I guess it’s a philosophical difference. I know several investors who have a bare-bones approach to getting rentals ready and maintaining them. I see their point because they are looking at it as a revenue generating object. Maintain just enough to protect the object and the investment.
On the other hand, I tend to go in the other direction and perhaps do too much to get a property ready and maintain it. But here’s the deal: my philosophy is to increase value and attract better tenants and keep them satisfied.
I don’t know if I’m right, but there is method to my fix-up madness. I want to attract a tenant who will be pleased with the house. I also have this idealistic notion that people will take better care of the property if they see I care about the property. Okay, you can quit snickering now.
Here is a list of reasons why I go a little overboard on fix-up and maintenance.
- I want the tenant to know that I care about the property and that it means something to me.
- I want the tenant to be proud of where they live.
- I want the property to be much more valuable when I sell it than when I bought it.
- I want to get a reputation of renting good homes in good condition and keeping them maintained.
- I want to be respected as a landlord and attract tenants through word of mouth.
- To minimize turnover and vacancy.
However, I do see that doing too much can negatively affect return on investment, so I have learned from other investors how to be frugal and not throw money away on vanity and a overdeveloped sense of aesthetics. Like everything else, I guess it’s about balance, but I tend to go more in the direction of doing more rather than less in hopes of getting a better return in the long run. Naive? What are you, and over-doer or an under-doer?
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Article Author: Mike FarmerMike has written 20 articles for us.
Visit Mike's Website: http://www.MikeFarmerRealty.com
Joshua Dorkin
{ 16 comments… read them below or add one }
In the Florida property market close to Disney, the approach of “too much” rather than too little is one that we recommend – not only because renters definitely treat such places with more respect, but also because the policy attracts repeat business. Competition is fierce and the advantage of a well-maintained home versus an average to poor one is great.
When is comes time to sell, the better care also attracts a quicker, higher priced sale of course.
I can see that I wasn’t clear in my earlier post – my comments relate to short-term rental homes which are invariably furnished. This is a specialist market, of course, which demonstrates, I guess, that different rules could apply for different localities.
Those are 6 quality reasons. Anyone that cares aobut their business should follow those 6 principles, even if the business is not related to real estate. Developing a good reputation, letting your customers know that you care about them, minimizing turnover, and gaining respect and word of mouth advertising are timeless business principles that always bring about success.
My vote goes for too much over too little.
You have a very interesting opinion about increasing value, attracting better tenants and keeping them satisfied. I do agree with you, especially with your six reasons.
Thanks for the comments.
My natural tendency, like the author is to overdo! I agree that when people have something nice they are more likely to take care of it. One thing I try to do is to overdo on a budget by upgrading lighting and appliances purchased from Craig’s List. It is a great resource for adding some flash to a home without hurting your bottom line.
Thanks for the tip Wendy.
Mike
Everything must be functional. All the lights need to work, the stove needs 4 burners that work instead of 3 that do and 1 that doesn’t. If it’s trashed – replace it. Otherwise repaint/repair. But everything hinges on the idea that you can actually rent a place out and have a functional home.
If something like a fridge/stove/washer breaks in a less expensive apartment, and you have a more expensive apartment with an okay appliance. Put the the new appliance in the better apartment, and hand me down their appliance to the lesser apartment. Same $$$ but 2 happy tenants instead of just 1.
Thanks Athol, good practical advice.
This is a specialist market, of course, which demonstrates, I guess, that different rules could apply for different localities.
I always overdo. I believe my tenants respect both me and my homes more. People want a nice place to live and to know that you respect them. I also receive generally about $100 – $150 more per month than most of my competition for the same style homes.
When my tenants are ready to buy, I am sure they will remember me as their Realtor as we have such good relationships.
Thanks for the confirmation Lisa
I think what is more important that over-do is “over-deliver.” I don’t think you need to over-do on all of the fixtures, appliances, finishes, etc. as much as you need to “overdeliver.”
I think if you overdeliver on your rental’s look, your service, your “tenant support” (a.k.a. customer support in business terms) and you’ll be well off and your rentals will rent. Why? Because of one simple marketing technique that’s been around for ages:
“word-of-mouth” People who rent know other people who rent and the word will spread that you are the nest landloard in town.
Just my 2 cents.
Peter
I would make my rentals in very good shape. I agree that making something more attractive would increase the chances of getting better tenants.
I tend to do the same when I can with fixing up. I think, long term, it decreases the “hassle factor.” It creates an “upward pressure’ on the type of tenant I attract, reducing vacancies and allowing regular rent increases to be ‘credible.’
these are all things that don’t show up on my initial excel document I use to evaluate a property. I might use a generic 8% vacancy rate for “testing” but maybe my “over delivered” property that I finally got my dream tenants in hasn’t had a vacancy in 3 years, and even though I spent a little too much on cap imp’s,. because of my zero vacancy, it still cash flowed like I predicted.