Upgrade Your Property, Where to start?

IS IT WORTH UPGRADING THE OUTSIDE OF YOUR RENTAL PROPERTY?

HOW BEST TO MAXIMIZE VALUE AND INCREASE TENANT SATISFACTION

As real estate investors our goal is to add value to our assets whenever and wherever we can. So what value exists in upgrading the exterior of your property? The simple answer is: not a lot. But as always, there is nuance depending on a couple variables. Regardless, there are better ways to spend your money. Nexus Property Management’s Vice President of Franchise Sales, Greg Rice, reminds clients and subscribers to focus on what is most important to them. If the answer is maximum value and tenant satisfaction, focus your resources on the inside quality of life.

EXTERIOR NEEDS

Just a quick word on the exterior of your property: The key is to meet a basic level of care. Landscaping and snow removal fall into this category. You must address any structural issues or avenues for potential water damage. Spending money by painting or siding is BIG MONEY and the expense is not going to add enough value to justify the decision, but you can’t neglect anything that will actually decrease value and require costly maintenance either.

There is a big difference between keeping up with exterior needs and opting to upgrade the outside of your building. As previously alluded to, landscaping, snow removal, stair repair, and window repair are examples of needs you’ll want to keep up with to avoid further costs down the road.

[ Learn More: Maintenance Needs = #1 Point of Friction for All Property Owners ]

THINKING ABOUT VALUE

When we think about value in the investment landscape, we’re focusing on financial returns. Spending $10,000 (modest estimate which will obviously vary greatly based on property size and geography) to beautify the outside of your apartment is not going to bring you higher rents. It’s not going to improve your tenant pool. Sure, the building will look better from the outside, which could make insurance companies and neighbors happy, but you’ll never make that money back through your rentals. If the exterior looks great, but the interior is subpar, tenants aren’t going to care one bit about the lipstick you’ve added.

Instead, our clients add value directly to tenants’ everyday lives by focusing on interior upgrades. Most commonly this will take place during the rent ready process, after a tenant has vacated (see “Learn More” link below). Adding granite counters, new flooring, new appliances, and fresh paint to inside walls goes much farther in creating positive impressions on potential tenants. Tenants are going to appreciate the areas they inhabit and encounter the most. Smart investors will focus their resources on the inside quality of life and this will help achieve goal number one: long term tenancy.

[ Learn More: THE IMPORTANCE OF ADDING VALUE TO RENTAL UNITS DURING TURNOVER ]

IN SUMMARY:

Most owners can’t afford to improve both the exterior and interior of their rental properties. If forced to choose one or the other, the decision should be an easy one. Tenants will pay more for higher quality living space but rarely (if ever) can you increase rents or attract more reliable tenants with subpar or just average interiors. When you improve the building’s outside, you’re showing that you appreciate the building. When you improve the individual units, you are showing you appreciate the individuals…and that is the key to a valuable relationship for all parties.

[ Learn More: THE VALUE OF A WIN-WIN RELATIONSHIP ]

As always, reach out to our team if you have any questions or want to learn more. Our New England teams operate out of four offices in the region and Nexus offers franchise opportunities nationwide.

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Mick Lefort is the Vice President of Operations for Nexus Property Management®. 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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