Adding Value to Your Rental Property for Appeal and Profitability

Ever seen the term "added value" when searching for rental properties to purchase? Usually this implies the purchase price may be reduced because there are improvements that can and should be made to make the property more profitable.  Sometimes its physical updates, sometimes it's an opportunity for new owners to apply their own strategy and knowledge

In this episode, we are discussing what to focus on to add this value to your properties, not only for your own business strategy, but also so you can receive top dollar when you sell.

Specifically, we are talking about improvements you can make to the exterior, interior, and with your business strategy to make a big difference to your tenants and ultimately, your bottom line and profitability.

LINKS

👉 Episode 18: 7 Ways to Increase Profit for Your Rental Property

👉  Solar Path Lighting

👉Fake Security Camera’s

👉 Charbroil Electric Grill

👉 LED Retrofit Recessed Trims

👉 Replace Your Deadbolt With a Quickset Halo Smart Entry Keypad 

👉 EP51: The Hidden Dangers of Using Cash Apps to Collect Rent

👉 Landlord Management Software: TurboTenant

👉 EP28: The Cash Reserves Blueprint: Protecting & Expanding Your Portfolio

👉 EP39: 50+ Must Ask Questions When Hiring a Property Manager, Pt 1

👉 EP40: 50+ Must Ask Questions When Hiring a Property Manager, Pt 2

👉 Product: Property Manager Questionnaire for $9.99.  Email it to them or use it as a guide when interviewing them in person.  Over 60 Questions!

👉 Course Waitlist: From Marketing to Move In, Place Your Ideal Tenant
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Transcript

Stacie: 0:00

When we buy, we love places that we can make small improvements over time, place our own tenants in, and build to work within our business model and strategy. When we buy out of state, we prefer more turnkey because we're not there to be able to do the work needed and need to depend on someone else to do that for us. Both options require a totally different mindset in our opinion.

Kevin: 0:24

Exactly. Adding value to a rental property definitely makes it more marketable both for the rental side and the sales side. I mean the whole point of today is about adding value by way of improvements. Improvements to your property, improvements to the living experience for your tenants, and hopefully, improvement to your business strategy overall which in turn, increases your return on investment.

0:53

Welcome to your Landlord Resource Podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast forward to today, Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire, all while building a streamlined and profitable rental property business. This is your Landlord Resource Podcast.

Stacie: 1:42

Hey there, landlords. Welcome to the Your Landlord Resource Podcast. I am your host, Stacie Casella, and I'm here with my co host, also known as my best friend, Kevin Kilroy.

Kevin: 1:55

Ah, that was a nice one. Thank you. I can't imagine life without you, Stace.

Stacie: 2:01

Well, let's hope it stays that way. Okay, you guys. We can't believe we have produced over 75 episodes and we have never done one on ways to add value to your rental property. This is something that we always preach.

Kevin: 2:16

I know. And when you told me about the subject matter for this episode, I mean, I was sure we had covered it already. And, maybe in some capacity we have talked about these, but now we are putting them all together in this one episode for you

Stacie: 2:30

All right, so I want to clarify something right up front here. These are not direct ways to increase your income. That is an episode that we have already done episode 18, which we'll link in the show notes. Today we're going to be discussing ways to improve your property and your rental property business to make it more attractive to rent. And in some cases, if you're planning to sell it sometime soon, many of these things are definitely going to put you in a position to help you get a higher price. And because we do our best to have conversations that cover both single family home and multifamily rentals, we're going to do our best to narrow down which improvements will benefit each property better. You know, as a rental and for sale. But our main focus today is to discuss simple ways to add value as a whole by way of doing improvements for rental purposes, not sales. If you want to know exactly what to do in order to increase your value for a sale of a single family home, consult your Realtor. They know what the market will support, what buyers are looking for, and how to get the most bang for your buck. When we are referring to a sale here, honestly, it's for multifamily properties, because the improvements that you make will absolutely benefit the bottom line. And when selling a multifamily property, the bottom line is what can make or break your sales price. For instance, if you make improvements in advance, then an investor who was looking for a turnkey property will be willing to pay a little more knowing a property was cared for and actively managed. And all they have to do is come in and continue running it. If no improvements were made, then a buyer has some room to negotiate the price down because then they have to come in and make all the changes themselves so the property can hit their potential marks for profitability. Some buyers prefer this option and to an extent we do too, but this is only when we're buying property near us that we're going to manage ourselves. When we buy, we love places that we can make small improvements over time, place our own tenants in, and build to work within our business model and strategy. When we buy out of state, we prefer more turnkey because we're not there to be able to do the work needed and need to depend on someone else to do that for us. Both options require a totally different mindset in our opinion.

Kevin: 4:56

Exactly. Adding value to a rental property definitely makes it more marketable both for the rental side and the sales side. I mean the whole point of today is about adding value by way of improvements. Improvements to your property, improvements to the living experience for your tenants, and hopefully, improvement to your business strategy overall which in turn, increases your return on investment. So, when considering what kind of improvements you want to make to your rental property, think about how much time, energy, and money you want to put into it. Because some of the things we're talking about today are not a one size fits all solution. Properties differ by size and location and what the market is looking for. Some of our ideas may work great for a single family home, but not so much for multi family units, so keep that in mind when listening to our suggestions. Some of our ideas are also great DIY projects to do, and some will require professional help, which obviously will cost you a lot more. And like Stacie said, if your properties are not near you and you are managing from afar, some of these changes might be more challenging for you, but where there's a will there's a way, right?

Stacie: 6:10

Yeah, and many of these options may seem obvious, but you'd be surprised at how many landlords really do overlook them. So today I want to start with some ideas to improve and add value to the exterior of your rental first. Then we're gonna move into the interior and then close out the show with some ideas on concepts that can improve your business strategy. So, let's talk ways that you can add value to the exterior. And let me start with an easy one. Update the curb appeal of your rental. We can't stress enough that first impressions are key. Rental properties are usually an eyesore because landlords do nothing for the landscape, leaving it to the renters to do container gardenings or nothing at all. And some landlords are tentative about investing a few hundred dollars into landscaping like shrubs and plants, especially if the tenants aren't going to take care of them. With that said, your alternative is to hire a landscaper so that tenants know their property will be well maintained the entire time. This is something that can improve the property value and subsequently increase the rent you charge. It doesn't have to break the bank, but it will improve the first impression of a property and its overall value. You want someone to see your photo online or drive by and get that feeling of home that this is definitely somewhere I can live. So when you advertise your unit, do yourself a favor and include photos of the front of the home or building. All right. So here's some ideas. If you have irrigation or sprinklers and want to add some color, then add some flowers to the walkway. For one property we help a family member with, the front landscaping was tired and they're older and didn't want to spend a lot of money on it. So we went over and we spruced it up. In our own yard, we have some day lilies that were taken over and needed to be thinned out, and some blue cornflowers, the same thing. So we dug a couple up and put them in front of this rental. Then we spread out wood chips that our city provided for free. So check your city's website. Many times they have piles of wood chips that they're willing to allow you to come and get at no charge. And you guys, this took us a few hours, but at zero cost. So look at your own property and see what you can gather or check Facebook or Next Door for people who are giving plants away that you can use. And watch the sales at your local gardening store too. Now, if you don't want to deal with irrigation or burden your tenant with remembering to water your landscaping, maybe try to add some what they call drought free landscaping. Maintenance is pretty low on this type of landscaping. So you or someone you pay might not need to be over there but every other month to clean it up. Maybe it's as simple as just trimming trees and bushes to make it look like it's more kept up. Because an unkept house is a red flag to renters that you may not be as responsive for a necessary repair. And to buyers, It's a warning sign that the home wasn't taken care of during ownership. Path lighting is another great way you can make your property look better, especially at night. It also lowers your liability by decreasing the chance of someone tripping and falling. And we found some really nice solar path lights that we use at our multifamily units. So we'll link them in the show notes and you can check them out.

Kevin: 9:29

Yeah. And making sure the paint is looking good is another easy way to spruce up the exterior. Make sure none of the paint is chipping. And if it is, give it a little sanding, touch it up. It makes it look like new again. I think I read the average price to paint a three bed, two bath home is around$4000. And that has to happen every 7 to 10 years, depending on the climate it's in. And I want to go back to the lighting part and talk about exterior lighting. If you have porch lights or lights on the sides of the garage, consider changing those out to LED or more efficient lighting. And you don't need to get those bright ass lights. Now you can get bulbs with a softer light that adds to the ambience while still providing ample light to walk in. And if you really don't want to replace the fixtures, a three dollar can of spray paint goes a really long way to making them look like they're new again

Stacie: 10:24

Yeah, we did those when we remodeled our personal home. The old fixtures that we had were fine and they matched the aesthetic of our home, but the finish was really worn. And to replace them was going to cost like a couple thousand dollars, which is ridiculous. So my dad offered to take them and use his sprayer to paint them the finish that we wanted to match our home and you guys they looked amazing. And he did have to take his time, but I think it cost us like 30 bucks for paint.

Kevin: 10:52

Yeah, I mean that was great. He did a really good job. He's done that on some of our outdoor furniture, too

Stacie: 10:58

He has, yep

Kevin: 11:00

And yeah, like Stacie said in our case it was more about the time than the expense. You can get all kinds of ideas and tips on Pinterest if you want to repaint something. So go over there and check them out sometime. Security is an issue for a lot of people, so of course, good outside lighting helps with that as well. You can put up security cameras too, but those are a bit tricky because they can't face any windows. And in some areas they can't face a door. has been recommended for security cameras that are installed and monitored by the rental property owner, you can only have them facing stairs and walkways to maintain privacy for your tenants. And, you know, to be honest, I wouldn't want someone to know my comings and goings either.

Stacie: 11:44

But you would want to know who ripped off your bike or your packages from the front porch, right?

Kevin: 11:49

Yeah, I mean, that's the hard part. Pretty much security cameras can only be placed in common areas, like the main and back entrances and maybe the patio and walkways around the building as long as they do not face the tenant's door or window. Maybe just allow a tenant to use their own doorbell camera so they can monitor their stuff.

Stacie: 12:09

Yeah, and if you're looking to deter people from stealing from your rental property, there are fake cameras that you can buy that have a battery in them and that battery runs a little blinking red light to make it look real. Uh, we've used them in the alley above the dumpster to deter illegal dumping, and I also have a family member who installed these on their home in places where the Wi Fi couldn't reach. I think they're like 10 bucks for a two pack, and you guys, they look really real, not fake at all. So I'll link the ones we used so you can check them out.

Kevin: 12:39

Yeah, I forgot about those. I mean, that's a great suggestion. It's really helped in the alleyway. You know, in Sacramento, our tenants have a tough time with porch pirates where they will have packages, bikes, and even their shoes stolen from their front porch. So, one thing we have is a locking mailbox. There's a couple of spots for parcels to be locked up too. However, those parcels can only be from the U. S. Postal Service. Now, other delivery services like Amazon, UPS, or FedEx cannot use those as the key is only accessible by the mailman. Now depending on how your multifamily building is laid out, you could always add a multi parcel box that's like a mailbox for delivery persons. I mean, they're kind of expensive, but might be something to consider. So one thing that people like is outdoor space, right? And this is more for multifamily, but if you have any open common space, create a place for tenants to sit and get some fresh air. For many years, we had a concrete area behind our six plex that only had a metal bench. So, little by little, we started adding outdoor furniture for the tenants to have a communal, private outdoor space to you know, read or gather with friends or barbecue. Our first purchase was outdoor seating. We picked up a plastic wicker set on sale at Ace Hardware for like 500 bucks, and it included a settee, two chairs, some cushions, decorative pillows, and a glass top coffee table. We love the fact we can just hose it off for cleaning. Assembly wasn't difficult at all and we picked up a small outdoor rug on Amazon to lay underneath. We wanted to wait and see how the tenants responded and use this patio set before moving forward with more pieces. And we actually got some very surprising positive feedback. I mean, one tenant even wrote to us telling us how much they appreciated the space and that when his parents came to visit, they were able to sit in the nice weather and enjoy each other's company. So the following spring we had our electrician out and asked him to run a couple of receptacles and wiring for a timer switch. Then we headed over to Costco and purchased a few boxes of those, you know, party string lights and strung them in a zigzag pattern across the back patio. This new lighting enabled the tenants to enjoy the space at night. Of course, evenings in Sacramento are the best time to be out during the summer months anyway. We also purchased a square dining table with four chairs to add to the area. So now our tenants could eat outside if they wanted to. I mean, this addition was another huge success. We actually heard from neighbors that one tenant had invited them over for a wine tasting evening, and they all sat out in our little back patio and had a really great time. The following year we purchased an electric grill, one reason we had additional receptacles installed, and that completed the patio. And, by the way, electric grills are the way to go. There's no propane to mess with, no hot coals to worry about causing a fire or burning someone. And it's a breeze for our tenants to clean up after themselves. And I think we picked up, I think it was a Charbroil electric grill, which I think is like a giant size George Foreman grill. I'll link it in the show notes for you to see what we're talking about. If you don't have one wide open space like this to use, maybe consider adding some small social spaces around the property. Maybe you have a nice tree and you can place a bench under the shaded side. Or there's a dirt area where you can lay some pavers and add a small bistro set for tenants to sit and have coffee. So just walk around your property and see where you can create areas for these outdoor living spaces. You know, it may seem silly, but this little effort shows your tenants you're working to improve their living environment. You are adding value to their experience of living there. And this way, when you increase the rent on your next renewal, your tenants will feel like they're at least getting something in return.

Stacie: 16:43

Yeah. I like how we took our time and we evaluated each addition before we just went and spent a bunch of money without knowing if the tenants would even use the space. And I'm pleasantly surprised at how often the space is actually used too. One thing that our tenants often ask us when viewing the property is about extra storage. And as much as you don't want to have your unit all cluttered with the tenant stuff, neither do they. But if you have apartments and they are storage challenged, then this is an amenity to consider. You can build something really simple. If you have a basement that can't be converted into living space, you can just get some chain link fencing and posts and a swinging door and you can install those. I know I'm making it sound like it's a lot simpler than it is, but we know some landlords who, depending on the size of the storage area, are making an extra fifty to a hundred dollars a month per storage area. Not bad money at all. If it has to be outside, you'll need to make sure that it's water and rodent resistant. And we did find a small upright storage unit for a decent price that we picked up to rent back to one of our tenants who needed more space. I think it cost us about 200 bucks, and was able to be locked, so there was that. mean, he just wanted something small to use to store his hiking and his camping gear in and it worked fine. We rented it back to him for$25 a month. And so he basically just paid for the unit. Now at this time, we just have the one unit, but we definitely have room for more should additional tenants want to pay for storage. For single family rentals, if you have a shed or a detached garage on your property, consider asking for an additional rent for tenants to be able to use that. Garages especially can be rented in a neighborhood if someone has a classic car or something that they need to store. Detached garages do not always have to be included with your single family house rental.

Kevin: 18:44

Yeah, I mean your cousin keeps one of his garages for his car, right?

Stacie: 18:48

Yep, he has his old Pontiac in there. Not for tenants to use at all. And the thing is, if you allow tenants to use garage space, take some time to finish it out and add functional items such as storage shelves and hanging hooks for gardening tools and bikes. Make sure you finish off the look by finishing the floor and, you know, if you're really into it, do the walls too. Because you want to create a space that they can really utilize. Not to mention it'll certainly make a tenant think twice before moving. I mean, who wants to move out of a house and a garage that's filled with all your stuff? Not me, that's for sure. Parking is another huge benefit, especially for multifamily that only has a few spaces. If you can, try to negotiate commercial parking spaces at a discount for your tenants. This is an amazing amenity to offer and make your tenants feel like your unit gives them the full package. All right. I want to keep it moving because we still have a lot to cover. The last thing for the exterior is to check out your front door. So replacing an existing entry door with steel is one of the best home improvements a real estate investor can make. Tenants really appreciate any energy efficient upgrades that come with low maintenance. Of course, this all depends on how much the door costs, the color, and how much it improves the appearance of your home. And I said color. Yes, color is something you should pay attention to. Zillow Research shows houses with specific door colors sell for more and rent better. So value goes a long way with this minor improvement. However, while a bright front door can add a pleasant pop of color to your rental property, it can be a riskier choice depending on what your market likes. So pay attention to that as well.

Kevin: 20:36

Yeah, I mean, I can see a nice gloss black door or something, but colors like red, teal and canary yellow really are for a specific market. So keep that in mind. Alrighty. So now let's move into the interior of your rental property and talk about what kinds of improvements you can make to add value there. Now, this is where tenants really do make their rental their home, and it's where they will make the decision on whether the rent you're asking is worth what is being offered. So let's start with the kitchen. Now if you can afford to renovate the kitchen, this is where you can get the most bang for the buck. This is for rentals and for property sales as well. And I will say the kitchen and the baths being renovated prior to our purchase is a huge plus, especially if it's done well. If you have painted cabinets, a fresh coat of paint goes a long way. Maybe you have tiled countertops. Consider upgrading those to a nice neutral colored quartz. I mean, granite is out now and buyers and renters are now leaning towards lighter colors with a cleaner look. But you guys, sometimes the simplest upgrades can make a world of difference. Replace the kitchen cabinet knobs. I mean, this is an easy DIY project that really makes a big impact. Same goes with updating lighting and appliances. Replace all the switches and plugs and plates after painting. I mean, this one always surprises us. I swear, every single time, we're in awe of how much cleaner the space looks, and it's not that difficult, really. Swap out the old faucet with a new one, and maybe one with a pull down sprayer. And, before you say those break too easily, let me say that you get what you pay for. We spend a little bit more for a quality faucet and it lasts for years.

Stacie: 22:27

Can I jump in real quick and talk about flooring?

Kevin: 22:29

Be my guest, m'lady.

Stacie: 22:33

Okay, Mr. Bridgerton. So one thing that we need to do is update the flooring in our units, all of them. We're way behind the times on this one. We do have vinyl plank flooring in most our units, but it's really outdated. We did pull out the tile in the kitchen. And the bathroom when we renovated the studio and put in a really nice luxury vinyl planks throughout the whole space. And wow, what a huge difference that made. Uh, we made sure to buy waterproof protection just to be safe, but it seems that renters love to have seamless flooring where it's the same floor in every single room. Maybe the bathroom has tile instead of hardwood, but for the most part, all the rooms have the same floor. When there is a standard flooring type throughout the whole house, it makes the home feel more spacious because everything flows. It feels bigger and brighter. And that's what you want when trying to find a tenant or eventually even sell your property. One thing to keep in mind is your budget because flooring can get out of hand really quickly. Now, if we put in what we wanted, we would have done hardwood floors, but there's just no way. So if you have hardwood floors and they're in decent shape, the design pros say keep them. And carpets are not the best choice for rentals as they tend to get stained and worn easily. We have a couple of units with carpet and it"s getting more and more expensive to replace those after every tenant. We sure would like to rip it all out and put in LVP, but the price is a tough one for us to swallow right now.

Kevin: 24:09

Yeah. I mean, making sure you set a budget and stick to it is key. It's not hard to price out, so make sure you find someone who is experienced in it and can get it done efficiently. A lot of our tenants are looking for units that show some sort of energy efficiency. So consider changing out old lighting with LED light fixtures. And I know those booby lights were only like$15 back in 2010. But do yourself and your tenants a favor and put in something a little more modern. Unless you have a period style home, many tenants appreciate brighter lights that cost them less in energy fees. Have old incandescent recessed cans in your rental property? These can be easily retrofitted with new trims if you have 5 inch or 6 inch recessed cans. I, I mean it took Stacie about 20 minutes and$30 to swap these out, and they have a very long life. We installed FEIT retrofit trims over 7 years ago and they're still going strong in all the units. I think they sell them at Costco, but we'll put a link to the ones we found on Amazon so you can see how easy they are to swap out. Oh, and if you provide dimmers, you'll need to replace them with LED compatible ones, but what a difference it makes to not have to worry about changing out light bulbs anymore. And along with efficiency, tenants like having smart home options. And you don't have to go nuts here, but maybe a thermostat, some lighting they can control from an app, and smart door locks can go a long way.

Stacie: 25:46

Yeah, we have smart locks for our midterm rental, and we've also installed them on our mountain homes as well.

Kevin: 25:52

Yeah, it, it saved my butt last time we were up in Tahoe. mean, I wanted to go grab something from in the house and forgot my key. And it also sure makes it easier to assign a key code for maintenance personnel as well. No need to have a bunch of keys floating around, plus the chance of dealing with a lockout pretty much goes away. I mean, there's still a physical key to use. And if you get the quick set Halo model that we got, you can rekey it at turnover for about five bucks and takes about two or three minutes. And that's huge. We bought ours at Costco a few years ago, but we'll link the ones we used in the show notes so you can check'em out. I mean, we're really happy with them.

Stacie: 26:34

Yeah, that was one I wasn't so sure about, but ended up being a really good call that we made. The only downside is that you have to have wifi in order for it to work properly. Otherwise you have to use the key. Okay, so I want to talk briefly about adding space or how best to market space for your rentals. If you've ever watched those home improvement shows on HGTV, you know that when people are looking to buy a property, it's always a big deal when they find bonus space to use. Now, we have a family member with a single family home that has two bedrooms and two bathrooms, plus a bonus room that is about the same size as the bedrooms. And this one room makes for the perfect office space. With so many people working from home these days, it's nice to have that extra space for them to use as an office. Now from our perspective, we want this family member to install a closet because then it can legally be marketed as a three bedroom, two bath, and that would allow for a huge jump in rents. But it's not what they want and we're going to have to respect that. If the day ever comes where that property is sold, someone is absolutely going to come in there and do that. So think about the rent increases you can get by changing your rental from a one bed to a two or a two bed to a three. And then when you go to sell that property, adding one bedroom can increase the value of a property by at least 10%. Same goes with bathrooms. This is an expense that pays for itself. When you have several people living in a home, there never seems to be enough bathrooms. If you can add a half bath to your home, the value goes up by 10%. If you can add a full bath, it goes up by as much as 20%.

Kevin: 28:21

Yeah, and in one of our two bedroom units, each bedroom has its own bath and that makes it so much easier to rent., If they'd have to share a bath.

Stacie: 28:31

Yeah, 100 percent and it makes it much easier to rent to roommates too. So you have to consider that this widens our market base quite a bit.

Kevin: 28:41

I. Will touch on this quickly because this improvement is quite an undertaking, but if you have a basement space or garage space that you can convert to additional living space legally, and that's the key word here legally. Meaning you must make sure there is egress for someone to escape during a fire. But if this is something you can do, then you can really open yourself up to earn more rent and really boost your return should you ever sell. Another bedroom or even a bonus space like a family room or office space that's away from the main living space is a huge plus. Now if you're in a rent by room situation, then you really want to be looking at ways to convert living space to bedrooms. Again, legally. Check your local building codes before making any changes. Adding laundry is another huge plus that renters are looking for. When we are searching for comparables to see what we can rent our units for, we filter out units who do not have a washer and dryer. And you know what we're left with? A handful of rentals, most of them really high end. And that means our rental rate can be almost$200 more a month.

Stacie: 29:50

And yeah, that's also because we have central AC too. It still floors me how many units do not have air conditioning these days.

Kevin: 29:58

Yeah, I mean obviously air conditioning is another huge plus. And of course central AC as opposed to wall units is much more preferable. Getting back to washers and dryers, there are two options to consider here. Coin operated community laundry or a washer and dryer inside the unit. If you choose a community laundry room, it can serve as passive income for you and convenience for the tenants. The earnings from the machines can cover upkeep and maintenance costs as well. Now with the in unit option as we just said, this provides another opportunity to charge higher rent prices. Furthermore, since it can help satisfy tenants, they may agree to sign longer leases, which keeps your property filled longer.

Stacie: 30:43

Yeah, that's for sure. When your tenants are happy, they're going to stay for as long as they can. And like we've said before, we have had one tenant now for 13 years and most all of our tenants are, they're upset when they have to leave, but life changes and it's time for them to move on. Now, I want to throw in an option that we are hearing more about, but I don't really know many landlords who offer this. And that is to offer a furnished rental. And not a short term or midterm rental. This one's for longterm. From our understanding, a furnished rental is one of the most sought after amenities. Especially for the millennial age group, because they like to try out a new city for a year or two and see how it fits their lifestyle. And apparently it's popular because tenants can just show up and not have to worry about buying furniture or having to rent a U Haul or hiring a moving company when they move. It is estimated that you can earn an additional 20 percent of rent. And for our studio, that is spot on if we decide to rent it out to a longterm tenant in lieu of a midterm one. And midterm, we would likely yield around the same profit because for those we have to cover utilities, which for longterm, obviously we don't. Not to mention the wear and tear and turnover costs for midterm, should we have multiple stays per year. So these are all things that we need to think about and consider. Okay, so I'm going to switch gears here and forgive me if this comes off as a tangent, but landlords, if there is one thing that you do before you rent your unit out, it's to thoroughly clean it. The one thing we are always told during our showings is how clean our units are compared to the other units on the market. And I'm telling you, we get into every nook and corner and clean it. We clean every appliance, inside and out. Every light fixture, every window, and all the blinds. For units with carpets, we'll either steam clean them or we'll replace them. The wash machine is thoroughly cleaned, and our bathrooms are sparkling when they're done. We paint, or at least spot paint, after every single tenant. We do maintenance, touch up chip sinks, oil the cabinets, remove and clean the switch plate covers, etc. And cleaning is not hard, it's just not fun to do, especially when it's someone else's dirt that you're cleaning. If you really do not want to clean it, just hire someone to do it. We have a cleaner that we recommend to our tenants to hire when they're ready to move out. And when she goes in and cleans, we don't have much at all that we need to do other than some paint and maintenance items. Let me put it to you this way. If your rental looks like you don't care about it, then your tenants aren't going to care either. And yeah, there have been times we have handed over a unit in perfect condition and then we go in for an inspection and it's an absolute pigsty. Does it piss us off? Absolutely, it does. But our lease and our move out procedures pretty much ensure that when we get that place returned back to us, it's really clean or we're going to deduct from their security deposit. But if there is one improvement that you can make as a rental property owner, make it being that you will really clean your units before showing them.

Kevin: 33:58

That's for sure. I mean, this is one thing Stacie is an absolute stickler about and that dedication she has to presenting a perfect product to those who come to do viewings, has paid off so many times over. Our tenants for the most part really do care for and take care of their units. So if it means you have to spend one or two whole days cleaning your rental property so it impresses someone, we highly recommend you do it. First impressions make a world of difference, good and bad. Let's move into some suggestions on how to make improvements to your business strategy that may or may not result in increased profits, but it will absolutely make it a little easier to operate. So, let's start with knowing your market. You know, we can tell you all day long to go out and make the improvements we just mentioned, and you'll likely see higher profits, but that only matters if the improvements made will make a difference to your tenants and your market. Now, most of what we have recommended today are not huge expensive things. They're pretty common, easy DIY projects that you can do over time to make your rental property more appealing to those looking to rent. When we say know your market, we mean take some time to scope out your competition. Find out what other landlords are offering for amenities and what kind of rents they are getting for those improvements. Check out what they offer and how they structure their fees. If they have amenities that you don't have and can yield a much higher rent, then you might want to consider implementing a few of the improvements to your property to help it stand out. And make sure you focus on properties that are similar to yours in size and locations. You know, compare apples to apples. Because if you have a small one bed, one bath cottage on the other side of the tracks, you are not in competition with a four bed, three bath home up in the hills with a beautiful view. And the last thing to know about your market is that your rents reflect the neighborhood. As I mentioned, if you're located in a C level neighborhood and you do a bunch of improvements to offer an A level property, you will probably not get the return you're hoping for. One more thing I want to talk about is something that Stacie and I had intended to do this year, but we haven't gotten around to it yet, but is to implement a RUBS program for our Sacramento property. RUBS, or Ratio Utility Billing Service, is for multi family units where you take a property wide utility bill, most commonly water, and you divide it up amongst the tenants each month. Now, this is a tough one because our unit sizes vary as do the number of tenants who occupy them, but we pay our properties water bill each month and it comes to around$450. That's around$5400 a year for utilities that we barely get to use out of. And I don't know about you guys, but we have a lot of things we could be using some of that$5400 for. So it took us a little while to begin the process because each tenant has to sign off an approval that they will pay their share of the bill. This was not previously written in our lease agreement, so we had to add an addendum for the new tenants to sign, and we decided to wait for all current tenants to renew, and then one by one they signed off on this new agreement as well. But bottom line, if you have one large bill you cover for your multifamily, you can hire a company to break it down each month accordingly and then bill your tenant and they pay the invoice on your behalf. I mean, it's not crazy expensive and it absolutely will be less than what we are paying. So now we just need to get on board with a company and get it done. Now, this is an improvement that will add to your return and profitability. It also shows your tenants that you are fair and mindful of your bottom line. Not a bad thing.

Stacie: 37:52

No, not at all. And the only thing I want to say is that you can't just split a utility. You do have to use a RUBS company to do it for you. And some areas have very strict rules to abide by, so make sure you're checking your landlord tenant laws before implementing a program like this. Okay, you guys. We have several more things we want to discuss, so I'm gonna do my best and get through them quickly. One improvement that you can make that costs very little is to implement or start using landlord software. If you only have a couple of units, we highly suggest checking out TurboTenant. We have several companies that we like and are associated with, but TurboTenant is, for the most part, free to use. And the main reason is that you can collect rents electronically as well as track payments of fees, track maintenance requests, process applications, et cetera. And we don't really care what software you choose, but using one makes you look more professional, like you really have your stuff together and care about how you operate your rental property business. Think of it like when you go into a dry cleaner and one uses an automated system that has your name and tracks all your orders and gives you a printed receipt, let you know what you dropped off and what it's going to cost you. The other one down the street, whose owner is equally nice, uses handwritten receipts. And every time you go in there, it takes longer because they have to go into their manual filing system to find your tag. And then run the close rounder around a bunch of times until they finally notice your name. So which one appears more professional and cares about efficiency in turn your time? The first one, right? So using landlord software is kind of like the same thing, but for your tenants. If you still only accept rents through checks that have to be mailed in, do you think it's quicker for your tenant to physically write that check, address an envelope, search through the junk drawer for a stamp, and then walk to the corner to mail that rent payment on the 25th of the month so you can get it by the 1st of the month? Or do you think they prefer to set up their account on your software one time and then have it charge their account automatically every month after that? And please don't tell me you use cash apps for rent. That is a huge no no. If you have not listened to episode 51, where we tell you many reasons why you should not accept cash apps for rent, you need to listen to it pronto. We'll list it in the show notes to make it super easy to find. We'll also link the TurboTenant for you to check them out as well. And you guys, they're a company we're affiliated with, so we do get a small kickback when you sign up through our link. We do appreciate when you do use the links we recommend, as the small amounts that we earn are what enable us to keep this podcast going. So if you have used a link to purchase something before, thank you from the bottom of our hearts. And you know, it's not much, but every penny helps. Okay, I guess I'm not getting through this very fast, am I?

Kevin: 40:51

No, you're doing okay, but we do need to wrap this up pretty soon, so let me take a couple of these off your hands. I'll roll through them pretty quick. If you have any questions, shoot us an email and we can go into more detail. A couple of amenities are tenants like, as we've mentioned before, are washers and dryers on property, air conditioning, smart devices, efficient appliances, and light fixtures, and also pets. Now, we don't allow pets and thank the Lord, the law California was trying to pass about forcing us to, without being able to charge additional rent, yeah, crazy, right? That got thrown out recently. But for those with single family homes or larger units that might have a yard, pets can 1) widen your application pool because a lot of renters have pets and many landlords are like us and do not accept them, so for the ones that do, you get a lot more applications. 2), pets really make your tenants happy, and in turn, they would likely stay in your unit longer. And 3), you can earn additional rent each month for those pets, which will add to your profitability. One more thing you can do to make tenants happy is to offer high speed internet. Here's the thing. Most internet companies make you sign up for a two year contract. So, for tenants who may not plan to stay in a city more than a year, that means they have to pay a hefty fee to get out of the contract. It's not hard to set up, but you do need to manage it if something goes wrong. That's the only bummer. But for cost, let's say your cost is$50 per unit. You can charge$60 or$70 a month for the convenience of the tenant not having to open their own account. And then potentially make an extra couple hundred dollars per unit annually. Our place in Sacramento recently was qualified for fiber optic internet lines and we are thinking this is something we need to add to our units as a benefit. Okay, a couple more and I'll hand it back to Stace. 1 Make sure you're updating your photos for your marketing. 2-Do regular inspections to check on your unit. This is the best way for the tenants to know you mean business and you care about your property. 3 Preventative maintenance is key. 4 Stay in communication with your tenants and keep accurate records of all conversations, especially ones where you promise to do something for them. 5 Surround yourself with a great team. You can't do it all, so make sure you have a good lawyer, a good Realtor, a good handyman, good service professionals, and a CPA who understands tax advantages for rental property owners. And that last one is super duper important, you guys. You want to meet with your tax professional at least once a year, preferably early in the year so you can discuss your options. You know, things like depreciation and expenses, and would it be better if you held the property in an LLC? If you plan to do major improvements, this is something your tax advisor can, well, advise you on.

Stacie: 43:59

Yeah. I mean, we meet with our guy once a quarter to talk about our current properties, what our plans are and our retirement plans as well. You know, he's helping us create a plan to decrease our tax liability and increase our equity and in turn rental income. Okay. There's two more things I want to discuss. First, take a moment to consider how you're going to pay for all these improvements. And I'm sure you've heard the term, you have to spend money to make money. Many of these suggestions can cost less than$500 bucks if you do the work yourself. So pull up your sleeves and put in some sweat equity on your properties. Unfortunately, for some of you, paying$500 or more is too much. So how are you supposed to afford these improvements that add so much value to your rental property? I have two words for you, cash reserves. If you have not listened to it yet, on episode 28, we talk all about your cash reserve blueprint. We'll link it in the show notes so you can go check that out. But if you're not holding cash reserves each month, you're doing yourself and your rental property business a huge disservice. Paying for these improvements are precisely how cash reserves should be utilized. And finally, when you're in that meeting and discussing your plans with your CPA, ask them about these improvements and how they're going to affect your bottom line. Because often the government will reward you with deductions off your profit for improving your rental property. Depending on the amount spent, it can either be expensed or considered an improvement. Again, we are not tax or legal advisors, so check with your CPA and make sure that these benefits apply to you. Bottom line, when you want something, you save for it, right? You want a new car? You save for it. You want to go on vacation? You save for it. You want to make improvements to your rental property? You save for it by way of cash reserves. Okay. And the last thing I want to say, and that is if you cannot handle all of this, the all encompassing task of managing your rental property properly, then hire a property manager. The very worst thing you can do is get a tenant in your unit and walk away until they move out. Your rental property needs someone to have a thumb on it. Making sure there are no lease violations, no maintenance issues, or even understanding small improvements to make the living experience better for your tenants so that they will renew and respect your rental property. Now we did a two part series on all the questions you need to ask a property manager before hiring them. It's episodes 39 and 40, and you guessed it, we'll link them in the show notes. The other thing that we're going to link is the questionnaire that we created that has over 60 questions for any property manager you think you might want to hire to answer. And yeah, that's a buttload of questions, but you don't have to use every single one. Some might not even apply to your situation. But if you do not ask the right questions, you're going to regret it later. Now, this questionnaire is one of the two things that we sell. We sell it for around 10 bucks and you can use it as many times as you'd like, but it's all set up and formatted for you to either send off to the property manager to complete, or for you to use as a guide when you're interviewing them in person. So go give those episodes a listen. And the last thing I want to say is please, please, please screen your applicants fully before allowing them to move in your units. All right. That is the end of our podcast on ways to improve the value of your rental property. And let me leave you with this. You should care for your rental property with some of the same concerns as you do your own home. So if you notice something needs to be repaired, repair it. The little things you do are going to have the biggest impact on the overall value and on your ability to increase rents on a regular basis. All right, that's our show for today. We really appreciate you taking time out of your day to listen to what we have to say about landlording and owning rental properties and ways to improve upon them. If you like what you hear, subscribe to the podcast or give us a follow so you don't miss out on any episodes. If you really, really like what we have to say, would you do us a favor and leave a kind review and tell other landlords you know about us? We would be very grateful if you could. We would love to stay in contact with you. In the show notes, you can find links to all the free downloads we offer, ways to sign up for our free weekly newsletter, and the waitlist for our upcoming course on placing your ideal tenant, of which a significant portion of the course will be on tenant screening. There's also links to our social media accounts where we share very informative and detailed tips and tricks for landlords. So check those out. I think that's about it. Thanks again. And until next time you've got this landlords.