Every property is unique. Finding potential in a piece of real estate that others miss is one of the thrills of real estate investing. However, if you haven’t done your homework to make sure that you have all bases covered when you buy a property, even the most delightful sunlit kitchen or spacious back yard might not save your investment.
Here are nine basic requirements every real estate investment should have. None of them are complicated, but you would be surprised to learn how many investors skip one or two of them in hope that tenants will fall in love with a property’s attractive features and overlook the basics. They’ve paid the price in vacant units and rent reductions.
Imagine that you are a prospective tenant looking for a place to live for the next year or two. What would be on your list of must haves?
1. Good Location
“Good location” means safe and easily accessible to transportation to work, food and entertainment, schools, recreation and shopping. You can command higher rents for a great location.
If you compare single family renters with apartment dwellers, you’ll find that single-family renter’s households are more likely to have children. As such, they value neighborhood features important to children, such as parks and playgrounds, good schools, and safe neighborhoods.
2. New Smell and Feel
Even if you don’t do a total rehab, a coat of paint and some shiny new appliances can give your single family rental a fresh smell and feel. Renters like updated kitchens and baths, nice finishes and flooring. If you are buying appliances, spring for stainless steel. It conveys cleanliness to tenants. Even if you have painted, do a little touch up before you show the place. Remove signs of previous owners, like stains or broken fixtures. Smells are VERY important. Tales of real estate agents baking cookies before open houses are true. Mold and mildew smells are killers. If you pick up bad odors on humid days, clean walls and floors with remediating chemicals and dry humid basements with dehumidifies and fans. Spend the money on professional remediation if you have a chronic problem.
Most single family rentals are detached, in suburbs or urban residential neighborhoods with yards and trees. A majority, if not all, of your tenants are going to need safe, free parking even if they can commute to work by public transportation. Off-street parking is ideal. A driveway or a garage will help get the unit rented quickly and can command higher rents. However, on street parking will suffice as long as a tenant has a place to park within close proximity to the property. Many urban neighborhoods today offer free parking places by issuing residents special permits. If you have no off-street or public parking available, you might be able to negotiate with a neighbor to provide a parking space. If you can’t provide parking on any terms, your property will be harder to rent.
4. Central Air Conditioning
Once upon a time, central air was a necessity only south of the Mason-Dixon Line. Nowadays even in Northern states window units are a sign of an old building and it suggests to a tenant that for at least several months out of the year they might endure loud, dripping units and uneven relief from the heat. On the other hand, retrofitting older properties with central air can be difficult and costly. It’s a cost-benefit decision. No CAC means it might take you longer to rent, or you might be forced to lower the rent to get a tenant. With CAC means you can charge market rent and get it rented quickly.
No one wants to have to drag their dirty clothes all the way to the Laundromat. Larger apartments offer a washer/dryer in the building. Renters are likely to pay more to have this important convenience. It doesn’t cost much to put in a washer/dryer in the property even if the tenant has to walk down to the basement to use it. It is still better than having to lug a laundry bag four blocks or getting in the car to go to the Laundromat.
6. Storage Space
Many older homes were built at a time when people used wardrobes and bureaus to store clothes rather than walk-in closets with built-in drawers. Many newly built town houses or small detached houses scrimped on attic and basement storage space. If you are rehabbing, look for space to add another closet. If there is none, do you have a basement, garage or storage shed where you can allow the tenant to store their belongings? Inadequate storage space can be a deal killer, especially for couples and families.
7. Outside Space
Urban Igloo, a real estate resource that pairs renters with landlords in D.C., Maryland, Virginia and Philly, surveyed 1,010 people recently and asked them to rank amenities they considered important when searching for new homes. Outdoor amenities came away the clear winner with 47 percent of respondents ranking them first. A little outdoor space is one of the biggest advantages of single family rentals over apartments. Space should be accessible, incorporate nature into the design, provide protection from the sun, and be as private as possible.
Safety goes hand in hand with location but even in the nicest neighborhoods tenants like to see deadbolt locks. To make your units safer, you can even install a security system, put peepholes in doors, install solid (instead of glass-paned) doors, security cameras and make sure your property is well-lit. A security system that includes fire monitoring will run you several hundred dollars to set up and a monthly monitoring charge, but you can make it up with a rental increase.
9. Pet Friendly
Believe it or not, an estimated 49.4 percent of U.S. renters have pets, according to the Humane Society of the United States. Pet friendly apartments and single family homes obviously are no longer a rarity. Landlords who turn down pets are locking out a large part of the market. Single family homes with more space, easy outdoor access, and fenced outdoor spaces have always been pet friendlier than apartments, so making your rental pet friendly to small pets is a no brainer.
Tenants today come with individual requirements that you may or may not be able to meet. This list of nine “must haves” should make it easier to prepare for the vast majority of requirements on the average tenant’s shopping list.