3 ways to improve your rental property business

3 ways to improve your rental property business.

Is your property renting as quickly as it could be? Are you getting the highest possible rent for your units?

If you are an investor or a homeowner managing their own properties or if you are a property manager handling the rental properties of your clients, there are always ways to make your rental property business run better and more efficiently.

During my 15 years in real estate, if I have learned anything, it would be that the key to successful property management is being proactive and setting the expectations upfront.

However, tenant turnover often takes longer than it should. How do you know if your marketing is reaching the largest number of potential applicants and bringing in the best rental rate? Here are 3 areas of property management you can focus on which should help you get the most out of your rental property business.

1. Updates and upgrades.

You don’t have to add the highest end and most expensive finishes if you have a small 2 bedroom unit that is in the middle of the average rent rate for your area. But you do have to provide a fresh clean home for someone to feel good about moving into. Although, exactly what finishes you use is up to you. But if you want to get the most rent possible for your unit, these are the main areas to focus on for making repairs and upgrades:

            Kitchens & Baths

Updates in your kitchen and bathrooms will make the most impact on rental rates. Therefore, make your updates specific to your unit, it’s location and amenities

Make smart upgrades that don’t break the bank. We recently took an outdated bathroom in one of my beachfront rentals and updated it to a point that allowed us to raise the rent nicely. Rather than doing a major renovation we simply added a new vanity and glazed the tub and tiles from a 1950’s purple and pink to a beautifully shining white and bright bathroom. All in all, it was like having a brand new bathroom for under $600 bucks. That investment will be totally paid back in less than a year with the rent increase it was able to bring.

Clearly, people want to feel good at home no matter what their price point. If you make smart updates to your kitchens and baths you will see a good return on those investments. Tenants will want to stay longer, take better care of the house and be willing to pay higher rental rates. All good things for you as a landlord.

            Flooring

It goes without saying if the floors need to be replaced do it. A fresh clean floor will do wonders for the appeal of your rental. We always recommend to our clients they install hard surface flooring whenever possible. A tile or vinyl floor will always be easier to clean and maintain than a carpeted floor. Especially if you are going to allow pets in your rental homes. No one wants to move in behind a tenant who had pets and has to inherit their pet odors. A great flooring product for rental property is a vinyl tile. It’s highly durable and cleans well and lasts a long time. But what’s really great about it is that if there is a problem area it can easily be replaced with a few new vinyl planks vs having to replace the entire floor. Which will save you flooring costs over the long run. People will love moving into a home that has clean, fresh and easy to maintain flooring.

            Paint

Hands down, a new paint job will generate the highest ROI to your renal property. New paint has a “new paint” smell that tells people the unit is well taken care of. It will provide a strong psychological effect to applicants viewing the property and let them feel as though they are moving into a new home that has good value. The key will be using colors that are modern and neutral.

If you are not good at picking colors, admit it and find someone who can help you choose the best paint color for the property. Right now where we are in the U.S. we are finding that light grays and light blues are providing the best appeal for a fresh, clean and updated look.

2. Accurate pricing.

The right rental price is an important factor in increasing revenue and reducing vacancy times. When it’s set too high it will sit vacant and the listing will grow stale. But if you set it too low, too much money is left on the table. Find the right balance by doing your research.

            Use pricing tools

There are lots of online tools for pricing your unit. A free tool is available at rentOmeter.com – you can generate a number of types of reports based on location, unit, and price. They provide a very helpful gauge to help determine rent prices.

There are also a number of property management companies that offer a free pricing analysis of your rental property. We always provide a free no-obligation rental analysis to anyone who is interested. You don’t have to be a client. We provide a report and tell you what we think your unit should rent for. All for free!

            Consider using a tenant placement service

The most effective way to determine your rental price is to use a tenant placement service or a leasing service. If you don’t want to hire a property manager, a leasing service offers the benefit of a professional tenant placement without the ongoing fees of a manager.

We offer a “placement only” service to all property owners in our area. There are tons of benefits to a leasing placement service. Owners get the benefit of an onsite visit by an expert property manager to asses condition. There is a detailed pricing analysis for determining the rental rate. We take pictures, develop the listing, and do all the marketing on behalf of the owner.

In addition to that, a placement service will often handle all showings, process, and screen the applications including a full background and credit check. Verify income, complete the lease and handle the move-in. Usually, a service like this will be an investment equal to = approximately 1-month rent.

For many property owners, the peace of mind knowing that the tenant has been professionally screened and processed by a licensed property manager is worth the up-front service fees.

3. Leasing and Move-in

If you use a leasing service this part is usually taken care of for you. Most leasing or tenant placement services include all the up-front work of advertising and showing the property along with screening and moving-in the tenant. But when it comes to choosing a tenant and moving them in on your own, be sure you have yourself covered.

I would recommend having an attorney from your state who specializes in property management review your lease. There are so many “free” leases online. You can find yourself in hot water if something is omitted or not considered until it happens.

By not having certain clauses in your lease you could be opening yourself up to scrutiny and possible legal action depending on the severity of the issue. A good lease from an experienced property management attorney will help you avoid potentially bad situations.

Completing the lease

Most importantly, when it comes time to complete the lease with the tenant, I recommend checklists. Checklists are in every facet of my business. I use them at every stage of the process. There are a ton of benefits for managing a property with a checklist. Not only does it keep you on track, but it helps keep the tenant informed and on track as well.

When it comes to the lease. Have the tenant complete a checklist in which they acknowledge what their ongoing responsibilities are under the lease terms. If they are responsible for replacing the air filters on a monthly basis then have them initial the part of the checklist that says so.

Very few tenants read the lease in its entirety. Having a separate 1-page list of their main responsibilities that you want them to remember, will help. Make it a handy reference for the tenant. It will help everyone.

Moving-in your tenant

Once the lease is completed and rent and deposits are collected. It’s time for move-in. This should be a pleasant experience for your tenant. Moving is stressful and they are already living in a disorganized situation. Don’t make the move-in process also confusing and stressful. It will set the wrong tone from the beginning.

We like to always perform a walk-through inspection with the tenant before any belongings are brought in. While the house should be ready for move-in already it helps to go through the entire unit or home with the tenant so that any issues or discrepancies are noted. Sometimes the tenant will point out something that we had missed.

We also provide tenants with a move-in checklist that allows them to make notes during the first week of living there. They submit it back to us and it allows us to see if anything was missed or not known. Sometimes things are only noticed after moving into a home. So we provide the opportunity for residents to bring up any issues they find as well.   

No matter how you decide to run your rental property business, remember that first and foremost real estate is a people business. If you treat people right, and fair, things should go well. But have your bases covered with strong leases and contracts along with good systems that help you and your residents keep track of responsibilities.