What this means for me, within 9 months I will be able to do a cash out refinance to pull out all of the money I invested, both in my down payment and remodel. I can then get 100% return on investment. This will lower my cash flow, but it will still remain steady each month.
Join the Apprentice Program!
Welcome to the world of being a really productive real estate investor! Join my Apprentice Program to learn how to build wealth for the rest of your life with vacation rental properties like mine. You can do it too with help from an experienced mentor who will take you step by step from where you are now to owning your own successful vacation rental.
Hapsai says
Thanks so much, I learn so much in this video.
Matthew Hummel, Diligent Asset Network, LLC says
Based on the experience converting a 4plex into upscale condos, I have to say that your rehab costs for new flooring, new hvac, new ceiling are about $35k too low. Lately the cost of labor and materials have gone way up so that your cash on cash return is less than you predict in your example. Your ideas on priority of updates are good based on my market in Austin Texas. Well done and thanks. Were you on-site to oversee the rehab work on a daily bases. My stainless steel appliances took Samsung 6 months to get them delivered because of the virus and the back log.
Phil Pustejovsky says
I have assembled the greatest construction crew on the planet. I can source great materials at the lowest possibly price. I know how to get appliances when almost no one else can. And I don’t have to manage my crew. But I am one of the most successful residential real estate investors in America. Of course I can get my rehabs done $35,000 cheaper than most and with no hand holding or oversight.
Emmanuel Mohammed says
Phill,
I’m a Big FAN of you and your mission of changing lives.
I would like to share something with you on my vacation Experince here in orlando Fl area.
You have been a big bless to soo many I’m no exceptions.
Thx God bless
Evgenii Puchkaryov says
What’s the lock model?
Phil Pustejovsky says
SCHLAGE BE365 Camelot
Michael Isu says
I have learned a lot following your teaching. I am going to take a step forward and make things happen.
Abi says
Outstanding transformation! Clear and well presented.
Phil is an all round awesome guy! I will join his mentorship program once I’m liquid!
Daniel Nugeness s.r. says
Hey Phil I’m little scared but I know your mentorship will help me learn and be a success. I want to learn more also
Robert simeone says
How about the board, some complexs only allow you to rent for 3 months some want 1 family to rent a minimum for 3 months, hoa fee vary extensively,taxes ,roof repairs or restoration additional cost ,extra cost for adding sand to beach due to erosion,lots of thing to consider,on that property you have if you can make 200 grand id take it!
Phil Pustejovsky says
Obviously, I did intense research on the Association before I purchased. I following my Ultimate Buyer’s Guide to Property Associations. This particular Association is incredible.
Laura S. Haymon says
I’ll be in cloud9 to team up with your organization…God is a mysterious creator “WOW” in Jesus Christ name amen!
Khaliq says
Great video Phil, I always learn a lot from your videos. This one is excellent with all the details of the makeover and return on investment.
Thank you
William Diamond says
I am interested in your mentor program.
Phil Pustejovsky says
Apply here: Freedom Mentor Apprentice Application
William Priddy says
Hi
Great vid!
Which part of FL is this Condo located?
Phil Pustejovsky says
Volusia County
Gerald Godsey says
I’m considering a mentor program and would like more information
Phil Pustejovsky says
Go here: Detailed Explanation of the Freedom Mentor Apprentice Program