Agent says why are you putting that much money into a rental?

My duplex is quit a project for a rookie. $20k in rehab estimated. The 1st house I guessed $10K in repairs and we ended up at $10,084…I was proud! The back house we are working on should be about the same.

I was doing work in a realtors house and she was real curious about my properties then goes why are you investing so much in a rental that is going to get tore up? I replied well with fix ups and when all of the dusts settles I could make about 15K on a flip or make $275 a month on rentals while paying on a small mortgage. Plus the 20K might put (guess) 40k in equity. I also know the house was done right and will last as is for a long time.

Considering she is a realtor with a nice house she has done something right. Just wandering if there is something I missed here?

In general real estate agents don’t know the business of real estate. They are salesmen. They can sell cars, shoes, boats it is all sales. Because they don’t know the business they don’t believe in it. Think about it. The only time a real estate agent sees a real estate investor is when the investor has a sour property and he comes in begging the agent to sell their property before they lose their shirt. There are a few and I mean few like DeeinAustin that understand what you are trying to do. I spend $10k on fix up. My average fix up is about $6,500, but I have gone as high as $12k.

My philosophy is that when I buy a house I fix it up in apple pie order. New carpet, new paint and new appliances everything works. Since new things don’t break I don’t do any maintenance. If the tenant breaks it, then the tenant pays for it. Again I don’t do any maintenance. After 3 to 5 years things still look good but they are going to start breaking so I either refinance the house and use the cash out to do a mini rehab, (if I am going to keep that house) or 1031 the house and the maintenance problem to someone else.

My advice is to talk to everyone about your real estate, but only take advice from a qualified individual. A qualified individual is someone doing what you want to do. Not someone who tried in failed (Because he evidently didn’t know how to do it). But someone that is doing it and it is working.


I would have to differ a little with Bluemoon on this one. I fix up rentals based on the quality of tenant I am expecting. In our low income rentals, I paint the floors; put in used appliances, and only do what is necesary to make it clean and safe. In our better SFHs, I will put in cheap Berber carpet, but I still always put in used applianced (although they look new). In all instances, I am very careful about what I put into a rental. Fancy tile, expensive carpet, expensive appliances, and expensive countertops are only justified in rentals that generate very high rents.

Good Luck,


I kind of fall between Bluemoon and property manager here as far as repairing and rehabbing for rentals.

If you do a rehab right from the start, with decent quality flooring (although very durable), fixtures and the like, things last longer. I’ve found some people go into a low-income rental area and go the absolute cheap, then complain that everything is torn up and broken in too short a time - requiring almost immediate repair and replacement and causing maintenance costs to soar. You save in the short haul but pay lots more over the longterm.

On the other hand, getting top-of-the-line stuff is expensive and uneconomical, unless you are catering to some truly high-end customer. I’ve seen investors do it both ways - put too much rehab into somthing that is going to be a rental - while others doing rehabs slap-dash and cheap. I always took the approach of do cheap but quality, and it always worked for me.

As far as real estate agents, I was one for three years and that was a time that gave me a grand education. My experience was that 75% of all agents are part-timers- semi-retirees- housewives - people needing a small income - and not truly motivated to go out and sell. Many just hang around and drink coffee. if they get 1-2 deals a month they are happy. In the office I was in there were four of us - of 18 agents - that produced 80% of all of the business in the office.

One reason why it is important to look for good real estate agents. You want one who is truly hungry.

So a small percentage of agents are high-powered sales people - and investing is a bother to them. After all - they make money off of buyers and sellers, why should they become one - and an agent’s job is hectic. Who has time to own an investment property? As far as the rest, most don’t have the fire in the belly to really get involved themselves in investing. In fact, in my office, only two got involved in investing. The owner of the brokerage and myself.

I left because I didn’t like the office politics and sometimes cutthroat nature of a real estate office. Investing is so much more satisfying - and profitable, as far as that goes.

So always listen to what a real estate agent says, but remember, they have a very limited and skewed view as to what an investor does.

Thanks for all of the great replies. Since I stated I am income 1st and appreciation 2nd you guys have guessed right that my properties are lower income. I do install used appliances with warranties (remans) and watch my spending, install light cheaper carpet that can be died twice ect, ect. That 20K is all rehab not much frills. I did do new ceiling fans and lights but they were cheap in the 1st place just looks 10X better.

In summary I do cater to the clientel.

My realtor that I do biz with (not the one I was talking about) Is a broker, realtor and owns the company. He works very hard and is hungry. Sometimes a bit too hungry and I can feel him pushing properties on me sometimes that dont qualify under my income regulations.

What is norm for negotiations with realtors on percentages for you guys buying properties frequently?

I love the idea that some landlords actually paint the floors.

In the Section 8 Bible, they call it “carpet in a can.”


In one of my houses I wanted to do this on some old wood floors that need to be refinished someday. Problem is i have not found a paint that will take the abuse. Dont want to paint the floors every change over


It takes about 45 minutes and $10 worth of paint to roll the floors in a 3 bedroom house. I use “True Walnut” colored exterior paint from Walmart in my rentals. It won’t last, but who cares, it’s easier and MUCH cheaper to spend 45 minutes rolling the floors than replacing carpet!


Actually Salverston is right. You need to evaluate your property to determine how much you should put into the property. I have properties that are pretty upscale. 1500 sqft or above with 3 to 4 bedrooms 2 baths and 2 car garage.

Good point, I might try this in my house I am working on now. They do have true floor paints that my old man uses on some jobs that works okay, oil based and messy though.

One reason we put ‘alot’ of money into a rental, is becuase, even though they are a rental… If they’re on our books, they’re always for sale.

Making them nice will do 2 things for you. 1) attact nicer clients, which can demand higher rent than the next door that is just habitable. 2) bring a nicer price tag to potential buyers of an ‘occupied’ property.

As we all know… Somethings you put money into, you’ll raise the value of the property… other things will simply make the easier to sell. We balance both, and maximize the property and invest in it to the point of deminishing returns…

my 2 cents…


I disagree with this…A hungry agent could be hungry because they just can’t make the sales?..Much like a hungry contractor…Why is a good/qualified contractor hungry?..They shouldn’t be if they are decent and know what they are doing…Same for a hungry accountant, hungry engineer, hungry lawyer…Why are they hungry?..Cuz they’re not getting business…

My real estate agent in Virginia, where I own upper scale homes ($300k and up), is THE MAN as far as I’m concerned…He used to own the 2 biggest real estate agent schools in the state and I think the largest appraiser school…He knows the business inside out…But he’s not hungry…He’s in his late 60’s and has more money than he’s ever going to spend but he loves the real estate game…That’s really his motivation…he’s taken me to houses before and I told him to break out the papers - that I liked it and it was just what I was looking for (I bought 8 houses from him in one year about 3 years ago)…Then he told me to forget it - he’d find me something better…AND HE DID!..He’s the true opposite of hungry…A hungry agent would’ve whipped out those papers so fast we’d both get paper cuts…And I would’ve been happy with the deal, but my agent took things to a better level, and I’m glad he did…

I don’t want hungry…I want qualified…

One reason we put 'alot' of money into a rental, is becuase, even though they are a rental.. If they're on our books, they're always for sale.

Making them nice will do 2 things for you. 1) attact nicer clients, which can demand higher rent than the next door that is just habitable. 2) bring a nicer price tag to potential buyers of an ‘occupied’ property.

It sounds like you’re in the business of flipping rentals to newbies. That is an entirely different business that actually being in the rental business. Tenants are hard on rentals. Putting a lot of money into a rental is a very poor idea if you’re in the rental business. Additionally, because tenants are constantly tearing up the nice things (carpet, wood floors, countertops, walls, appliances, etc), spending money on expensive items will not help in a sale unless you’re planning to sell very quickly - before the tenants tear it all up.

I disagree with this...A hungry agent could be hungry because they just can't make the sales?...

I don’t interpret “hungry” this way. When Salverston said he was looking for a hungry realtor, I think he meant an aggressive agent that really wants to do deals. In other words - a greedy agent.

Good Luck,


“Hungry” to me is someone who has a fire in their belly and is willing to go the extra mile to put a deal together - and sometimes more importantly - keep it together. Most unsuccessful real estate agents aren’t hungry - to my way of thinking. Most are lazy or unmotivated. Some are desperate. :helpThat is not hungry.

In fact, some of the hungriest real estate agents are the most successful. They truly have a fire in their belly to be successful, to learn, and make a great living.

They have HUGE appetites :beer

Makes sense. When I consider my current rehab, It will be close to 20k for a duplex consisting of 2 houses, I should get my rehab investment back plus 50% or so in equity or profit from sale. Not to mention I bought it right and should get even more at sale. Being a newbie, (3 properties) I am looking at this one as a possible flip for a turn key investor or keeper, we will see when I am done. The great thing about this is it will for sure make money either way.

Have you ever refinished the wood floors in a lower income rental, Mike? I’ve wonder how long they would last, especially with a Section 8 tenant.

I guess if you paint them, you still retain the option of someone sanding and refinishing them later. Do you do any prep work to take off the existing poly/stains before painting, or do you just get it broom clean and roll it as is?

I’ve been an agent for 4 years now and i find 75% of the agents flat out suck at what they do…

spending money on rentals…spend your money on roofs, mechanicals, electrical services and keeping the landscaping well groomed(ie, nothing there but not bare dirt). low ball the rest and figure a round of paint, carpet and fixtures into your operating budget every 3 to 4 years.