By Mike Baird
If you want to make the most money possible with the least effort on a fix-and-hold real estate investment, you need to be able to charge a good rental rate, and you need to find great tenants who will renew their leases and stay for longer than just a year or two. To do that, you need great property management, but that’s not all. Your property needs to really stand out from the crowd. So how can you make that happen?
Treat It Like a Fix-and-Flip
The first step to making your property stand out is to treat it like you’re trying to sell it. When you buy a distressed property with the intent to fix and flip it, you put everything into making it a gorgeous place to live that people will be happy to pay market value for.
When most people rehab a house to rent, though, they don’t put in the same effort. They don’t invest in new appliances or opening up their floor plans, and they don’t add the extra details that make a home really attractive. That’s because rental tenants are expected to put a lot of wear and tear on properties, and they’re expected to damage appliances, too. So landlords put as little money as possible into fixing up their rental properties, and then they rent them out at whatever rate they can get.
That’s not the way to do it. Instead, treat your rental rehab like you’re going to try to flip the house at a great market price. With modern appliances and other tempting design details, you’ll be able to rent your property at a higher rate, which can help weed out a lot of potentially troublesome tenants. And, because your property will be so attractive, you’ll be able to pick and choose among tenants to get the best ones (of course abiding by Fair Housing compliancy).
Focus on the Kitchen and Bathrooms
On that note, I don’t think you need to spend a fortune on your rental rehabs in order to make them really stand out, though. If you focus on updating your kitchen and bathrooms, your rentals will immediately look and feel a lot better than most of the comps in just about any rental market. When potential tenants come in and see stainless steel appliances, marble (or marble-like countertops), and a master bath with a waterfall showerhead, they’ll be sold.
Consider Staging the Property for Your Open House
If you really want to get a premium rental rate, you should also consider staging the house (or a model apartment) when you show it to potential tenants. This will almost automatically increase the perceived value of the place, and it will help your prospective tenants see themselves living there, too.
Never Underestimate the Power of Good Property Management
Finally, whatever else you do or don’t do with your rental property, don’t skimp on property management. The right property management firm won’t just collect rent and answer urgent maintenance calls — it will also take care of routine repairs and upkeep, handle property costs, find new tenants when others leave and keep everything in good working order. With a good property management company, you’ll be able to sit back, relax and enjoy a truly passive income stream.
With the right updates, a little bit of staging and good property management, your tenants won’t just agree to pay a slightly higher rental rate — they’ll also want to stay for years to come. And, if you only raise rental rates by a reasonable margin every two to three years, they won’t have any trouble paying what you ask and won’t want to go anywhere else. Follow these tips, and you’ll be riding high on your fix-and-hold real estate investment property.