What can I do to add value/increase rent?

Question

Don Petrasek · Answer

@Darius Lipsey  I've been running my rental business exactly as @Jon Holdman described above for over 15 years. That strategy has always worked and I've never felt like I was leaving money on the table.  Always have had very positive feedback from appraisers as well.  People are constantly coming into my houses and telling me that they just looked at 2 others that were in terrible condition compared to mine but were $100 more a month....that's totally OK.  Those properties will sit on the market for months and then wind up being occupied with a less than desirable tenant.  I've seen that over and over.

For B-C areas, I've found that just making everything new and clean is generally all you need to do to set yourself apart from the average landlord who does nothing during a turnover.  You don't need to spend a lot of money going high end or adding unusual features.  I can't tell you how many prospective tenants told me how nice my $150 Home Depot kitchen countertops or $4.99 window blinds were- because they were new.  Its the details that matter including small things like painting/replacing molding, washing walls down, recaulking the tub, etc....don't show the property until you are completely done and everything is very clean.

Having said that, a couple of things I get asked for all the time are a dishwasher and washer/dryer.  The washer/dryer is a bigger deal but you can get away with just providing hook ups.  The dishwasher is a nice to have that will again set you apart from other options.

James Maradits · Answer

I agree with @Don Petrasek

Going overboard on the rehab and raising the rent too much in C/B areas will really limit the amount of applicants you get. There's a strong possibly that the tenant that wants the house with granite countertops in the C area is living above their means and will soon be delinquent on their rent payments.  Getting $50-100 a month extra is great, but reducing turn overs and maintenance problems will prove to be more profitable in the long run.

The dishwasher idea is great where applicable.  You can get a new base model stainless dishwasher for $250-300, which is only slightly more than buying a 24" cabinet for that space.

Jon Holdman · Answer

There's really not much you can do to a property to push the rent above the local market.  Going overboard and making it very nice may make it easier to rent, but it won't result in more rent than other similar properties in the same area.  Pricing a property high relative to your competition is a good way to get a crummy tenant.   Price it a little below the competition and make it a little nicer than the competition and you'll have your pick of tenants.

So, research your competition.  At the very least, look at ads.  Take the next step and call and have a discussion. Also note items like who pays for which utilities and deposits.  And assess the person you're talking.  Sometimes just being pleasant and courteous when on the phone is all it takes to get tenants.  If you're a little bolder, play tenant and go have a look.

Michael Guzik · Answer

@Darius Lipsey That's a good question man but it really depends on the class of property and the neighborhood. The for sure thing to do that everyone always looks at is the kitchen and the bathroom. Find ways to improve these areas, a new paint job and some articles and items to create a "theme" in the bathroom can go a long way and make it much more enticing. For example I saw someone paint a restroom brown, put up pictures of the ocean, and put seashells and  starfish around the sink and on the wall. It looked great and it certainly wasn't too expensive. As far as the kitchen goes this is what depends heavily on the market. Granite and/or quartz is the most appealing but if you are in a C area you might want to go towards a cheaper option. However if you are looking to be the best possible property in your area then go for it man! I know of a gentleman that is in a C area but he tricked out his triplex and it is the best one on the block. Sure he is surrounded by average properties but his amenities and extras that he put in the property stand right out and he always has people waiting to rent there. YouTube ideas or have your wife, gf or mom look at themes and give you advice. Women are very good at fashion and design and can really help you spruce up the place! Bottom line is if you put in quality products and make it look nice you can charge more. Just don't cut corners or be cheap because it will hurt you in the long run. Good luck my friend!

John Warren · Answer

@Darius Lipsey I own a 20 unit in South Bend, and I think the answer depends on a lot of things. Which part of South Bend are you in? Purchase prices are very low there, but it is tough to push values as much as in other markets. My 20 unit is in a C class area, and we have to be very careful not to over renovate as we won't get the value back out of the property when we sell if we go overboard.

I would say, your best bet is to pain the units a modern greige color like Revere Pewter by Benjamin Moore. You can have home depot paint match to this color, and it costs very little to slap some pain on the walls, ceiling and trim. After that, focus on easy changes like light fixtures. Lastly, your flooring choices can go a long way. I like to use vinyl plank in a dark/modern color.

What can I do to add value/increase rent?

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