When renting residential property, tenant turnover, or the completion of a newly constructed unit gives landlords the opportunity to set a new rental rate that will determine an investor’s return for potentially years to come.
Without the right market insights, a landlord could be leaving a significant amount of money on the table.
“Some of our clients underprice their units,” says Conrad Pool, the president of Sleepwell Property Management. “That’s lost rental revenue compounded over the years.”
With their extensive portfolio, Sleepwell – one of the city’s largest third-party property managers – can generate market analysis reports that provide investors with insights into the pricing of comparable units in the neighbourhood as well as how to factor in the value of parking spaces, modern appliances and other amenities.
A trusted leasing advisor can also make recommendations on capital upgrades that will result in higher rents as well as an increase in the property’s appraised valuation.
“Year over year, we analyse the assets under our management and determine which capital investments and renovations will generate a higher return on investment,” says Adam Pearce, Sleepwell’s vice-president of sales and operations.
One of the first steps is to look for ways to inject a “wow” factor into a house or apartment.
“Tenants want a fresh, bright unit,” says Pool, adding that a new coat of paint is an easy way to start. Choose two different colours – one for the walls, and one for ceilings and trim. A modern neutral with white trim is always a classic choice.
As you progress to considering more extensive upgrades, it often pays to look underfoot and evaluate whether there are opportunities to increase a property’s value by replacing old, tired flooring.
Pool strongly advises against installing carpeting in rental units. If a tenant with pets moves in, the odours tend to linger. Hardwood may have a higher upfront cost than carpets, but it won’t come with the costs of deep cleaning or replacing the carpet in the future.
In the kitchen, avoid laminate countertops and use quartz or granite instead. Although laminate is cheaper than stone, it’s more easily damaged if a tenant neglects to use a cutting board and cuts into the surface. Quartz and granite are more durable, last longer and give an apartment or home a more upscale look.
Similarly, a new kitchen with stainless steel appliances and cabinets may justify an extra $500 in rent to many prospective tenants. This adds up to an additional $6,000 a year in income, shortening the payback period.
“You want to do these renovations right the first time and not cut corners,” says Pool. “It’s about the quality of your finishes and amenities that really make an apartment shine.”
More information about property management is available on Sleepwell’s website.