January 17, 2019 by
Barbara Corcoran, a self-proclaimed “high school burnout,” had worked twenty jobs by the time she turned 23 years old. She then took out a $1K loan to start what would eventually become the largest real estate company in New York, selling for $66M in 2001.
Stories of real estate “sharks” like Barbara are part of what makes the promise of investment properties so enticing. The problem, of course, is that stories like Barbara’s are not the norm.
In any landlord’s ideal world, their investment property runs flawlessly, without need for repair – and rent collected from their happy, smiling tenants (never past due) provides a reliable stream of income. The reality is much more closely aligned with the concept of cost-effectiveness. In other words: You have to spend money in order to make money.
Attracting and keeping quality tenants will help a landlord generate revenue, but their responsibilities as the property owner are a critical part of the money-making equation. As a landlord, performing maintenance, making necessary repairs and taking on renovations that are both smart and cost-effective are key to a healthy investment property.
Whether you are thinking about becoming a first-time landlord or are a seasoned professional seeking some new ideas, take a look at the following suggestions to help maximize your profits and make the most money on a rental property.
Do NOT Cut Corners on Rental Property Repairs
To put it simply, duct tape can’t fix everything.
If your rental property is experiencing an issue, you should never ever put a band aid (or any other temporary fix) over the problem. A dollar spent today that might decrease later expenditures is a dollar well-spent! With most rentals, the focus should be on repairs that will negate future repairs.
- For Example: A relatively small leak can be addressed for little money. When that leak is allowed to continue, it will likely turn into ruined subfloor and mold that needs mitigating. For a multi-floor rental property, that issue becomes double when one tenant’s flooring is another tenant’s ceiling.
The bill for that minor leak sounds pretty appealing by comparison, doesn’t it?
Keeping a property compliant with its municipal code is a non-negotiable, as most communities implement inspections and mandate repairs. It would be foolish to attempt any way around this, because if something unexpected were to happen, the blame would fall on the property owner. Code is a baseline for minimum requirements. Strive to do more than the minimum.
One final note about repairs: Regular maintenance can help avoid the need to do damage control in the first place. Just remember to provide your renters with advance notice when technicians are coming in to service appliances, such as an HVAC. They will be happy to accommodate their schedules for any work that keeps their home in tip-top shape.
Attract the Tenants You Want Your Investment Property to Have
Meyer Real Estate has been in the real estate business for 60 years – so we think we’ve learned a thing or two about rental property management. One such lesson is that quality properties attract quality tenants.
The more run-down a rental unit becomes over time, the lower the rent you will bring in – and the more effort it will require to attract and retain a good tenant in the unit. If the carpet is worn, walls are dinged or fixtures look dated, quality tenants will look for a better home. Likewise, if your unit does not look like it has been well cared for, tenants are also less likely to take care of it.
Unless the local real estate market is really restrictive, the good and great tenants have their choice of where to live. These tenants generally have:
- A strong FICO credit score (i.e., 625 or higher);
- Stable employment history and sufficient income;
- Previous renting history with no prior evictions; and
- Lifestyle factors conducive to renting, such as being a nonsmoker or not owning a pet.
These prospective renters are not looking to take on sub-standard conditions or a haunted house. Furthermore, the perfect tenant is also looking for the perfect landlord to trust with their hard-earned cash. If you aren’t already that landlord, it is time to step up to the plate!
Affordable Renovations Can Make a Big Impact
So, what are those seemingly insignificant updates and improvements that can help add visual appeal to your investment property without breaking the budget?
For any updates you choose to undertake, a good marketing strategy and high-quality photographs of your unit will be essential. To breathe new life into your space after completing any necessary repairs, consider these budget-friendly renovations:
- Give your property a fresh coat of paint.
Use a neutral color or colors for broad appeal. Tan goes with everything!
- Rethink flooring in heavily-trafficked areas.
Hardwoods or vinyl-backed click flooring fare much better than carpet, which tends to become discolored by dirt, dust, hair and pet dander. On that note . . .
- Use a darker carpet in other areas.
This will better hide dirt for longer periods of time. It is also easier to downgrade the quality of the carpet if you install a quality carpet pad, which will make the carpet wear better and wow prospective tenants during showings.
- Paint or re-stain cabinets, and replace cabinet hardware.
White and dark brown shaker-style cabinets are all the rage these days. If your unit has the ‘90s area oak cabinets, they may be due for a makeover.
- Update, update, update.
This category is a bit of a catch-all, and can include countertops, faucets, and light fixtures. If you are really looking to increase your rent and add modern flair, swap out laminate countertops with solid surface, quartz composite or granite.
At the very least, a unit that is being turned over should be professionally cleaned and swept for repairs – but your creativity doesn’t have to stop there!
Find Quality Management for a Quality Rental Property
Being a landlord is a huge responsibility, and many choose to employ a property manager to help manage the day-to-day upkeep of their income property. A professional manager will help maximize profitability in the long run, by:
- Marketing the property effectively;
- Filing and transmitting the proper documentation;
- Screening prospective tenants thoroughly and in compliance with housing law;
- Understanding relevant state laws and municipal ordinances; and
- Maintaining a working relationship with local contractors, repairmen and realtors.
Remember, the journey isn’t over once you find a responsible tenant. Retaining that tenant for a more than the minimum guarantee in their lease requires gaining their trust, through a demonstrated commitment to your property – their home. If you need help with all of the moving pieces, consider Meyer Real Estate’s full-service rental property management program.
With a team of full-time rental managers and a rental management secretary, Meyer Real Estate can provide the staff augmentation you need to keep up with the demands of serving as a landlord in the greater St. Charles area. Maximize your time and the income potential of your rental property with full-service solutions customized to fit your needs – and enjoy NO fees until your property is leased.