Some of you outside the Midwest may not have heard of QuikTrip, but you probably will soon enough. The rapidly expanding convenience store chain is now in eleven states, has just opened its 700th store, and is worth over $11 billion dollars. It also happens to be ranked as the 41st best company to work for by Forbes –an incredible feat in my judgement for a convenience store.
For me, QuikTrip has become the only convenience store I will go to. I have imprinted each of their locations in my brain for whenever I need an iced coffee. And their delicious pizzas make it quite difficult to maintain the gluten-free state I desire.
But what really sets QuikTrip apart from competitors like Seven Eleven, Fast Stop and all of the rest is that QuikTrip has completely inverted our expectations of what a convenience store is supposed to be.
Most convenience stores are dingy places set up for little more than, well, convenience. The various food items are arranged in a disorderly fashion in a cramped, cheap building. Any food that doesn’t come prepackaged is borderline inedible, and, of course, the bathrooms are usually disgusting if they even go so far as to provide one to the public. The employees are rarely polite and often hidden behind Plexiglas.
On the other hand, QuikTrips are large, well lit, well laid out buildings that almost resemble small grocery stores. The tiled bathrooms are very nice, and the food service is high quality. They even go so far as to have what amounts to a fast food restaurant in the back of most of them. Basically, QuikTrips are the Rolls Royce of convenience stores.
But it goes further. The staff is courteous, wears uniforms, is constantly cleaning the store and seems to be at least reasonably well trained. They will literally always say “see you next time” after you’ve made a purchase as if to subconsciously program you to return again and again for their iced coffees and pizzas.
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How QuikTrip Relates to Real Estate Investors
But other than QuikTrips being located in a piece of real estate, what does this have to do with actual real estate investors?
Well, the key has to do with the small things. QuikTrip has separated itself from the competition and niched itself in its markets as the premium convenience store. It’s not more expensive than the others, but it certainly offers better choices and a better experience. Indeed, they probably could go ahead and charge higher prices.
When it comes to real estate investing, it’s often said you don’t want to have the nicest house on the block. That’s because the other homes there drive down your property’s value. But what you do want to have is the nicest (or near nicest) house amongst the competition at your price range.
We mostly rent, but I think this applies to selling just as much as renting. I have viewed other landlords’ units and have often been surprised by the little things that just don’t come off well. Indeed, we’re looking at a package of houses right now, and while they are all structurally sound, I have been surprised by the how many amenities have been lacking and make the house appear dumpy.
The Big Impact of Small Upgrades
I’ve been in many houses that had rips in the kitchen vinyl or countertops with massive seams in them. I’ve seen houses in good areas that are rented out with those old, brown refrigerators that look like they are straight out of the 1980s (or 1970s perhaps?). I’ve seen apartments where every single room had a different colored carpet or paint. I’ve seen homes with good carpet and just awful vinyl or that tacky parquet flooring from way back when.
The list goes on: horrible caulk lines on a shower surround; broken panes in several windows; old, ratty blinds; trees with limbs growing all over the house; weeds in the driveway, etc.
Some of the worst offenders have been in the front exterior, which is the first thing a potential tenant or buyer sees and is their first (i.e. most important) impression of the home. Often the front paint is terrible or the house looks really unappealing. You may not even need to paint the whole exterior, just the front to bring the house back to life, but many landlords don’t. Or perhaps some shutters or window boxes will give it all the life it needs.
The landscaping is often equally as bad. When just trimming the bushes, getting rid of dead plants and maybe adding a little bark mulch is all that is needed to do the trick.
Yes, these things cost money, but they don’t cost that much money. Bark mulch is cheap, as are window shutters, window boxes, and certainly killing weeds in the driveway. That old fridge will go out soon anyway. And if you leave tree limbs over the house, you are substantially increasing the odds that one will eventually fall on the house and cause serious damage.
By upgrading in these areas and making those small improvements that really don’t cost that much money (or are things you should do anyway), you make your house the top of the line, whatever your price range. Of course, in upper end price ranges, these things are the bare minimum. But in lower price ranges, they are often not expected.
But then again, a beautiful convenience store isn’t expected, either. But QuikTrip is doing it and killing it because of it.
It’s for this reason that we can consistently charge a premium on our rents. Our houses and apartments almost always rent for more than nearby, comparable properties. Furthermore, this makes it much easier for us to choose the best tenants because those are the ones most likely to want a nicer place. That way, we don’t have to deal with questions of whether to accept prospects that have evictions or felonies or leave the unit vacant.
Sweat the small stuff. In real estate investing, it can make all the difference.
Investors: What businesses inspire how you run your real estate business?
Let me know with a comment!