For all of you savvy ‘buy and hold’ real estate investors out there, here’s a great outline of the value of improving the curb appeal for your rental property by Al Williamson of leadinglandlord.com Al’s blog is an ongoing thesis on how landlords can be a significant force for catalyzing positive change in urban neighborhoods- and as a result become the beneficiaries of those changes on a scale well beyond the effort and investment they put in. (Keep up the great work!)
The concept of achieving higher returns through curb appeal is intuitive enough- if you make the property look better more people will want to be there. If more people want to be there, it will be faster and easier to rent out your vacant units to qualified tenants.
The last part of that statement, renting to qualified tenants, is very important. Al doesn’t touch on it in the article, preferring to keep the discussion to a simple question of the return on capital invested via a reduction in the vacancy rate. As anyone who has held and managed a rental property for any length of time knows, the quality of tenant you put into your property will be directly proportional to the amount of time, energy, and money you will have to put in to manage that property.
If by improving your curb appeal you can select future tenants from a larger pool of qualified tenants, you should see a resulting reduction in overhead management costs. When a good tenant moves out fewer repairs and less substantial cleaning will be needed to bring the unit up back up to marketable condition. Good tenants typically don’t cause as much ongoing wear on the property. Good tenants typically attract other good tenants, and the upward trend continues. I’d love to see a breakdown of some of these secondary management cost impacts in a similar form to what Al provided with the vacancy rate.
How about you? If you own and/or manage a rental property and can provide some insight on the relative ongoing management costs of good tenants versus okay tenants or not-so-good tenants, let us know.
Ed, you are absolutely correct. Attracting and keeping qualified tenants does wonders for a landlord’s cashflow. The steady cashflow improves the property’s NOI and increases it’s cap rate property value as well. But, besides the finances, nicer looking properties with happy tenants take much less time and effort to manage. It’s the only way to roll. A cleverly designed landscape plan pays dividends in time and money.