Wednesday, May 7, 2014

The Days of Lipstick and Mascara are Over

This post may be a no brainer to a lot of investors and/or potential investors.  However, it has been my experience that a lot of seasoned investors need a little help when it comes to this topic.

Unfortunately a lot of investors began their career in this field back in the days when property turned over as quick as it hit the market.  No fuss needed.  No sprucing up needed.  The inventory levels were such that demand was greater than supply.  They developed a habit of doing the least amount of work possible.  Now they wonder why their properties aren't moving like others or why they can't command higher rents than others.

One byproduct of the still felt real estate crash is the fact that while tragic for many, it opened the eyes of many investors.  Before the crash, it was often easy to slap lipstick and mascara on a pig of a house and turn a very nice profit.  It was easy to paint, lay carpet and charge a premium rent for the worst house in the nicest neighborhood.  Now?  Not so much.  Renters aren't as desperate as they were at the height of the foreclosure era when there were far more renters than properties to rent.

These days it's just not enough to paint and mow the yard .  These days in order to get that premium rent, you have to justify the extra expense to the potential renter.   How can an investor do this without breaking the bank?  Be creative.  Always look at a property as if you were personally going to live there.  Depending on the neighborhood, some properties will require more creativity than others.  Obviously a house in a "soso" area will require more of a wow factor to fetch a higher than average rent than a plain house in a really good area.  The most important areas will always be the kitchen and bath but what about storage?  You can have the most expensive counter tops in the world but if there's no place to store dishes and food, the kitchen is worthless.  Big bedrooms are nice, but taking a little of that bedroom and building out a nice closet is even better.

Lots of investors spend all their money making the inside nice but completely neglect the exterior.  Renters are like buyers in that they will drive by and look at the property from the outside before scheduling an interior viewing.  If the curb appeal doesn't draw them in, they'll never call again.

While you're sprucing, don't forget to stage.  A staged - even a partially staged - property will rent/sell quicker and for more money than one that is not staged.

How do you stage?  You can hire a professional or you can do it yourself.  It's not as hard as people think.   All you have to do is define the spaces that might present a challenge to a viewer. As an example, suppose the floorplan involves a living room/dining room combo.  A viewer might be concerned that the space is large enough for one but not both functions.  You need to show them that it will serve as both.  You don't have to buy new furniture.  You can rent furniture or use a card table set or even a patio set with a table cloth in the dining area and a loveseat, small coffee table and chair in the livingroom. Staging done!  You can even just lay down rugs to define the spaces.  Get a large one for the living area and a slightly smaller one for the dining area.  There's no need to hang pictures or put out plants if you don't want to.

If there is perhaps a question about whether the master can accommodate a king size bed, buy a king size air mattress, cover it with a comforter and pillows so it's obvious that it fits.  It's also not necessary to stage each and every room in the house.  Just the rooms that either need definition or the rooms that might appear to be smaller than they actually are.

I never recommend fresh flowers or anything "smell good" to be used.  The  reasons for this is (1) LOTS of people are allergic to certain flowers and to lots of the chemicals contained in perfumes, potpourri and plug-ins. (2) If you use live flowers and/or plants you will have to go by the property on a very regular basis to water them and/or remove the dead ones and (3) Some people will wonder what awful smell you are trying to cover up.  The best thing to do is to arrive at the property 30 minutes to an hour before the appointment and open the windows up to allow the air to circulate and the stale air to exit the property all by itself.

The best thing that you can do to a property to turn it over is to clean it and keep it clean.  Every surface inside and outside should be cleaned.  No spots on the carpet.  No dust bunnies hanging out by the baseboards.  No grime on the ceiling fan blades or covering the light switch plates.  No old, frayed, stained liners in the kitchen/bathroom cabinets. If a potential renter walks through the house and sees only clean...they will likely assume that the landlord takes excellent care of the property and will feel more comfortable renting from that landlord.  They will assume that if the landlord takes such great pride in the cosmetic appeal of the property, they will also take great pride in the mechanics of the property.  While we're on the subject of cleanliness, how about going by the property at least once a week to look for bugs and to dust. Empty houses, especially those with basements, tend to draw bugs.  Water bugs, flies, spiders, ants, or even mouse droppings.  Nothing will kill a sale like a prospective buyer/renter opening the cupboard and finding a huge water bug in there or evidence that a mouse has been to visit.

The last thing I recommend doing is to set yourself (and your property) apart from the rest of the pack. Renters, like buyers, will view multiple properties before deciding which one to go with.  After a while, they all tend to merge together in our memories.  You will want to do something that will stick in their memories. While they might not remember that your property had the most closets, they will remember that your property was the brightest because of all the windows.  They will remember your property was the cleanest and the most move in ready.

I recommend going to the local dollar store and buying a large basket.  In that basket, place a roll of toilet paper, a roll of paper towels, a container of hand soap, a container of dishwashing soap, a couple of small bottles of water and maybe even a small package of cookies or cheese/crackers.  Add to this a nice thank you card and place the basket on the kitchen counter.

Years ago I rented an apartment that was actually not as nice as some I had looked at and was a bit over priced in my opinion.  But at the end of the day, this particular complex had a very nice gift basket on the kitchen counter that contained a calendar, menu's from several restaurants close by, a magnet that listed useful phone numbers, as well as, the above listed items.  It made an impression on me and I chose to rent from that management company.

One last tip.  LEAVE THE CURTAINS/BLINDS OPEN.  This is so important.  Not many landlords choose to do this and it's a shame.  As I've said, prospective buyers/tenants always drive by the property before they make an appointment to see inside.  They will get out of their cars and walk around.  They will try to peek in the windows.  Let them get a glimpse of the interior.  If there's a flaw with the interior, then they will see it when you let them inside anyway so why try to be sneaky and cover it up?  Let them get a preview of what they might be getting.  If they don't like it - you've just saved yourself a useless trip because they won't call for an appointment.

Another reason to leave the curtains/blinds open is because it fills the house with light.  Light makes everything look better.

Last two reasons to leave the curtains/blinds open has zero to do with renting or selling it.   (1) If you shutter the house up tight and a vandal/thief wanders across it, they are going to think there's stuff inside that they might be able to steal and closed curtains will not prevent them from doing a lot of damage in order to get inside your property.  If they can see inside, chances are they will move along when they don't see anything of value that they can quickly snatch.  (2) If the vandal/thief decides to go in anyway and you have the curtains/blinds open, a passerby and/or neighbor will be able to see them or their flashlight moving around in the house and will probably notify the police.  OR the neighbor will notice that while the curtains/blinds were open earlier in the day - they are now closed - and will call the police.  Either way, you might be saved a lot of damage and money.

At the end of the day, the business of investing is a risky business.  By applying the above simple tips, I think anyone can get ahead of their competitors.

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