Build A Rehab Inventory: How To Save Money And Time By Stockpiling Rehab Supplies And Rental Property Equipment
BATTLECALL GUEST EXPERT: Robert J. Abalos, Esq.,
InvestingInLand.com
As a rental property owner or rehab specialist you are going to handle many
repair and replacement jobs on a regular basis. This is just common sense.
Toilets break, things need painting, window seals wear out, refrigerators break,
and all the usual but expected annoyances that cut into cash flow when they
happen.
One of the most cost effective ways of handling these problems is to build up
a rehab inventory ahead of time, buying these items when they go on sale rather
than waiting until the crisis moment that you need them. You can also save
yourself a whole lot of time not having to run to Home Depot on a Saturday
afternoon and fight the mall traffic when you have an inventory of stock repair
items available for your immediate use. You not only save money on these
inevitable purchases you know you will need but lots of time and aggravation as
well.
Building a Rehab Inventory
This really isn't rocket science here. It just requires some careful planning
and minor record keeping.
First, find a clean, dry storage area for your inventory. An unused garage or
storage shed is perfect. Realize that very few of the items you buy will have a
shelf life and can be stored for years until they are needed.
Second, think of all the usual items that need repair on rentals. Examples
include not just common things like toilet seats but doors, windows, shelves,
washing machines, tiles, and more.
Some common examples from my rehab inventory include:
- Bathroom fixtures (toilets, sinks, etc.)
- All sorts of weatherstripping for windows, patio doors, etc.
- Doors, interior and exterior
- Plumbing fixtures
- Paint and painting supplies
- An extra washing machine, refrigerator, water heater, and stove
- Tiles, bathroom and kitchen
- Flooring
- Carpeting in small amounts
- Cleaning supplies
- Mailbox
- Light fixtures
- Shelving
- Light bulbs
- Glue, screws, nails, fasteners, etc.
- Closet doors, tracks, dowel rods
- Finish molding for door trim
- Bathroom medicine cabinets
- Basic construction materials like 2x4s, plywood, etc.
- Glass block
- Bricks, cinder blocks, gravel, asphalt patches
- Driveway refinisher
- Brass numbers for doors and much more
I think you get the picture. If you are going to need it one day on one of
your rentals buy it when you can get it on sale and have it immediately handy
instead of running to the store in an emergency, paying full price, and dealing
with the time pressure of an angry tenant.
Search Around and Buy It Cheap or Get It For Free
When you have a rehab inventory it is much like having a kitchen pantry.
Keeping all that food handy allows you to be creative in how you use it. Plus
when you dedicate a space for your inventory it means always having a place to
store your unique and prize finds. I once acquired a beautiful fireplace mantel
from a friend who gave it to me because he knew I had a storage area dedicated
in a garage for such treasures. He lived in a condo and understood the mantle
would go bad without protection from the elements. What saying here is that when
you select a specific space for your rehab inventory you will be very motivated
to fill it with bargain buys and special items.
You can buy all the obvious repair and replacement items you need at Lowe's,
Home Depot, Wal-Mart, and other home improvement places when they go on sale.
Search the Sunday newspapers for bargains. Many of these retail stores sell
certain items very cheap to lure you into the store. Buy those and only those
for your inventory.
But do not just think about shopping in retail stores. I have bought rehab
inventory items virtually everywhere from salvage yards to church and charity
fundraisers to damaged freight stores to garage sales. These places are
excellent sources of higher ticket items like used washing machines,
refrigerators, stoves, water heaters, and the like. I once bought a bunch of
solid core exterior doors at a garage sale from a guy who was liquidating his
own rehab inventory! His wife was in the front yard selling bowls and coffee
mugs while he was in the back getting rid of conduit pipe and aluminum gutters.
(They were retiring to Florida, by the way, on their rental property
income!)
Look for rare items for your inventory that can spruce up a normal looking
apartment or rental house and make it stand out as something beyond the
ordinary. You might not have a need for them today but your next real estate
purchase just might. Unique moldings, stained glass, awnings, antique door
handles, shutters, and more can give a newer home a classic look. Many of these
products can be obtained from companies that demolish houses for little or no
cost. I know these companies because I do rehabs and they know me because I
sometimes have to hire them. This symbiotic relationship can make your inventory
grow quite rapidly for almost no money at all.
Buy damaged items at bargain prices. Just because a washing machine has a
dent in it doesn't mean it's a bad buy. Your tenants won't know the difference
or even care. As long as it works, consider yourself lucky. I know so many
rental property owners that have to run out to Sears or Best Buy to buy a new
refrigerator or washing machine at retail prices at a moment's notice for a
tenant when the old model fails. After all, you can't ask a tenant to live with
sour milk or dirty clothes if you promised them otherwise. But you don't have to
supply a new refrigerator still on warranty, you need to supply a clean model
that works. When you can get your hands on damaged items, buy them. This
includes everything from bathroom vanities with tiny chips in them to kitchen
fixtures that are slightly discolored or scratched. These items could not be
used on a new construction project but they sure fit nicely in rental units. As
long as something damaged works, it can be used and often purchased at a bargain
price. But do not buy junk. Do not buy a washing machine that doesn't work with
the notion of fixing it yourself unless you REALLY REALLY REALLY know how.
Dents, wear, and dings are okay. Gashes, rust, and anything broken are not.
When you let people know you have a rehab inventory space, they will help you
fill it for free. I routinely trade my extra products for other things I want or
need. A friend needs a door, he gives me some extra hardwood flooring in return.
People will call you saying things like "I have some really nice metal lockers
from an old school. You want them?" I installed these one time in a kitchen
pantry and the tenants loved them. Plus they are indestructible, unlike wooden
shelves. I'm not above being a garbage collector either to get things for free.
When I'm at the dump (or what we call here the "transfer station") in my pickup
truck and I see some old pine boards or a broken bookcase I'm thinking of a new
storage area for an apartment. I once built a shelving unit out of some old golf
clubs I found at the dump. Don't be shy. Help the environment and yourself at
the same time.
Keep Accurate Records and Organize
The worst thing is having something and not being able to find it. You KNOW
you have a wax toilet ring but where?
Keep accurate records and organize your purchases well. Nothing more than a
clipboard is really necessary. You don't need a computer in the garage to keep
track of where your screws are or your glue isn't. Just write down what you buy
(some grout, for example) and where you put it (in the metal cabinet near the
door).
I segregate my space by material type. Plumbing in one area, wood in other.
All fasteners are in one place, all paints and decorative material in another.
I'm suggesting you become a pack rat for the supplies you know you will need on
your rentals but also a shrewd and frugal rodent with a sense of order and
discipline.
Above all else, do not go crazy and spend money and space acquiring
EVERYTHING you may ever need. Stick what you know you will definitely need. If
you have two rental houses you don't need sixteen bathroom sinks no matter what
your dreams of expansion are. Keep only what you know you will inevitably need
or have a use for one day soon. Otherwise you will renting space in someone
else's property to house your rehab inventory designed to save you money. Not a
wise option.
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