share your ideas to increase rental value in a single family home

9 Replies

if there is no positive cashflow expected by renting single family home here in bay area, (as property tax, mortgage and competition etc too high )

what can be done to increase rental value of the home without increasing square feet?

- put new flooring (engineered wood ) ?

- upgrade appliances ?

- add sun room ?

- landscaping ?

- allow pets (with deposit)?

-antyhing else ?

what do you think ? please add

also, how do you manage income tax from rental income ?

@Ron Singh One thing that can ensure optimal rents in the areas I’m looking at now (C neighborhoods) is in-unit laundry. A lot of the bungalows in the zip code I’m targeting were built right after WWII and did not have these conveniences. And a lot of them never had them installed. People go to the laundromat or use a clothes line. So adding a washer and dryer hookup can increase possible rents in this example by 5-7%.

This was actually the reason I passed on one property that otherwise would have been great. It was a concrete block home with a slab on the ground. There was no laundry hook up, and there was no way to run plumbing to make one without literally demolishing structural concrete to do it! Laundry is a must when you’re paying top dollar in the market I’m trying to buy in right now.

My best value adds usually involve flooring.  Swapping carpet to laminate or refinishing old hardwoods under carpet.

With just a few rentals or less, tax software like TurboTax should be able to handle pretty well if you're looking to DIY. I usually use the county assessor info to break out  land value for depreciation, but there are different methods.  

Consulting with a tax pro early on shouldn't be too expensive and I would advise if brand new to you. 

Originally posted by @Minh Le:

Podshare.

Hiya Minh. Great to see you!

What the heck is podshare?  Thanks!

Originally posted by @Steve Vaughan :
Originally posted by @Minh Le:

Podshare.

Hiya Minh. Great to see you!

What the heck is podshare?  Thanks! 

Here's an article for you Steve.

https://sf.curbed.com/2019/7/1...

I happen to know a young guy who does this for a living. He moved to the Bay Area from NY. He rented SFH in high end neighborhoods (Palo Alto) with high walk score and rented them out per bed. He was renting 4-5 bedroom homes between $7-9k/mo and re-rented them per bed with the landlord's approval. The going rate was $35-$50/night. He had 4 beds (2 bunkbeds) per room with three bunkbeds in the master bedroom. For the office or den, he put a big bed in there and charged $80-$95/night. He was grossing between $18k-$25k/mo/house. His average vacancy was 15%.

At each home, he had like 8-10 bikes for the tenants to use. Whatever objection my partner and I came up with, he had it resolved. At each home, he had a person lived there rent-free/discounted rate to manage the place. A cleaner comes in once a week to clean the place. These places were clean and neat when we toured them. Unfortunately, he made a mistake when he rented a house in a prestigious neighborhood, and the neighbors complained to the City Council. The city changed their law, and his biz got toasted. He moved his operation to San Francisco. So when this pod share aka co-living idea came out, it reminded me of him.

Here's the kicker. When every bed was booked, he slept in the garage. When not, he would sleep in the office's bed, and that was heaven. He met a girl, took her back to "his place" and just happened that all the beds were booked so they stayed in the garage. She wasn't impressed so the first date was also a last date. He spent his days at Phil's coffee shop answering inquiries. 

He moved out here and bought a brand new 2015 Tesla Model S in less than a year. He gave me a ride in it. Now, I ride in my Model S everyday, and my car is even more powerful than his. Argh, argh, argh (imitating Tim The Tool Man Taylor). What's not to love about the Silicon Valley? It's the land of opportunity where opportunity is only limited by our own thoughts. I hope the OP gets something out of this post.

Cheers!

Originally posted by @Minh Le:
Originally posted by @Steve Vaughan:
Originally posted by @Minh Le:

Podshare.

Hiya Minh. Great to see you!

What the heck is podshare?  Thanks! 

Here's an article for you Steve.

https://sf.curbed.com/2019/7/1...

I happen to know a young guy who does this for a living. He moved to the Bay Area from NY. He rented SFH in high end neighborhoods (Palo Alto) with high walk score and rented them out per bed. He was renting 4-5 bedroom homes between $7-9k/mo and re-rented them per bed with the landlord's approval. The going rate was $35-$50/night. He had 4 beds (2 bunkbeds) per room with three bunkbeds in the master bedroom. For the office or den, he put a big bed in there and charged $80-$95/night. He was grossing between $18k-$25k/mo/house. His average vacancy was 15%.

At each home, he had like 8-10 bikes for the tenants to use. Whatever objection my partner and I came up with, he had it resolved. At each home, he had a person lived there rent-free/discounted rate to manage the place. A cleaner comes in once a week to clean the place. These places were clean and neat when we toured them. Unfortunately, he made a mistake when he rented a house in a prestigious neighborhood, and the neighbors complained to the City Council. The city changed their law, and his biz got toasted. He moved his operation to San Francisco. So when this pod share aka co-living idea came out, it reminded me of him.

Here's the kicker. When every bed was booked, he slept in the garage. When not, he would sleep in the office's bed, and that was heaven. He met a girl, took her back to "his place" and just happened that all the beds were booked so they stayed in the garage. She wasn't impressed so the first date was also a last date. He spent his days at Phil's coffee shop answering inquiries. 

He moved out here and bought a brand new 2015 Tesla Model S in less than a year. He gave me a ride in it. Now, I ride in my Model S everyday, and my car is even more powerful than his. Argh, argh, argh (imitating Tim The Tool Man Taylor). What's not to love about the Silicon Valley? It's the land of opportunity where opportunity is only limited by our own thoughts. I hope the OP gets something out of this post.

Cheers!

Awesome story and idea, Minh.  This guy sounds like a character I'd like to meet.

I'd have 2 suggestions for him if he were to ask me.  1) Don't take a first date back your podshare/place if you like her.  2) Although a new Tesla is an awesome choice of vehicle, I wouldn't buy a new car starting out.  But he didn't ask me anyway ☺

AirBnB or VRBO (aka short term rentals or rental arbitrage) will often yield more $ per month even when only rented for 1/2 month than a traditional lease. They also come with more demands and it's more like a business vs. "passive" income from SFH rentals. This works great however, if you own in an area next to major weekend/vacation attractions.

I know a guy who owns a 4 BR home near a military basic training base.  It was his primary residence, but he bought a new one.  Instead of selling, he built 2 very sturdy up and down bunk bed per bedroom, increasing the occupancy to 16 people maximum.  Note, this house also has 3 full baths.

Why?

Because this way the whole family (mom, dad, sissy, brother, aunts, uncles, and grandparents) can all come see Private Smith graduate and become an official Soldier in the Army for a $300 per night vs. paying for 6 hotel rooms @$120 per night.  He was booked solid 3 months out, and people only stayed in the place 2-3 nights per week.  The rest of the time it was vacant so he could handle repairs, upgrades, cleaning, etc.

So that's 2 nights per week * $300 per night * 4 weeks per month = $2,400.  He also charged a $75 cleaning fee which covered his cleaning gal and linen washing.  Had a credit card on file for each guest in case there were damages plus the AirBnB $1 million liability guarantee.

The house "as is" would've rented for $1,000 - 1,100 per month.

If you're wanting to stay with traditional rents on SFH, explore fees and packaging amenities.

* Want pets?  $300 per critter fee + $25 per critter rent per month.

* Want the "hassle free moving special" (internet, cable tv/netflix, trash service)?  LL negotiates with vendors to get all that for $100/month and you charge $150/month.

* Want your rent due dates to line up with your paycheck?  Divide rent in half and pay every 2 weeks.  The smart folks among us realize 26 half rent payments = 13 full rent payments per year.  I used this all the time and folks love the convenience.  Just be sure to explain clearly that some months have 3 Fridays and rent is still due every 14 days...NOT twice per month. 

* Offer a rent is due twice per month option (hinted at in the last point).  Divide rent is half and add a $25 per payment convenience fee, and it's due on the 1st and the 15th.

Lots of ideas.  Give people a little something extra that other LLs fail to provide.

Originally posted by @Steve Vaughan :
Originally posted by @Minh Le:
Originally posted by @Steve Vaughan:
Originally posted by @Minh Le:

Podshare.

Hiya Minh. Great to see you!

What the heck is podshare?  Thanks! 

Here's an article for you Steve.

https://sf.curbed.com/2019/7/1...

I happen to know a young guy who does this for a living. He moved to the Bay Area from NY. He rented SFH in high end neighborhoods (Palo Alto) with high walk score and rented them out per bed. He was renting 4-5 bedroom homes between $7-9k/mo and re-rented them per bed with the landlord's approval. The going rate was $35-$50/night. He had 4 beds (2 bunkbeds) per room with three bunkbeds in the master bedroom. For the office or den, he put a big bed in there and charged $80-$95/night. He was grossing between $18k-$25k/mo/house. His average vacancy was 15%.

At each home, he had like 8-10 bikes for the tenants to use. Whatever objection my partner and I came up with, he had it resolved. At each home, he had a person lived there rent-free/discounted rate to manage the place. A cleaner comes in once a week to clean the place. These places were clean and neat when we toured them. Unfortunately, he made a mistake when he rented a house in a prestigious neighborhood, and the neighbors complained to the City Council. The city changed their law, and his biz got toasted. He moved his operation to San Francisco. So when this pod share aka co-living idea came out, it reminded me of him.

Here's the kicker. When every bed was booked, he slept in the garage. When not, he would sleep in the office's bed, and that was heaven. He met a girl, took her back to "his place" and just happened that all the beds were booked so they stayed in the garage. She wasn't impressed so the first date was also a last date. He spent his days at Phil's coffee shop answering inquiries. 

He moved out here and bought a brand new 2015 Tesla Model S in less than a year. He gave me a ride in it. Now, I ride in my Model S everyday, and my car is even more powerful than his. Argh, argh, argh (imitating Tim The Tool Man Taylor). What's not to love about the Silicon Valley? It's the land of opportunity where opportunity is only limited by our own thoughts. I hope the OP gets something out of this post.

Cheers!

Awesome story and idea, Minh.  This guy sounds like a character I'd like to meet.

I'd have 2 suggestions for him if he were to ask me.  1) Don't take a first date back your podshare/place if you like her.  2) Although a new Tesla is an awesome choice of vehicle, I wouldn't buy a new car starting out.  But he didn't ask me anyway ☺

10x napper? What does it mean Steve? Don’t tell me you’re taking a lot of naps during the day. 

Here’s a true story. When I had a W2, I was such a go getter. There wasn’t enough time in the day to do things so I used to sleep 5 hours per night. My coworkers were shocked to find this out. Everyone was into 7-8 hours of sleep per night. I told them I would catch up on my sleep when I’m dead. Do you really want to go through life napping Steve? 😜

With respect to the podshare guy, he believes he’s an entrepreneur, and school was slowing him down so he dropped out of college. He was dating a girl who was attending Princeton University. Her mom told her to dump him, and she eventually did. 

He moved out here and started this podshare biz and within a few months, he was operating 5-6 rentals in Palo Alto and was making $25-$30k/mo. He asked my partner and I to buy these million dollar homes so he could operate them, and we would do profit sharing. 

He told us he called the ex-GF and her mom and told them that he “had made it” in the Silicon Valley, but they didn’t care. 😂 I wouldn’t be surprised the guy is getting a lot of action from the ladies driving around in that Tesla. 😜

Driving a Tesla in your 20’s is different with driving a Tesla in your 40’s. If you haven’t driven a Tesla before, give it a try. The car will put a smile on your face every time you drive it. How much does it worth Steve? 

Different things bring people different happiness. As long as you’re happy driving a used or a new affordable car, it’s all good. There’s no right or wrong answer. 

Originally posted by @Minh Le:
Originally posted by @Steve Vaughan:
Originally posted by @Minh Le:
Originally posted by @Steve Vaughan:
Originally posted by @Minh Le:

Podshare.

Hiya Minh. Great to see you!

What the heck is podshare?  Thanks! 

Here's an article for you Steve.

https://sf.curbed.com/2019/7/1...

I happen to know a young guy who does this for a living. He moved to the Bay Area from NY. He rented SFH in high end neighborhoods (Palo Alto) with high walk score and rented them out per bed. He was renting 4-5 bedroom homes between $7-9k/mo and re-rented them per bed with the landlord's approval. The going rate was $35-$50/night. He had 4 beds (2 bunkbeds) per room with three bunkbeds in the master bedroom. For the office or den, he put a big bed in there and charged $80-$95/night. He was grossing between $18k-$25k/mo/house. His average vacancy was 15%.

At each home, he had like 8-10 bikes for the tenants to use. Whatever objection my partner and I came up with, he had it resolved. At each home, he had a person lived there rent-free/discounted rate to manage the place. A cleaner comes in once a week to clean the place. These places were clean and neat when we toured them. Unfortunately, he made a mistake when he rented a house in a prestigious neighborhood, and the neighbors complained to the City Council. The city changed their law, and his biz got toasted. He moved his operation to San Francisco. So when this pod share aka co-living idea came out, it reminded me of him.

Here's the kicker. When every bed was booked, he slept in the garage. When not, he would sleep in the office's bed, and that was heaven. He met a girl, took her back to "his place" and just happened that all the beds were booked so they stayed in the garage. She wasn't impressed so the first date was also a last date. He spent his days at Phil's coffee shop answering inquiries. 

He moved out here and bought a brand new 2015 Tesla Model S in less than a year. He gave me a ride in it. Now, I ride in my Model S everyday, and my car is even more powerful than his. Argh, argh, argh (imitating Tim The Tool Man Taylor). What's not to love about the Silicon Valley? It's the land of opportunity where opportunity is only limited by our own thoughts. I hope the OP gets something out of this post.

Cheers!

Awesome story and idea, Minh.  This guy sounds like a character I'd like to meet.

I'd have 2 suggestions for him if he were to ask me.  1) Don't take a first date back your podshare/place if you like her.  2) Although a new Tesla is an awesome choice of vehicle, I wouldn't buy a new car starting out.  But he didn't ask me anyway ☺

10x napper? What does it mean Steve? Don’t tell me you’re taking a lot of naps during the day. 

Here’s a true story. When I had a W2, I was such a go getter. There wasn’t enough time in the day to do things so I used to sleep 5 hours per night. My coworkers were shocked to find this out. Everyone was into 7-8 hours of sleep per night. I told them I would catch up on my sleep when I’m dead. Do you really want to go through life napping Steve? 😜

With respect to the podshare guy, he believes he’s an entrepreneur, and school was slowing him down so he dropped out of college. He was dating a girl who was attending Princeton University. Her mom told her to dump him, and she eventually did. 

He moved out here and started this podshare biz and within a few months, he was operating 5-6 rentals in Palo Alto and was making $25-$30k/mo. He asked my partner and I to buy these million dollar homes so he could operate them, and we would do profit sharing. 

He told us he called the ex-GF and her mom and told them that he “had made it” in the Silicon Valley, but they didn’t care. 😂 I wouldn’t be surprised the guy is getting a lot of action from the ladies driving around in that Tesla. 😜

Driving a Tesla in your 20’s is different with driving a Tesla in your 40’s. If you haven’t driven a Tesla before, give it a try. The car will put a smile on your face every time you drive it. How much does it worth Steve? 

Different things bring people different happiness. As long as you’re happy driving a used or a new affordable car, it’s all good. There’s no right or wrong answer. 

10x Napper to me just means I don't hustle and grind anymore and I weigh effort/reward carefully when evaluating a task or venture. Valuing freedom and choices highly.

I get driving a car that puts a smile on your face. Now.  For most starting out it's a wealth anchor is all I was saying.  But most starting out aren't pulling in your friends' type of cheddar. ☺