The other day I met a neighbor at one of my open houses. She was looking for a new home and wanted to keep her current home as a rental. As she looked around she asked me if this home for sale had been staged.
As an Accredited Staging Professional (ASP) I “stage” all our listings. However, much of what I do is actually a “redesign” of the home. Redesign consist of using the existing furnishings and subtracting or adding elements. It also includes changing wall colors, flooring, cabinet colors/finishes and landscaping to name a few things. All the while the goal is to create a lifestyle impression with design and color that is most advantageous to the home and with the broadest appeal. The challenge is to keep the cost at a minimum for any new elements that need to be purchased. And, yes, they should be things the homeowner really likes so they can be used in their new home.
So, back to the neighbor who wants to rent her home instead of selling it. As we talked it became obvious that redesign would maximize her rental property in several ways. The obvious way was getting higher rent. The less obvious was in getting a renter to take better care of the house while they lived in it.
Let’s look at the same house in two different scenarios.
Scenario #1. You decide to rent your house and figure that new renters will mess up the walls and carpet and generally put wear and tear on the home. When they leave you’ll have to put some money into it to fix it up. So you don’t bother doing much to it. You leave it just the way you have been living in it. You put an ad in the paper and online right away and start to show the house. The yard needs some work so it’s not really a problem for you if the tenant has a dog. The inside could stand to be painted, the carpet has a few stains and a good spring cleaning hasn’t been done in awhile. You ask for a reasonable rent but negotiate it down a little if the tenant keeps the grass cut. Your security deposit is one months rent. You thought of asking for more because of the pet but decide not to. Whew! That got done and you now have a renter. Time for you to move to that new house you want.
Scenario #2. You want to buy a new home and rent out your current home. You want the best possible renter who will pay the highest rental price and will take care of the house like it was there own. Now some people don’t take care of their own things very well and since you can’t go and see how a prospective renter is currently living, what do you do? You decide that you will invest in your soon to become income property and do a few things to hedge your bet. You repaint the inside of the house in neutral, soothing colors. You get the carpet cleaned and replace the areas that are worn. You organize all your cabinets and closets as well as the garage. Yes, you might have to rent a storage unit just like people who are trying to sell their homes. You don’t want to show off your clutter. The yard gets the TLC that you have been putting off and colorful bushes and flowers are spread throughout the front and back. You’re not done yet. It’s time to stage or redesign your home. Why do this when you just want to rent it out and not sell it? Remember that creating a lifestyle impression is the goal. You redesign the house making it look larger, newer and upscale. The house becomes a version of the new one you want to buy. Everything is done and you’re ready to find the perfect tenant. You price your rental at the very top end of similar size rental properties. You don’t allow smokers or pets and require a security deposit to equal 2 months rent. You’ll include a gardener who will take care of the yard.
The day comes where you place your ad in the paper and online knowing that this house is very different than the house you would have offered without doing any work to it. The two house aren’t even looking for the same renter!
There is a psychology in play that most people are unaware of. When you stay at a hotel or vacation rental you will notice the condition of the property. If the door frames have nicked paint and the walls are dirty it not only changes your mind about the quality of the place but also about how you will behave when you are there. No one wants to be the obvious one to nick the wall or stain the carpet or furniture. The operative word is obvious. The nicer and cleaner a place is the better a “guest” or tenant will behave.
When renting your investment property, you can’t minimize the importance of presentation. As our neighbor said, the difference in rental income can pay for the property tax bill not to mention the peace of mind knowing you have done everything to protect your investment.