There comes a time in every real estate investor’s life when they see occupancy rates drop. Sometimes it results from economic changes. Sometimes it means a little sprucing up is in order.
In some cases, a little sprucing up isn't enough, and the property needs to undergo a more extensive transformation. When renovating and repositioning your property, here are nine strategies to generate more interest and keep your rentals full.
Even new landlords are familiar with the concept of renovating a property. These improvements can be as simple as painting, changing finishes, and updating a kitchen. In other cases, they might involve a full-gut overhaul down to the studs.
Many investors consider the cost of a rehab when determining if they can recoup the price in rent. A renovation might also include property upgrades, such as outdoor amenities.
On the other hand, repositioning a property involves a broader approach, more than simply adjusting the building's physical appearance or layout. Repositioning can include renovations, but also rebranding, overhauling operations and management, or even changing the property's purpose — think high schools morphed into condos.
With repositions, not only does the property get a facelift, but its function and behind-the-scenes operations can be drastically altered to serve another need in the real estate market.
Before jumping into a repositioning, note that doing so often takes more time and money than merely renovating. In some cases, zoning changes may be needed. With changes in zoning come different regulations in terms of parking, traffic flow, and environmental concerns.
Both renovating and repositioning start with figuring out the potential of your property. Conduct a market rate survey of properties similar to the one you have to determine the appropriate rent price — both immediately after your renovation is complete, and further in the future.
This groundwork can also help you determine if it’s time to renovate or reposition a property (or buy another one that’s ripe for a new use).
Are you repainting the interior, adding a new roof, and replacing the windows? Or will you be changing the entire layout of the downstairs, moving plumbing and electricity from one side of the property to the other?
Consider the demands of the market you’re in and the return on investment when it comes to renovations. In general, the best ROI comes from adding square footage or amenities. Don’t forget to factor in things like maintenance for whatever you renovate — these hidden costs can eat into your profits.
Your renovation might be as simple as updating your standard white contractor’s kitchen appliances to a suite of stainless steel appliances, including a cooktop, refrigerator, range, and dishwasher. Stainless steel is elegant and durable. It also photographs well and can bring more renters in for a showing.
What’s beneath your feet when you’re at home is essential. If past renters have potty-trained multiple dogs on that contractor-greige industrial carpet, chances are good that all the steam cleaning in the world isn’t going to pep it up. Consider investing in high-quality, durable flooring that is updated and fresh.
The competition for good tenants is fierce, and they'll pass on your property if it doesn’t have desirable amenities.
The most sought-after amenities include:
Renting a commercial property to startups? Take a cue from big companies that have installed integrated wet bars, nap rooms, and gaming areas to attract younger professionals.
For many tenants, landlords that don't accept electronic payments are not an option. If you're still in the paper check and money order era, electronic tools are easy to set up and run through your website. But that’s not all: Switching to electronic communication in general makes it easier for tenants to report issues and ask questions.
Look for apps and other technology that allow you to modernize the way you communicate with tenants and collect rent.
One inexpensive strategy for rebranding your property as more transparent and forward-thinking is putting more emphasis on social media integration for things like announcements, tenant feedback, and other communications.
Give your property a name and hashtag, then start posting on social media. Focus on the platforms where your desired demographic is hanging out (more on that below). This is a great place to document updates, announce availability, and get ideas about what people want in a rental and landlord.
Wondering why your beautiful property isn’t getting any traffic? It could be your marketing strategy is off. Most marketers agree that social media is the tool of choice for marketing, but simply using social media more often isn't enough.
How you use that tool matters. You’ll start by identifying your target renter, then take the following strategies on your website and social media platforms:
Your website is often the first impression potential tenants have of your property. Not only should it look good, but it should also function well. Optimize for mobile devices, and make sure every page is fast and responsive.
Even though it's just a website, many potential tenants who visit your page will read into its quality. If the website is clearly low-effort, people will tend to think the property itself is subpar.
Typically, this would come after your property has already completed most of its renovations or repositioning. It’s time to let potential tenants know how lovely the property is by writing the perfect property description. Old descriptions won’t get you the tenants you need and don’t reflect the time you’ve put into the property. Even a small change can make a big difference when it comes to finding tenants. Shout that small change from the rooftops!