Time is money.
And nowhere is this truism more true than in real estate.
Let’s say the loan payments on your flip are $1,500 per month… You gotta start thinking of that stuff as $50 per day (if you haven’t already).
Yes, the clock starts ticking on your closing day. Tick, tock… Tick, tock…
Every additional day between closing and selling means you just lost another $50.
Then think of all the utility bills, taxes, and insurance. You pay more and more – and more – as time goes by.
And what if you see an even better deal come along? But your money is tied up in your current flip? How much extra profit are you losing? (Economists refer to this as “opportunity cost – and it can be even more painful than all your largest expenditures combined.)
The more the clock keeps ticking and tocking, the more everybody else’s cash registers keep ringing.
Make it stop! Make it stop! MAKE IT STOP!
But how?
Well, pick up the phone …
“Hello Ms. Stager...”
I’m going to be a little sexist here. (But don’t worry, ladies. You’re cool.)
If you’re a male investor, selling to a retail buyer, then you need to hire a "stager" -- and that stager needs to be a woman.
Why? Because women know how to turn a house into a home. (Whereas men are typically much better at turning a cave into a sports bar.)
Turning a house into a home is the definition of something called “staging”. And it’s an important concept – something you probably need to accomplish, one way or another.
So why not do it yourself? Simply put, it’s the same reason you shouldn’t do all the renovation work yourself: Because time really is money.
There are some ways to save money on the staging process, if you want, but there are a lot of reasons to outsource it to a pro.
For example:
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A pro can pay for themselves by decreasing time spent on market, from months to days
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A pro will have all their own furniture and other accessories
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A pro spends their days keeping up with the latest styles. (Do you? Didn’t think so.)
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A pro knows how to create warmth and bring out emotions in buyers
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A pro is emotionally detached from the house, and can see flaws you would think are fine
Typically a professional stager will cost you about 0.5% to 1.0% of the sales price of the home*. On a $200,000 home that means $1,000 to $2,000. (And it may cost slightly more if the stager rents their furniture, instead of owning it.) But 90 days of mortgage payments and other holding costs would typically exceed this amount – especially if you are using hard money – thereby justifying the investment.
*That price will cover up to 90 days of staging. Generally, you don’t use the full 90 days, because the property sells more quickly with the professional stager’s assistance.
A reasonable knowledge of staging will also help you work better with your stager, in order to make your house really stand out. So here are some ideas…
Staging “Do’s” and “Don’t’s”
Obviously the top suggestion to “do” when staging your flip is to hire someone to help. But you don’t have to pay for everything with the stager.
However, you can also:
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Hire the stager to walk through your house for a couple of hours and give you staging ideas. This may cost you only a couple hundred bucks. Bring a video camera and implement her suggestions.
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Look into virtual staging. There are lots of services on the web that can take your pictures of empty rooms and digitally enhance the photos to put furniture in them. That way, people can imagine what the room will look like when they move in. This may be especially useful if you want to put the house on the market before you have it ready to go. Be careful though – don’t deceive your prospective buyers by adding or changing room features that are not reality. Buyers are gonna find out the truth, eventually. So just add staged accessories.
There are some general themes to staging that apply everywhere in your house…
The biggest thing you can do is de-clutter and clean. Get all the construction and remodeling debris outta there!
And, for Pete’s sake, don’t stage it too much. Having too much furniture and other accessories in your house is going to hurt you just as much (or maybe more) as too little.
Thirdly, take a big whiff inside the house. How does it smell? Many investors love the stench of cat urine in a house. Stench of Cat Urine = Big Purchase Price Discount. Do you want to give a big discount when you sell? No way! So make sure the house smells great. Put out a tray of just-baked chocolate chip cookies, for instance. (Or, at a bare minimum, at least make sure the house does not smell bad.)
You also don’t want to hear:
“Hey, the 1970’s are calling – they want their stuff back.”
Make sure you have modern furniture. Don’t use items from Grandma’s old, cluttered garage to save some bucks on a profession stager.
And keep up with the latest trends. Not just what is in style at the time, but also what time of year it is. If you are selling your house in December, think of putting a Christmas tree in the house. And the same goes for any other big holidays… Help create emotion and let people feel what it would be like if they lived there.
(Are you starting to see why it may be good to hire a professional?)
The "Money-Maker" Rooms
The rooms that really stand out are the kitchen and bathrooms.
More than any other rooms, these rooms sell the “house” as a “home”. In both rooms, you can hang out nice, new (or almost new) towels, arrange soap dispensers on sinks, and position vases with fresh flowers, in order to make the kitchen and bathroom(s) both look and smell wonderful.
For the kitchens, you might want a little extra:
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Dishes in the cabinets, or out on the breakfast bar/dining table
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Stools at the breakfast bar and/or chairs at the dining table
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Pots hanging from hooks near the stove
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A cookbook opened to a favorite recipe
Of course, don’t go overboard in either room. (For example, don’t bring in a huge piece of furniture for bathroom storage that fits over the toilet.)
Besides the kitchen and bath, think about where else the potential buyer will spend most of their time. Usually this is the master bedroom and the main living room.
In the master bedroom, all you may need is a bed. Just make sure that bed is not too big for the room – because erring on the small side will help the room look bigger. I’m not talking Barbie and Ken’s bed, but don’t stick a California King in the room if it takes up the whole space. Keep the staging in this room very simple.
Same goes for the living room. You’ll want some kind of couch or love seat in there –but make sure it fits easily. Don’t let it dominate the room. Maybe add a simple sitting chair and/or a fake TV, like they have in furniture stores. See? “Simple.”
And one other room that’s important – the ‘awkward room’. You may have a smaller room, or a room that’s hard to figure out. By staging it as an office or a game room, for example, people can see right away that the room is a benefit, not a liability.
Don’t Forget About First Impressions
Many rehabbers work like crazy to make the interior of a house look fantastic, and they don’t spend much time with the exterior. Yet many buyers will tell you they make most of their decision about whether or not to purchase a house as they drive up to it.
Both the exterior of your house itself as well as the surrounding landscaping can be a huge factor in a buyer’s decision to purchase (or not to purchase). So pay particular attention to the path the buyers will follow to enter your house.
Start with the “curb appeal”. Make sure the grass is cut well, and edged. Nice flowers, mulch and landscaping can be pretty inexpensive – and they can really help make the house look appealing. Weeds don’t.
Pay particular attention to the door with the lockbox on it. Is there any paint peeling on the frame? Should the door be replaced? How about a welcome mat out front? Work those emotions!
A great stager can really help with all this, and save you a ton of money. Not to mention the piece of mind of having your house sold relatively quickly, and money in your pocket.
However you decide to go about it, staging is pretty much essential if you want to sell your investment properties for top dollar in today’s market.
Talk to Other Investors – See if they have a favorite stager. Ask them what their stager did to really sell their properties.
Talk to Realtors – Ask them what’s selling in their areas. How should you fix up and/or stage your house to price it at the higher end.
Talk to Stagers – Ask them lots of questions - how they run their business? Do they rent or own their furniture? What kind of track record do they have for selling homes quickly? Do they have satisfied clients and could you have their phone numbers?
Try to Stay Up with Styles – Do people like Islands in their kitchens? Stainless steel appliances? Separate bathtubs and shower stalls? None of these? Knowing the latest trends up front may help you decide on buying the flip in the first place.