How to Renovate a Rental Property to Minimize Repairs

How do you renovate a rental property to minimize your repairs so you’re not paying through the nose? That’s today’s.

How do you renovate
a rental property to minimize your
repairs so you’re not paying through the nose? That’s today’s video. Let’s dive in. [INTRO SOUND] Hey everyone. I’m Clayton Morris. I’m the founder
of Morris Invest. I’m a turnkey, real
estate provider, and I’ve been a longtime
investor for a number of years, and I own many, many
rental properties. The key to a successful
renovation on a rental property is to minimize the
repairs down the road, because we’re all
about cash flow. So this whole channel
is devoted to helping you create passive income,
and cash flow, right? That’s why we do
what we do here. And so if we have that
cash flow coming in, the form of rental income, do
we want to be paying it out to keep fixing stuff? Windows, doors, refrigerators,
God knows what else. Of course not. So how do we
minimize our repairs when we’re doing our rehab? Let’s say you identify
a great property. You find a great three
bedroom, one bath house, and you’re ready to
start the renovation. It’s going to cost you
maybe $15,000, $20,000 to do the rehab. What do you do in the
property to make sure? Well, here’s what we
do on our properties. Let me show you a total
disaster of a house that we bought recently. This is a typical one
of our properties. You can see here how much of
a disaster was on the inside, right. We had ceilings
falling in, we had terrible flooring,
you know, everything. It was a total gut
rehab in the property. So when I’m starting with
a blank canvas like that, what we like to do, on all
of our properties, is simple. We want to make sure that
the main mechanicals, the main systems of the
house, are fully rock solid. Why? Because when you take care
of the roof, the windows, the plumbing, the electrical,
the furnace, and the water heater, then you’ve
got a rock solid house for 15 years minimum, right. 10 to 15 years, depending
on the life of the water heater, but you
really are not going to have repairs to worry about
for like 15 years, if you really do that type of a rehab. So what do I mean by that? Well, let’s go through
them point by point. On the roof. So when I buy a rental
property, if I buy a property, and there is another
25 years or 20 years of life left in the roof,
I’m not going to touch it. That would be a waste of money. But if it needs a
new roof, I’m going to put a new roof on the
property, or an overlay. So in certain states,
you’re allowed to put a certain number
of layers of shingles before you have to completely
rip them off and put on a whole new roof. So typically, it’s
about three layers you’re allowed to put on. So if it needs a new
overlay, put that on. New roof? Done. What about windows? If the windows are
in great shape, there’s no need to replace
them if they’re working, or they’re fine. They keep the insulation
of the property. But if you’re putting
new windows in, I always put in Pella windows,
or sometimes Andersen windows, in my rental properties. You know, they’re the
white, vinyl windows. And they keep it nice
and warm and insulated. That way, your tenants
love it, because it’s keeping their costs
down on their heating bill and their air conditioning
bill during the summer. Windows, roof. Next is the electrical. I want to make sure– this is
the stuff that’s not terribly sexy when you’re putting
together a property, right, because it’s the
stuff behind the walls that you don’t get to see. But, it’s where you’ll want
to spend your most money. So if you’ve got that old
knob and tube wiring– you know what it
looks like, right? If you’ve ever seen an
old house, those old knob and tube wires– and we upgrade to a 200
Amp electrical panel on all of our properties,
so putting in, running all new electric
through the house, and making sure that
it’s up to code. That way you don’t have to worry
about that house for 40 years when it comes to the
electrical panel, especially if you’re putting
in a 200 Amp electrical panel, sort of future-proofs
your house. And it’s not that much
more expensive than putting in a 100 Amp electrical panel. I would go 200 Amps all day
long, and that’s what I do. The next thing that we
would do in our property. If we have to pull out all
the old plumbing– so if I’m pulling out all the
old galvanized pipe, I’m going to rip
all of that out. If there’s that
PVC pipe, you know, the white piping, if
that’s in there as well, typically, we’re going to
pull that out of the property. And I’m going to put in all
new, brand new, PEX plumbing. P-E-X. Why? Again, I can snake this
through the rafters. It lets me maneuver
it around the house very easily and nicely. And if it gets too cold, it
can swell up like a balloon without bursting. That’s another benefit
of PEX plumbing. You always hear about
people in the winter, if, you know, maybe
the power is out, or they’re not living there and
the house is vacant, you know, the pipes will burst. Well, it will still
happen with PEX plumbing, but not as likely. It’s able to withstand a lot
more of that give and take. So we’ll put in all new plumbing
in the property as well. So roof, windows,
plumbing, electrical. Then I’m going to put in
a new water heater, which are fairly inexpensive, but
putting in a new water heater ensures that I’m going to get
10 years of life out of it on a manufacturer’s warranty. And typically, you know,
they last for 10 to 15 years, depending on the water
heater, and how much use you’re getting from it. It’s actually when you
don’t use the water heater that you end up
having more problems with it. If a tenant is living
in the property, then your water heater
can last a lifetime, can really last a long time. Furnace. We’re also putting in a
new furnace in the house. Of course, that’s one
of those big mechanicals that you want to make
sure you take care of. And again, 10, 15 years
of life on a furnace. That’s why most of them have a
10-year manufacturer’s warranty on them. When you go into the 11th and
12th year, then, of course, you’re getting towards
its end of life. So if you get all of those
mechanicals taken care of in the house– the roof,
the windows, the electrical, the plumbing, the furnace,
and the water heater– then, you’ve got a rock solid
house for many, many years to come, where you shouldn’t
have to worry about repairs. That’s why I do this
on all of my homes, because I don’t want
to worry about having big repairs down the line. Not for many, many years. And by the time I
get to those repairs, the property will have paid
for itself, like three times over, by the time I actually get
to some of those major system repairs. Now, you’re always going to
have, like, a minimal repairs. Right? On a tenant turnover,
if a tenant moves out, you’re probably
going to get in there and steam clean the carpets,
or replace the carpets for a few hundred dollars. Paint, some paint touch-up. And maybe some drywall patching. But for the most
part, you’re not going to have much more
to worry about when a tenant leaves the property. So those sorts of
things, we always expect we’re going to have
a little paint touch-up here and there, cleaning
out the property, et cetera. But those main systems,
those main mechanicals, those are still rock solid for
many, many years to come. So that’s the way that we do it. I’d love to hear your
comments in the thread below. We’ve got some great
videos here on the channel. So we’ve got some playlists
in the description below on this video. You can click on some
of our other playlists. We cover some of the news that’s
happening in the real estate world, like what do
the markets look like, what are some of the
best rental markets to be investing in right now,
what have the highest vacancy rates out there. So some great real
estate news, we have a playlist
for that as well. And don’t forget,
you can subscribe. Just go over here and
subscribe to our channel. Click on the big,
red subscribe button. And we’ll see you back
here with more videos. Every week, we’ve got them. Thanks everyone. Go out there, take action, and
become a real estate investor.

56 thoughts on “How to Renovate a Rental Property to Minimize Repairs”

  1. great information Clayton. That sounds like a lot of major system work for $15-$20,000, even on a fairly small house. Do you happen to have a breakdown of what typical costs for each of those major areas you mentioned might be?

  2. I watch all of your videos, the ones with pictures of your projects really give great texture to the substance of what you're saying.
    Keep em coming!

  3. I'm curious about your business model. If I buy a property through you, you're obviously going to profit somehow (and rightfully so). Do you mark up the price of the house to your buyers, or do you own the management company that manages the property? I'm confused about this. Thanks.

  4. I just turned 30 and am gaining extreme interest in investing in rental properties. I'm so glad I came across your YouTube channel. Are you available for specific advice if I decide to move forward with a deal? Could really use the mentorship

  5. Hey Clayton, would you consider tankless water heater for your rental properties or is that upgrade just waste of money?

  6. because I have experienced a leaking water heater in two of the homes I have lived in, I have installed a whole house water shut off with leak sensors near the washing machine which is set in a tray to control water damage as well as a sensor near the water heater… Also installed with a pan. The pan is piped to a nearby drain. The shutoff saved me thousands when my last water heater began leaking while we were out.
    I like your theory… Pay now or pay more later in cash and headaches.

  7. Hi Clayton,

    Good morning.

    l went in to download Tom's Report this morning, but it's been already taken down.

    Is there a way you may get it for me?

    Thank you.

  8. Thank you Clayton for the feedback.

    Please l purchased my first double house (2 houses for the price of one) with my own money (Roth IRA) at the price of $12,500 in NJ.

    l want to live in one and rent the other. But very concern with taxes.

    l purchased it as an investment, but l would love in live in one of them as my primary home because of its location, very close to the Delaware river.

    What do l do? Please advise.

  9. yes replaced all the windows in my house and got the roof painted. Still have the original 43 year old water heater though, and galvanized plumbing throughout the place.

  10. I'm a Home Inspector, licensed in Florida, have been a landlord for more than 5 yrs now and totally agree with this advice. Great video Clayton!!!

  11. Did you start out with the philosophy in the beginning or did you eventually get to this point as you gained more houses? I just closed on my 10th rental a couple weeks ago and at this point, the cash flow isn't quite there. It isn't that I made a ton of poor decisions, I just have some very aggressive owner finance deals mostly at 0% so excess cash flow goes there. I can see the eventual benefit of this when I hit that tipping point, but at this time, a working HVAC is an expense I am not having to replace.

  12. One of your upgrades is to replace the plumbing with PEX. It seems like you are recommending PEX for hot and cold supply lines as well as the vent, waste/drain lines.

  13. nice to know. renovating my first rental property now. its been gutted and ive been putting brand new everything behind the walls , also restructuring/re-supporting the entire house so that it lasts another 100 years. brand new hvac, plumbing, electrical. would hate to have to tear down drywall to get at the stuff behind the walls. its much simpler to replace a toilet then it is to run a new wire 😛 i think its best to buy houses that need complete gut because you buy them cheaper and you get to fix them up properly

  14. Great advice though it's scary at times when the cash is going out. I've done this on all my properties but I really want the next ones to be less of a remodel.

  15. If you have an older 78% furnace that's in good shape I would keep it for awhile. Clean the pilot orifice and install a new thermocouple and limit switch. They're old enough to have no fussy and expensive electronics to fail or draft inducer motor with cheap bearings to go bad (always on Christmas Eve) . One landlord I worked for had about 30 old furnaces, some from the 1950s, and they plugged away winter after winter, while the modern ones constantly needed $200 circuit boards and $150 draft motors.

  16. If im getting an estimate for the knob and tube, which Im finding a lot of here in the Midwest what would be a good ball park to do the whole house as a newbie with less than 2,000 sq feet? I just don't want to get taken for but do make sure it's done according to code.

  17. Fantastic!  Again, I love how you keep it so very simple.  Helps make it not so scary particularly of a newbie REI.  Thank you for this information.  Added this to my list of valuable resources.

  18. Hey Clayton! I know you can’t give exact numbers, but do you have ballpark prices you expect to pay for all new plumbing and all new electrical? Just curious how to evaluate quotes. I’m in a very similar market as Indianapolis.

  19. So buy a 40k dump and fix up the 6 systems for another prolly 30-40k and then at that point u might as well just of bought a house with all that new stuff for 80k…I’m just confused the purpose.

  20. i agree..i do alot of apartment flips for investors.. water heater is 10 years old we just replace it.. most units have the old type M copper plumbing installed in the 70s we will take an extra week and rip it out and do pex…best to do all this when unit is empty because a tenant might stay for 10-15 years you never know.

  21. Another great video!

    Question, on average, what does it cost you to replace an entire home with Pex plumbing? Are massive amounts of dry wall taken down in the process?

    Thank you.

  22. Me personally I decided against PEX as well as CPVC. CPVC is known to become brittle over time. PEX is quite tasty to rodents… namely mice, rats, squirrels, raccoons. I chose copper with sweat fittings. Copper plumbing supply will last probably 100 years or more, and sweat fittings will never leak. To protect against freeze, I merely insulated the pipe. With that said, I did that all myself on two properties I own. I doubt you would find many plumbers these days who would do all copper repipe job with sweat fittings. Some tenants aren't as clean as others. If trash is left out, not disposed of regularly the rodents don't need much encouragement from there to realize the food is inside the house. It's all down hill from there in terms of major flood potential. Plumbers like PEX because it's a guaranteed repair job later and if you don't get rid of the mice it will just keep happening. Scan the horror stories on youtube if you don't believe me. What are your thoughts of wood look tile through out house? So as to not have to replace carpeting every time a tenant moves out? I've got one house with laminate flooring and I'm not impressed with the way this is holding up and I used a midgrade product with what was billed as a 50 year life cycle and tenant has only been in there a year. My thought is put in wood look tile and all it would ever need is to be cleaned. I can hire out to have that done with professional floor cleaner. The wood look tile is incredible these days, you can't tell that it's tile, without getting up really close and even then I think it would fool most people. What are your thoughts on that?

  23. Clayton, considering $20-30K rehab, even if the property is under market value, you are still far from $45-50K purchase price:))) (rehab included)…
    Let’s say it’s C-class property, according to many search engines in your most favorable states, these prices gone a long time ago;) unless you are a magician and pooling rabbits from a wonder hat;)

  24. What if the property you are buying already has a renter in it? How do you renovate it or do you just forgo doing the renovation since it's already occupied?

  25. So… you guys as prperty owners, do you do this work yourselves or do you hire someone? I would have not the slightest clue as to how to change the electric or plumbing in a house. Do all the walls have to come down for this? Sounds intimidating.

  26. I’m surprised at how people can say the renovations are done cheaply (overall) when my experience with my own house rehab is a bit more expensive. I’m estimate at least 25% more than what you might pay and I’m using the best quality cheap Home Depot supplies and using trustworthy contractors. Good ones can’t be made to work that cheaply.

  27. Thank you for your videos! I just bought my first property for just under 50k. The structure looks solid and has all newer mechanicals that you're speaking of (within 5 to 10 years). Would you still advise to update things or rent it and try to get as much use out of the originals as possible?

  28. When it comes to kitchens and baths… stay with function over form too. Don't over invest in upgrades and appliances that add complexity and cost. For example, use simulated off the shelf home depot granite counters instead of real stone. Use 500 refrigerators instead of 1000.

  29. I watch and enjoy a lot of your videos, and am getting close to buying my first property. This video really helped!

  30. Clayton, I am buying my first long distance investment in IN. I have contractors who have given me proposals. If possible, can you tell me a strategy on how to work with contractors long distance, without being taken advantage of? I am flying out there next week to meet with a property manager I have lined up along with the one contractor, mostly to build up a trusting relationship. Any advise would be great. Thank you.

  31. My Hardwood flooring are beyond repair and I'm looking at Vinyl Faux Hardwood flooring for my first rental property. Do you invest in carpet for the Bedrooms? Or would you just continue with the Faux flooring for the entire house. I'm afraid that carpet needs to be replaced all the time.

  32. What about a rusted screen door to enter the house or a sliding mirror over the closet it has bleeding marks on the bottom? Will this turn renters away?

Leave a Reply

Your email address will not be published. Required fields are marked *