Most Property Owners Have Untapped Potential In Their Rental Properties.
3 out of 4 clients that sign up with Nexus Property Management® will have rent amounts below market value! Can you believe that? What that means is the most important function of their property is not being evaluated properly, AND THEY ARE LEAVING MONEY ON THE TABLE! What does that say about the rest of their property? Just like our car, our properties can use a tune up occasionally. Nexus Property Management is now proud to offer a free rental property checkup to any property owner within our Rhode Island and Massachusetts service range. We can go over projected rent amounts, options to increase rental value/tenant morale, and, see if there any factors that are preventing you from receiving more than your bottom line is currently giving you.
Step 1: Evaluate Rental Rates
Like I mentioned above, 3 out of 4 rental property owners have rent rates that are below the industry average. Most recently, we took over management of a 6-family property here in Pawtucket, Rhode Island. This property (ironically) was one we managed about 5 years ago so we had a video of the condition and were able to give the Owner a tailored estimate based on what information we had. The 3rd floor unit was up for rent and we asked the owner what he wanted to receive for it. He stated he wanted $725-$750 per month. Instantly we knew that he was leaving a great deal of money on the table! Based on our current market data we know that the unit can easily rent for $895 conservatively. If you do the quick math on that we have just added $1800/year to his bottom line FOR JUST ONE UNIT!
Now, imagine the other 5 units being in the same boat! With just our information + experience alone we can potentially add more than $10,000/year to the bottom line for this entire property that the owner was not expecting! Our management fees for the year on this property would be $5,155.20. With the newfound rental prices, the Owner would be covering for our management services AND making close to $5,000 profit to boot! Unreal!
Are you in that same boat? We highly recommend you contact us because within minutes we can change your life! Who else in this business environment can say that (honestly)?
Step 2: Ways To Increase Rental Amounts
Now the sky is the limit when it comes to ways to increase your rental amounts, however there are a certain few that will call for the biggest amounts quickly. Owners think that since things like new roofs, insulation, new boilers/water heaters, etc. are big ticket (expensive) items that they will translate into high rent amounts. THIS IS FALSE! While these items increase the longevity, efficiency, and property value, they do not necessarily translate into higher rent amounts. When it comes to tenants they are looking for condition, amenities, and space. If you are not looking at improving one of those then you are not putting your money where it needs to be.
For condition, think about things like new appliances, fresh paint, refinishing hardwoods, new blinds, new door handles, painting the hallways, etc. When you put lipstick on your rental property tenants will take note and appreciate it. In turn they are willing to fork out more money. In our experience apartments/homes with stainless appliances will get a minimum of $100 more than those that don’t have them! With the cost of stainless being comparable to those nasty vanilla white ones, it’s a no brainer to swap out and replace them. If you don’t have the money for new ones you can also buy used stainless appliances at places like Danny’s Appliance.
Adding a new roof, insulation, new sheetrock, new subflooring, new PVC pipes, updated electrical, etc. are increasing the CONDITION but not for renters. They are increasing the condition for a refinance, or for a new buyer. There is a big difference between the two. If you are interested in knowing what improvements are best for your specific situation please do not hesitate to contact us directly.
Step 3: What’s Holding Your Rental Rates Back?
There are again many different factors that can prevent you from getting top dollar, but, similarly to improvements, not all things you do will yield higher rent amounts. The biggest thing we see holding owners back from a greater bottom line are the 3 P’s;
Pets, Parking, Personal Space.
Allowing pets is a great amenity for a tenant as most of them do in fact have furry friends. What Nexus suggests is charging pet rent of $25 per pet per month for the duration of the tenancy. This is different than charging a pet deposit. A pet deposit is finite in nature and must be refunded accordingly at the end of the tenancy. Pet rent is not refundable and infinite in nature. See the difference? You increase your property’s caliber, make the tenant happy, and increase the bottom line without doing anything but changing your mind. Some owners will say “Greg I’m worried about what the damage will be from pets.” I always assure them not to worry because people cause way worse damage than pets do!
Next is parking. Parking is a must have on a tenant’s checklist. I’ve seen owners that have driveways not being used properly. For example, in a 3 family they will grant parking just to one floor and not the other 2 because it’s tandem parking. If there are no ways to configure it differently then we typically suggest owners to allow parking for all tenants but include in their lease that parking requires intra-tenant communication. This means that the tenants are to communicate with one another (not you or us) about getting in and out comfortably. This increases the amenity, takes communication off your plate, and builds a bond between the tenants + (hopefully) strengthens their relationship.
Personal space is next. This is vital to ensure your tenants are happy and stay for as long as possible. If you have storage availability in the basement we suggest you let the tenants use it! If you don’t, the truth is things will appear there anyway! Storage is something we all need as humans. Whether its extra clothes, decorations, or hobby items, we all need a little extra space aside from our living quarters. If you provide storage the tenant will feel more at home and likely stay for that much longer.
Once again, it’s very simple for you to increase your bottom line with some simple adjustments your thinking and a quick chat with myself. We know Rhode Island, we know Massachusetts. Our staff has been serving this community for decades. We’ll give you the meat and potatoes; all you must do is ask!
Gregory Rice is the Vice President of franchise sales for Nexus Property Management®.
Nexus Property Management® is a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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