Homeowners and landlords are often shocked to see just how poorly maintained (by their standards) rental properties can get after years and sometimes decades of tenancy. While there are many factors at play here—including the complexity of managing a rental property, tenants’ lack of interest in maintaining anything besides the basic necessities, and the relatively low risk associated with owning real estate versus renting—it’s safe to say that the biggest factor behind this phenomenon is homeowner expected tenant maintenance practices. Its well understood that landlords are responsible for regular inspections, repairs, and other upkeep on the property, so more often than not, tenants will not spend their time or money investing in a property that’s not theirs. As a result, property damage and wear and tear will accumulate over time.
The old adage that renters never care for a home like an owner is true, but that doesn’t mean they don’t take care to have a wonderful home of their own. They simply never bring a handyman in or spend much of their own free time and money to upgrade things, whereas the average homeowner brings them in all the time or undertakes consistent fixup jobs themselves. So it’s less about daily care and more about those Spring and Fall projects that owners consistently do to improve the home like powerwashing, freshening up mulch, and regular AC tune ups. Most renters move at least every 3 years and those jobs get done during turnover periods, but for owners, if we don’t do them consistently no one will. So it’s less that renters don’t care for the home like owners do and more that renters aren’t typically expected to invest in the home.
A decently cared-for home is almost all we ever need to deliver great results. However, how we define that and how you do may differ. Admittedly, in terms of rental property, we’re highly focused on return-on-investment, long-term consistent cash flow-oriented, and it shows in how we operate. We never focus on resale value as it usually never increases rental value. We normally do the bare minimum to get the best rental rate.
That’s another myth in this business. Owners and managers often want to do what they think the house needs (upgrading counters or bathroom remodels) but we try very hard to focus and tailor our approach to what the best tenants want and those priorities are often quite a bit different. Often when an owner sees their home they’re disappointed but we still get maximum rents. It’s a matter of priorities for owner-oriented folks vs renter oriented. Now, thats not to say we leave a home trashed with poor paint jobs and broken cabinets, that’ll never fly with renters. We’re simply saying that it’s not always best practice to replace laminate counters with granite because it may not yield the return investors think it will in the rental market.
We’ve had highly disappointed owners despite getting industry-leading figures. We never let a home fall into disrepair, we’re talking subtleties for the most part, largely aesthetics. We’re certainly not super aggressive about pushing for expensive preventative or long-term issues either as owners get highly suspicious when we do. Large aesthetic projects are only pushed when deemed necessary, like full house paint or updating appliances. While these costs are high, renters are still looking for quality and nice features they can be proud of and these kinds of upgrades or improvements can limit vacancy equalling money in your pocket faster.
We can also take more of a “keep the home in great condition” approach, but it does deviate from our system and that tends to reduce our results. Examples of this are not replacing old, worn carpet and instead opting to have it cleaned or consistently doing touch-up paint causing the walls to look worn and uneven. We’ve had a few of those and we struggle a bit. More so for our lower-end homes, we pride ourselves on knowing what upgrades are best suited to get the most return without spending more than it’s worth.
We take a more professional emotionally detached mindset. We’re passionate about each of our rental homes, but not so passionate that we push for improvements above a home’s worth. We only make changes when they make financial sense to get the most rent, head off serious non-superficial degradation, and maximize cash flow. Then we advise owners to save that cash flow and rehab the property about every 10 years or right before they sell it or move back in. Then they can update, improve, and customize with those great rental cash flows they’ve been enjoying over the years.
More often than not, one thing that tends to cause problems (especially in this hot housing market) is using a home as a rental investment for several years and thinking you can list it for sale and not get a lot of negative feedback without addressing those deferred maintenance items. This year especially, we’ve seen numerous homeowners cash in on this hot market and sell after years, even decades, of using their property as a rental home. It should be expected that homeowners that do this need to make special note that there will be minor, potentially major, work that will need to be done to make this home sell-ready and you should not expect us to hand over your last tenants security deposit to offset those costs.
We can’t say this enough to our owners, in 5 years the home will have gone downhill a good bit in your eyes, I can promise that. The thing we want you to focus on is the long-term bottom-line results in the rental market. If that’s a major issue you may seriously want to reconsider using us. That said, if you’re emotionally tied to the home I would say you should not be a landlord as it will bring a large degree of stress. We’ve seen it a thousand times.
Finally, we’re not extremely strict on former renters when it comes down to their security deposit charges. If they took good care of the home (by renter standards), paid on time consistently, and didn’t bury us in costly maintenance then we think it’s only fair by our golden rule philosophy not to nickel and dime them on every small thing. That means a fair amount adds up over time. Think of things like paint and deep appliance cleaning. We simply think the trade-off for being hyper-aggressive on deposit charges would offset the mostly massive rents we enjoy these days. Even with our own rentals and those of our closest friends we firmly push for them to accept some tenant damage costs as part of doing business and a minor offset for the rates. We see today’s long-term industry as more like the hotel industry than the 90s rental market. If you want Hilton/Marriott-like renters you need to treat them very well, and if you want Motel 6-type renters then you can cut a ton of costs and service.
Overall, its important for homeowners and landlords to understand prior to putting their home on the rental market that things will degrade and it will not be the same home you moved out of years ago. Moving in itself can be very damaging to walls and flooring whether it be from a renter or yourself. Its also important to understand that your preferences (paint colors for example) are not everyone’s cup of tea and there may be times when we request it be changed to a more neutral color or drop the rental rate. All-in-all, if you have strong emotional connections to your house, we highly suggest you reconsider using it as a rental investment as it will cause a lot of stress and heartache. However, if you’re open to the idea of long term ROI, we encourage you to contact us. With almost two decades in the business, we’ve helped thousands of homeowners increase their bottom line and take advantage of today’s hottest housing market.