There’s no doubt that rental properties are a hot commodity. As great as this is for today’s investors, the reality is that there will always be a demand for rentals, regardless of trends. Even with rental homes in high demand, you can’t assume that just any property will be profitable.
An empty property doesn’t turn a profit, which is why it’s crucial to attract good tenants and guests, not to mention if your property is vacant or unoccupied for some time you may need to double-check your insurance. Doing this successfully starts with treating your investment property as a business, plus making smart decisions about how you buy and manage it.
Attract Tenants and Guests through a Property Manager
Any new business has a greater chance of success with a strong team behind it. As a rental property owner, the best way to get a team that makes your job less stressful is to hire the right property management agency. Good managers provide support with everything it takes to find good renters and keep them happy, including help with maintenance, so you don’t have to worry about tenants and/or guests getting frustrated when something goes wrong. Besides helping with customer service, a property manager also helps with the tenant and guest relationships, from screening potential candidates to collecting rent.
Attract Tenants and Guests through These Property Features
A property management team can make a tremendous difference in your business, but the property itself also has to meet the needs that renters demand.
Optimize Your Location for Guests
Assuming you already know the general area where you’re searching, the next step is to narrow it down to specific neighborhoods. The blog Money Under 30 breaks down the type of neighborhoods you can find in most towns by three “classes.” In A Class neighborhoods, homeowners make up most of the population, whereas C Class neighborhoods have homes that are primarily rented and tend to be rundown. Money Under 30 recommends aiming in the middle — for the B Class neighborhoods that have a combination of homeowners and renters. You can expect to find a good number of reliable renters here.
Within these ideal neighborhoods, some of the other top qualities to consider include proximity to places people frequent and opportunities for growth. It’s worth your time to find out whether new community projects may be planned in the area or if new companies are likely to move in.
The “Just Right” Size for Guests
The size of the home you buy depends in part on your budget and the market you’re in. For example, in urban areas that are populated by young professionals, one- and two-bedroom homes may be perfect. But if you’re looking to attract families as guests or tenants, the blog BiggerPockets recommends going with a three- or four-bedroom place because these homes are more likely to attract families who will stay long term. A larger house is also more attractive for short-term family vacations.
Clean and Attractive for Guests
This may seem like a no-brainer, but it’s a guideline to keep in mind throughout your search. You don’t have to buy brand new construction to make a place look clean and appealing, but if a property is outdated, be sure to budget for renovations. These can even be relatively simple projects, such as painting, updating appliances, and replacing worn flooring. For example, if you’re updating the flooring, keep in mind that switching from carpet to hardwood can be a boon for your property and tenant prospects. If the property already has hardwood floors, a simple refinishing can be an inexpensive way to enhance the home, and typically this averages around $1,692.
Extra Amenities Guests Expect
When you provide what your guests or renters really want, a greater pool of candidates will be interested in your property — and they’re more likely to stay long term (which reduces money lost from turnover). According to the Landlordology, laundry, and parking, especially parking that is covered and off the street, are two of the most high-demand amenities. Today’s renters also appreciate energy efficiency. This upgrade is friendly to the environment, and it also helps tenants by lowering their utility costs when your rental is a long-term option.
Some of these amenities may seem like extras but remember that tenants and vacation guests alike will have them on their wish lists. Making these upgrades, and choosing the right house in the right location, is the kind of smart business thinking that makes a rental profitable. When you invest the time and money in these features from the start, you set yourself up not only for an immediate return but also for building wealth in the long run.
Written by Dennis Kane from Winterize Guys