but a clean front yard is the first thing a person notices about a home, and this first impression can last a lifetime (or at the very least, a lease cycle). Of course, the rent you are charging today is not going to hold steady for the lifespan of rental property ownership. This can be good or bad, depending on the appreciation potential of the home. If you feel a rental home’s income is stagnating, investing in some applianc- es for the property could help bring in higher long-term returns. If you put the proper due diligence into your investment home before you purchased it, then you should expect its value to appreciate. An increase in value for a home should correlate with a general increase in the value of similar homes in the surrounding neighbor- hood. Subsequently, average rental rates should rise, which is good news if you plan to rent out for many years to come. The central factors in any investment property’s rental price point are its lo- cation and condition. Larger rooms and proximity to schools and city parks will always have a strong influence on rental rate, but a smart investor knows that there is a certain standard deviation to a rental rate that can be taken advantage of. While a landlord should never make a decision to purchase a rental home dependent on artificially raised rental rates (via appliances and aesthetic im- provements) being informed on how to utilize different avenues to increase rent is important. •
A less-desirable home that’s struggling to get rented out might become more competitive with the addition of an appliance that’s not usually offered. It is therefore worth considering the idea of transferring appliances from one nonperforming home to another. HOWCAN A RENTAL RATE BE RAISED BETWEEN LEASE CYCLES? I once had a landlord who offered to buy my furniture at the termination of my lease. I was still in college, and I had bought the furniture gently used. He therefore got a great deal on furniture, and I made some of my money back. Following my move out, my ex-landlord marketed his now-furnished property for about 30 percent above the price I was paying to live there. Within the year, the extra income he made from the increased rental rate had covered what
he paid me for the furniture. It was a win-win situation. I didn’t have to wor- ry about the cost of moving or storing my furniture, and the rental property’s attractiveness to potential tenants went up significantly. MAINTAINING AN AESTHETIC VALUE While it is not necessary to keep a home’s landscaping in great condition for a rental property to perform suc- cessfully, the landscaping quality could help you justify a higher monthly rent. If a newly acquired rental home has at- tractive landscaping, keeping it up will have many benefits. Some landlords will ditch shrubbery for a low- to no-main- tenance substitute. But when tenants notice that the landlord truly cares about the home, it will incentivize them to respect the home a bit more. It might seem like an insignificant business cost,
Michael Jordan is the founder and president of Strategy Properties, which was formed in 2003 under the name Jordan Ventures Inc., with its initial
focus on new-home construction in Wayne County, Michigan. The company now has become a key provider of rental homes in the state of Michigan and many other cities across the nation. You can reach Jordan at mike@strategyIG.com or 734-224- 5454. www.StrategyProperties.com
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