Now that you have a property under contract, what should you do before closing on a rental property? Time is money, because every day you hold the property after close without a renter, that’s money out of your pocket.
This post assumes you have completed inspection and are hurtling towards closing. You have also sorted through lenders, decided whether to take points or credits, and confirmed a lender (I used Better.com). Now let’s talk about what to do before closing to maximize your profit.
Major Updates or Refurbishment
When you bought the house, you probably already knew what the major expenditures or costs would be to bring it up to speed. Or at least you caught the issue during the option period when you did an inspection. When I selected my home, I was specifically looking for something that would not require much work.
Completing the Major Projects
My experience and expertise is not with major remodels. However, it stands to reason that cleaning the house is not high priority if you’re going to rip out the kitchen. You can set aside the finishing details until your major project is nearing completion.
That doesn’t mean you can’t complete the annual service on the air conditioner or knock out other small items on your punch list. It is just better to spend your valuable time keeping the major project on track for a quick turnaround.
Completing Big Projects
When I bought the house, I figured I would need to match paint and touch up the walls. When I walked around before close, it was immediately apparent there was more work than I had thought. In retrospect, I wish I had taken the time to walk through the home earlier than the day before close so that I could start lining up bids on painting.
My advice, do your walkthrough a few days in advance. The removal of furniture and other items from the previous homeowner may reveal a few things you need to take care of. There’s no telling what you may find, but it could be anything from painting you need to do, holes in the wall from removed tv mounts, or stains previously hidden under furniture.
If you’re going to need to paint or replace carpet, it could add weeks to your turnaround time depending on how strained service providers are at the time. Thanks to the pandemic, carpet is actually out of stock more often than you might think.
The Basics of a Quick Turnaround
You will want to line up as many things as you can right after close to keep things moving forward. Things you will need to do:
- Touch ups if the home has been a bit beat up
- Deep cleaning; consider getting the oven and and other other non-obvious things cleaned and in good working order
- SIgn up for utilities so you have power to vacuum the floors and keep the refrigerator from molding.
- Bring your property up to code. There may be specific requirements for rentals so research local codes – check on door lock rules, peepholes in doors (really!), fire extinguishers, fire alarmes, etc.
- Get new locks or re-key the existing locks
- Make sure to address all safety issues on your inspection
- Renter-proofing: if you’re replacing the carpet, don’t get the nicest stuff, get the most durable! Don’t even consider scratch-able hardwood.
Some other things you may want to consider:
- Get your air conditioner and furnace serviced and cleaned
- If you have septic instead of sewer, get that looked at and make sure your tenants are aware of the limitations of septic
- Get your roof checked out by a pro to address any potential leaks or weak spots
- Have a photographer signed up for the day you finish cleaning and touch ups to get nice clean looking pictures ASAP.
Get your Property In Front of Renters
Getting your property out there on the market as early as possible can help ensure a quick turnaround. Even if the property isn’t ready for viewing for a week or two, posting it can generate interest and make sure your open house is well attended when you’re finally ready.
Consider that you can post it for rent without pictures, but the former seller may be willing to sell you the rights to the pictures they took to post their property on the market. It could be worth waiting until you’ve finished cleaning when hiring your own photographer.
I ran into an issue where the seller’s agent had not removed the listing from MLS. My property was still listed as pending sale. Because of this, I was unable to post the property for rent on numerous sites until he had marked the property as off-market.
What to do Before Closing on a Rental Property
If everything goes smoothly, there will be plenty of downtime between when you signed the contract and closing. Using this time effectively is key to a quick turnaround of the property. This is especially true if you’re like me and have a day job. Research and contact service providers slowly but surely to sign them up to be there the day of or after close. I spent a lot of time on Yelp finding quality companies to help.
By maximizing your time for a quick turnaround, you’re also maximizing your potential profit. Don’t let holding costs pile up before you get started on the income. Use your downtime to increase the profitability of your project!
