How well-maintaned should I keep a home?

Question

I have two duplexes.  As soon as I bought them I made improvements.  I wonder, how many improvements is advised for a rental property?  Do I keep it as nice as my house or do I do the minimum possible? (For example, I wanted to add a nice medium-low priced ceiling fan and bathroom fixtures whereas my handyman suggests the cheapest ones possible or not putting them in at all since it is a rental) I do want to keep the place in good condition, but I realize that I will lose my cash flow that way.  Is there any general guideline people suggest?

Tom Goans · Answer

@Carrie Pledger,

In my viewpoint, this is not my rental property, it is the tenant's home.

I would recommend learning the desires and trends of your target market. Be the best value of all your competitors for the same tenant.

I have always put a premium on curb appeal and then focused on the interior. I always keep the interior of my properties spotless - every inch down to the toilet bowls. The walls are spotless and fresh. I paint at least one wall between tenants to give the place a fresh smell.

I seek the WOW comment when the tenant walks in. And it is not because of a shinny new appliance, it is because many places they see are dull and mine are bright and inviting.

A ceiling fan can be very economical. If you have good tenants in place, ask them if they would like a ceiling fan. You can suggest it is your way of thanking them for being such great folks. Such an economical jester can reap great rewards.

My good tenants receive restaurant gift certificates during December with a thank you letter. This simple thank you greatly improved the January payment timeliness.

What goes around, comes around.

There is no general guideline. Search what works best for you and your tenants. Every situation and every individual is unique.

Adam Johnson · Answer

@Carrie Pledger -some great comments already, so I will throw in a few more to go along with what has already been said. Your market drives a lot of what you do.  When walking tenants through, ask what your competitor's look like inside or go see for yourself if you aren't sure.  Personally, I try to be a little better than my competition without going overboard.  That means that my apartments are clean and fresh when shown, but not flashy.  My competition doesn't put a lot of pride in showing a clean place, I am embarrassed if the shower isn't clean when I show it.  My shower might be 15 years old, but it is cleaned.

Regarding the fans, that will be partially/mostly determined by personal preference and I suspect it won't be a make it or break it for your tenants if there isn't a ceiling fan in there.  I like to go for simple and functional, so I don't use ceiling fans.  If I buy a building with them, as soon as they look worn they are removed and replaced with a flush mount light.

I do buy higher quality carpet (think durable and best wear-resistant and not pretty and fluffy) that looks decent and stands up to abuse.  I use VCT for kitchen and bathroom floor replacements because it is very resistant to tenant abuse.  I go with basic fixtures with good hardware (Fluidmaster components in a basic toilet - leaks cost a LOT), faucets that are rebuildable, etc.

With regards to painting - I never let my tenants paint.  In the very few rare occasions I have broken this rule, I buy the paint.  All of my apartments are standard colors (for me).  I have selected 3 interior colors that I use, one trim and 2 wall colors.  To go along with the comment by @Tom Goans , if I only paint one wall to give it that fresh paint smell, I don't have to worry about color matching!  My 3 colors interchange well with each other and it is very easy to tell the difference.  Touch-ups are cheaper than repainting on every tenant turn.

Now, with all of that said, if I have a good long-term tenant that needs something, I might step up my game a little.  Let's say a stove or refrigerator goes and need replacement, I will go up a notch or 2 for theirs.  I still buy used appliances, but my supplier has all grades from cheap green and ugly all the way up to higher-end stainless units.

It is a delicate game.  I maintain my properties above what most of my investor competitors do. But I don't maintain them as well as the non-investor or owner-occupant would because it would destroy my return.  I define a non-investor as somebody that owns investment property but operates it in a negative cash flow basis.  I'm in the business to make money, but I also try to balance protecting the underlying asset so that it keeps its value.

Jerry W. · Answer

@Carrie Pledger Be very careful about letting tenants paint.  While some do a great job, other can slop paint on carpet and fixtures and doors that can be very unsightly.  I only allow the tenant to paint if I know the quality of their work, otherwise I send a real painter.

Carrie Pledger · Answer

Dawn's comment made me smile .  Yep I want to do some things to my own home but I keep fixing the rentals and putting mine off.

Carrie Pledger · Answer

Thanks everyone. that is some great well-rounded advice! This is my first post here and first interaction with other investors so it is exciting to get feedback. You all have such great insights.  I hadn't thought about the curb appeal/wow factor.  I can see that....I know when I had tenants looking before they have mentioned that other places look bad compared to mine.  I also like the psychological benefit of asking what the tenants want. I agree it would help them feel more involved with the house.  My last soon-to-be tenants wanted the inside painted (which I hadn't even thought about and did need done).  I was going to do it myself but I didn't have time so we made a deal where they did it and I took some off of their rent.  I think it both saved them money and helped them establish some ownership of the house.

Yiv L. · Answer

@Carrie Pledger $80 and $100 ceiling fans from the same big box store are not necessarily different in quality (don't go with the cheapest, say those $40). Mostly just the look or newer/fancier style or finish. Look around for bang for the bucks. Also, plenty of same products can be bought online (ie, ebay) for a bit cheaper and no sale tax, if that is important to you.

Justin Rickson · Answer

@Carrie Pledger I agree with Tom, also with plumbing fixtures if you buy cheap generally you will have more issues with repair, where as more expensive fixtures hold up longer,and generally look nicer in the mean time.

Brian Mathews · Answer

You have to keep in mind that if you buy the lower end of the product, I've found they fail more often and you have to buy it twice and have it installed twice.  Most mid-grade products will last longer than the el cheapos.  Ceiling fans won't be directly touched by the tenant aside from turning the switch off and on, so it's really hard to be destroyed.  Whereas a dishwasher can be loaded with plates full of food, a stove won't be cleaned regularly.  I've got a tale of 2 friends of mine owning rentals, middle class sort of rentals both of them.  One of them keeps his maintained and takes care of issues, the other not so much.  The one with maintained rentals has less turnover and less problems because his tenants know he cares about his properties.  The other one has higher turnover and they both use the same real estate agent to find their tenants, so it's not their background checks.

Dawn Anastasi · Answer

@Carrie Pledger what quality rental is it?  There's low end rentals and higher-end rentals.  If the duplex is a lower/medium rental, then I wouldn't add a ceiling fan at all, just a decent light fixture. Whereas in a higher-end rental, I put in 3 nice ceiling fans.  (Nicer than in my own home, which makes me now want to upgrade my own homes ceiling fans.  Hmmm.)

How well-maintaned should I keep a home?

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