We're closing on our first 4-plex at the end of this month (yay!). The building is two stories, two units up, two down. The lower units each have their own moderately-sized enclosed yards with a small, paved patio area and some grassy area as well. We are wondering how to price the units compared to each other, so my question is what is more valuable to tenants - an upstairs unit where you don't have someone trampling overhead (and increased security), or a downstairs unit with its own yard? Or do the differences somewhat equal each other and we should just price all the units the same? I know this will depend on the area (its in Everett, Washington for those who know the area) and the specific tenant, but I thought I would put this out there in case anyone has noticed general trends in preferences amongst their tenants for these features or those professional property managers who may have specific data on this kind of thing. Any input is much appreciated! Thanks!
Hey! Everett Washington? We're neighbors!!!
In my experience, the lower units get better rents but it really depends on the building layout. With yours, I would say the extra yard space justifies a higher rent for the lower unit.
I would just price them the same and have them first come first serve. If one of the units can't seem to get tenants in a few weeks, drop the price.
@Melanie Smith congrats on the first deal! If the lower units don't have a fenced yard then the upper units are a tad more valuable.
I own a handful of fourplexes and manage a couple more for other investors in Everett. If you message me the address and unit conditions I would be happy to give you my professional opinion on the rents each unit could get
If you allow pets you can totally get more for the lower ones! people like yards :)
@Elizabeth Colegrove that's totally what I thought! And we do allow pets under 25 lbs. Thanks!
I have found that the neighborhood can really dictate this because of security. The upper units being more secure than the lowers sometimes makes the upper more valuable.
Thanks, @Dick Rosen I think that is likely the case here - this is more of a working class neighborhood.
@Melanie Smith First floor units get better rent because of the yard (dogs and BBQ's), with upstairs being the same price if the square footage is more due to not having common hallways or stairs. We've never had a tenant or prospective tenant choose a floor based on perceived noise. If you are going to allow dogs then you should have a pet deposit/fee (we do a non-refundable fee) and it's an extra $40 a month for dogs under 50lbs and $75 for over. Be sure to explore restricted dog breeds too, as you don't want common aggressive dogs in the place. One bite and you're in trouble. Here's an article that has some listed
@Sergio A. thanks for the suggestions. We do have a pet fee and pet rent for sure, and limit pets to 25 lbs each to avoid our insurance carriers list of disallowed breeds.
Also, when I rented I specifically looked for top floor, corner/end units since they are quieter. Your tenants may not mention that's what they're doing, but from years of apartment living I can vouch for that kind of quiet being worth a little extra rent. :)
@Melanie Smith Caution on using weight to equate to dog breeds as it wont hold up in a court of law ;-) You should have breeds explicitly mentioned in your pet policy. And while I am not as knowledgeable about dogs, I do know that the smaller ones can be even more problematic for larger ones, hence why we allow any size and just charge accordingly.
I guess I can understand noise being an issue in many areas, but it's not a major concern for folks wanting to live in the heart of a big city...they are more concerned with space size, central HVAC, nice kitchens and baths, etc. :-)
Melanie, interesting question and discussion.
We have a duplex where one unit is on top of the other. They have exactly the same floorplan and square footage. The yard is unfenced and shared, so no benefit to the downstairs tenant other than not needing to climb the stairs. We had one applicant who wanted to be upstairs due to wanting to get more exercise, but they normally applicants don't verbalize their preference or why.
Different people have different opinions, but we decided to make the entire property no pets due to the up-down nature. We didn't want to hear squabbling from tenants about a pet above or below them being too loud. We charge a per pet increase in rent of $25 each, and restrict on breed not weight, in the properties we do allow pets in. We meet and photograph all pets.
If it were me I'd probably charge a premium on the lower units, and I'd market the advantages of both the upper and lower units.
Thanks for the advice @Michele Fischer ! And good point that people don't usually verbalized their preferences. I definitely think selling the unique features of each unit is a good plan, and that's probably what we'll do. I imagine after a couple cycles of renters we'll get a feel for the demand level of different features (since we also plan to do exit surveys to get that kind of input).
Just to clarify we also meet pets to determine temperment, take pics of pets, charge a $500 pet fee (non refundable) and pet rent of $25 per pet. The 25 lb weight limit actually came from our insurer. Though these units are 2/2s and with top and bottom units I agree no pets is probably better. We just didn't want to limit our pool of potential renters since allowing pets is pretty common in this area.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.