Landlords: How to Get the Most Out of Your Investment
Being a landlord can be a tricky and difficult job at times. One of the biggest obstacles that landlords face is how to maximize their return on investment. Entrepreneurs typically get into the housing business because it has proven to be one of the most stable markets in the economy. However, when a landlord offers properties that are the same size as those nearby, but wants to charge a higher price for rent, customers are likely to opt for the less expensive house down the street.
How Can a Landlord Maximize His Return on Investment?
There are many ways that a landlord can justifiably increase the amount they charge for rent. Many of these methods include making simple improvements to the home. For example, painting the inside of a house can be done yourself for a relatively low cost. While the task may be time consuming, the total cost of materials is usually minimal. A fresh, well-done paint job alone may allow the landlord to charge an extra $50 per month. The building quality will be higher, the property will be more appealing to customers, and the paint will pay for itself.
A landlord might also want to increase the curb appeal of their properties. This means that, based on the outside elements of the property, customers may gain an impression of overall quality. These improvements can also be cheap and easy-tasks such as removing overgrown shrubs, planting new grass, or adding window shutters will make the home appear clean, cared-for, and well-maintained.
The more improvement projects that a landlord undertakes, the more valuable and attractive their properties will become. Many potential renters will place as much value on the appearance of the house as they do on the cost of the monthly rent.
Amenities
Amenities are another great way by which higher rent can be justified in comparison to competing properties. Large apartment complex owners and managers have used this trick for years. Complexes that offer such amenities as swimming pools, portable hot tubs, exercise facilities, and playgrounds are able to demand a higher price for their units. Some of these apartments simply must provide these amenities because their competitors offer them as well. The landlords of individual houses may want to seriously consider the feasibility of adding such amenities to their properties. Amenities that potential clients see as unique may allow the landlord to draw high-quality renters and name a higher price for the property.
One amenity that generally encourages good return on investment is a portable hot tub. A landlord can purchase a quality hot tub for between $4,000 and $10,000. While this is an expensive investment, it can pay for itself within a couple of years. By offering luxury extras like this, a landlord can charge as much as an extra $250 or more per month. Since the maintenance efforts and costs are minimal, a portable hot tub could be the perfect amenity to help entice the best possible renters toward your property.
If you are a landlord, you must ask yourself how many of your competitors are offering these extra amenities. You can stand out from your competitors by offering the luxury items that the other landlords would never consider installing on their properties. By doing this, you can win over the clientele that you and your competitors compete for.
Is it Worth the Effort?
A former landlord of mine asked me, when I was moving out, what improvements I would like to see made to the house. I suggested that he put in storm windows to help keep the energy bills down. His response was that he would not do so because “renters would just tear them up.” His attitude was that if he put anything nice into the house, it would only be broken or torn up.
Many landlords struggle with this dilemma because they want to make sure that they do not lose money on their investments. But by adding amenities such as hot tubs or fencing, a landlord can acquire high-quality tenants. A landlord can select renters with the best references and credit histories. A landlord can then also request an extra deposit solely for the hot tub; this is somewhat similar to the “pet fee” many landlords require as a type of insurance for the property.
In the end, if a landlord refrains from making home improvements, they will not be able to justify charging higher prices than his nearest competitors. If you are a landlord and want to get a long-term return on your investments, then you should consider the addition of unique amenities to your rental homes. These amenities will last for many years to come, and your return on investment will increase.
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