Everything You Ever Needed to Know About Flooring in Your Rentals and Flips

Everything You Ever Needed to Know About Flooring in Your Rentals and Flips

One of the most common questions I get from Strategic's passive investors will probably surprise you: They want me to tell them about the flooring in their rentals and flips.

The first time I heard this question, it was probably more than 10 years ago. The question surprised me at the time because I had been in this business for more than a decade at that point and no one had ever asked me anything about flooring unless they were an active investor looking for some informal advice!

These days, however, everyone wants to know about flooring, and if you are a passive investor, you are right to take the time to learn a little bit more about the topic. Today’s renters and retail buyers both tend to have strong opinions about flooring in your rentals that, fortunately, align perfectly with your budget as a rental property owner and your bottom line if you prefer to flip to retail buyers.

Everything you need to know about flooring in your rentals and flips

At PIP Group, we do hundreds and hundreds of transactions a year, so we spend a lot of time “looking at the floor,” so to speak, so here is what we know.

Hardwood is Hot for Rentals and Retail

Everyone loves hardwood, and that includes the rental property owner and the retail flipper! According to the National Wood Flooring Association, about 90 percent of real estate agents report homes with hardwood sell for more. A survey of buyers conducted by the National Association of Realtors (NAR) echoed these results, with more than half of all buyers willing to pay more for a home with hardwood.

Think hardwood is too expensive for your buyers, renters, and bottom line? Think again. Although hardwood floors may net nearly 100 percent return on investment (ROI), today’s high-end engineered floorings are nearly indistinguishable from hardwood as well as being nearly impervious to tenant-related damages. The combination of pressboard, resin, polymers, and hardwood “top-coat,” by the way, is called “engineered hardwood.” Don’t call it vinyl or tile! We’ll talk about that more in just a minute.

Everything You Ever Needed to Know About Flooring in Your Rentals and Flips

Laminate Can Mimic Luxury

Engineered hardwood is easier to install than hardwood, can be refinished if necessary, and is highly resistant to some of the most common rental disasters, like water damage. This is because the engineered hardwood can be installed over nearly any type of level surface and locks together, making it easier to swap out damaged pieces in the event of a moisture issue. In most cases, engineered hardwood is more moisture resistant than traditional hardwood as well.

However, engineered hardwoods are still relatively expensive. While you might install them in a fix-and-flip if the other houses in the neighborhood have hardwood or if you are trying to “set the comps” for the neighborhood, you might not want to put them in every rental. Fortunately, laminate flooring easily mimics luxury flooring like hardwood, marble, or stone using photorealistic images. This type of flooring is affordable despite its common nomenclature, luxury vinyl tile (LVT).

Of course, some investors still opt to install vinyl or linoleum in their properties, particularly in low-traffic areas like basements and storage areas. However, many PIP Group owners report that in high-visibility areas or in common areas, shelling out a little extra for LVT can make your units extremely competitive and will likely enable you to command higher rents, retain your tenants longer, or both.

Ultra-Lux Will Always be Ultra-Exclusive and Highly Custom

Of course, there will always be the fix-and-flippers who have a special knack for flooring and install special tile designs or stone floors that serve as a hallmark of that investor’s participation in the deal. These types of flooring and exotic hardwoods tend to have less of a hard-and-fast set of rules because their returns are highly contingent on your ability to read your market accurately. If you spend a great deal of money installing gorgeous marble flooring in a property, remember you will need to get back not just the cost of the marble but also the cost of the labor. Unless you are an expert in making these decisions, rely on your investment advisor or group to help you when it comes to making decisions about investing in ultra-lux flooring.