Maintaining Value in Your Rental
In order to keep your rental home valuable as a rental there are three things that will keep not only your rental income low but the home value if you intend to sell to another investor.
The Price of Deferred Maintenance is the biggest expense that will catch up with you whether you attempt to rent or sell a property. Not only that, but you will also end up paying a lot more for anything that is allowed to decline for a long period of time. A roof that needs to be replaced could cost up to $1000 for an emergency leak resolution during the winter. Gutters not being properly cleaned routinely will also contribute to the degradation of a roof sooner rather than later.
A furnace that has aged out will also become a very large expense if you suddenly need to replace it, not to mention the fire hazard that space heaters are when tenants turn to other heat sources. Some tenants will even turn on all burners on the stove to give extra heat to a house that does not have adequate heat. Upgrading the windows if they are old and cause drafts or mold can lower the expenses for tenants who may choose to move if their utilities are running too high. Making sure your smoke and carbon-monoxide detectors are marked as when they were installed will help determine when they should be replaced. It could cost up to $1200 to replace hard-wired detectors in an emergency if the tenants are not easily remedied by a temporary replacement of battery-operated devices that will become unsightly with too many devices installed in one area. It is a good idea to have your home professionally inspected every 5 years, including a sewer scope.
Not updating your rental between renters will keep renters from being interested if you are attempting to rent at a higher price point. Many renters these days are opposed to carpets. It's best to keep most areas as hard surface flooring and if you must have carpet, keep it only in the bedrooms. Luxury Vinyl Planks look like wood and are far more resistant to water issues or other wear and are much less expensive than real wood products. It's best to use a solid neutral color throughout instead of different colors in different rooms that can be off-putting to some. The market is minimized by anything that does not make anyone want to move in immediately. Colors or even accent walls look aged to many younger renters. Alabaster white is a great color and if you use the same color on all of your rentals, it will keep your costs down by maintaining the same color consistently.
Keeping rental prices low may feel like a good idea to keep housing affordable but lowering the rent too much may cause future problems for you when it comes time to fix or replace something major. Lower rental income could also be problematic if you are trying to secure lending and your lender can't make the numbers work because your income isn't sufficient enough with lower rental income. It is also in your best interest to have some kind of increase every year, even if it is as low as $25. Maintaining long-term renters is a great idea but compromising your income when bigger expenses come up is a challenge when you won't have quite enough reserves to pay for big expenses. You should have at least $10,000 in an account ready for a big expense. In my experience, finding the median rate and lowering it just below will allow your rental to stand out and rent faster. If your price is too low, you may inadvertently attract the types of renters who will struggle to pay rent on time.
Being a third-generation property manager, I have extensive knowledge and understanding of how renters think and cost-saving ways to maintain rental properties.
Holly Furen is a licensed real estate broker and property manager with LynnMac Commercial, LLC specializing in residential rental property management and sales. Contact Holly at (206) 599-9298 or holly@lynnmaccommercial.com. Visit her website at hollyfuren.com.
The views expressed in this article are solely that of the author and does not necessarily reflect the views of RHAWA.