Is Staging an Investor Owned Flip House Worth It?

Staging-a-HouseI was in a training class today with some other investors and the topic of staging came up.  The person leading the seminar only stages the kitchen and bathrooms (he mentioned he spends around $500).  Other of the attendees mentioned they can stage the entire house for $1,000.  When we first started we staged House #1 and House #3.

We had a break-in on our corner lot (House #3) and replaced some of the furniture and ended up selling the rest to the buyer of House #3.  Since I got home I have been thinking about it a little bit.

The answer really depends, I think in this market there is little advantage of staging a property.  We get multiple offers and our ceiling is the appraised value, not what a client is willing to offer.  But there are definitely some scenarios where staging makes a lot of sense.  The guru Kristen on the Property Ladder always recommended that the people on the show stage the house, and quoted that it helped get 3% additional out of a property.

The Advantages

  • Helps Buyers See the Potential
    I look at vacant houses every day.  When a property has furniture in it, it feels like a home.
  • You can sell the furniture to the buyer at a profit
    If you get good at buying furniture you can typically sell it to the homeowner for more then you paid for it.
  • Odd Spaces and Hide Flaws
    Some properties are not conforming… tiny bedrooms, breakfast nooks, office areas, etc.  The buyer can’t picture how a tiny bedroom would work, but if you put a twin bed it and some furniture it looks bigger!
  • Builds a Good Brand
    If you are an investor that does multiple properties, if your house is immaculately staged it will help with your name brand recognition.  Agents will want to show your “perfect” properties even more then they do already.

The Disadvantages

  • The Cost
    Staging a house is an extra cost, that sometimes you don’t recover.
  • The Infrastructure
    You can hire a staging company to come in and stage the property or you can buy the furniture, and move it to property to property.  We found it really hard to manage this, sometimes we have three or four listings other times we have only one and every so often we have nothing.  Where does the furniture go, how do you move it?
  • Break-Ins
    In House #3 someone stole half of our furniture.  We think it was a real estate agent who came in after hours and took the furniture.  Your flips are vacant for long periods of times… so there is little protection from this.

Overall, I think we are going to experiment with this, but it is really market dependant.  Our ceiling is the appraisal, so staging a house would not really net us any additional funds.  In 6 months we will have other obstacles and staging might help us overcome this… what do you do?

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