The Better You “Tenant Proof” Property, The Greater Your Profit Property management is the act of forestalling natural entropy. Leave any property alone for long enough, and it will break down. Some break down faster than others. For example, a shack in the desert will become scrap much faster than, say, pyramids made by ancient civilizations in that same desert. But the Egyptian pyramids aren’t what they were.
That said, some properties have been in continuous use for over a thousand years. How come they haven’t broken down yet? Because they’ve been carefully managed and maintained. So for generalized property ownership, it’s integral to maintain the premises or the value will be lost. It’s just the same with rental properties, but renters are like conscious entropy.
Because renters don’t own the property and don’t necessarily have any reason to get their deposit back, they can destroy the premises if you’re not careful to choose the right tenants. But even the right tenants make mistakes.
Sometimes “anger” punches a hole in the wall, sometimes a tenant stumbles and goes head-first into sheetrock, making a hole. Properties have to be tenant-proofed, and it’s the same as entropy-proofing, but more direct. Here we’ll cover a few ways you can effectively tenant-proof your property. Do the job right, and properties are more profitable for longer.
1. Figure Out The Sort Of Renters You Want
Different properties are for different renters. There’s a big distinction between a building designed for apartment rental, a house designed for single or multi-family occupancy, a duplex made for the purpose, an industrial building turned into a block of rentals, or a prefabricated building among multiple prefab units.
Trailers are generally prefabricated, and a property owner will hook up twenty or thirty “lots” with electricity and plumbing. Then, trailers can be moved onto those lots, and the money comes not from the property itself, but from lot rental. The cost on the tenant is something like $300 a month for lot rent, plus utilities.
So essentially, they’ll pick up a trailer for anywhere from $6k to $100k, depending on their situation in life, park it on that property, and pay around $450 a month (owing to taxes and utilities) from then on. The landlord gets money directly from the land, rather than the property itself. Accordingly, any renter will do; provided they pay lot rent on time.
This is why trailer parks are sketchy. Tenants often either lease their trailer or rent it out, so it ends up being the cheapest of the cheap. Once the value of the trailer is paid off, the owner sells it to someone else who does the same. In contrast, non-mobile property that isn’t prefabricated is stationary. The profit comes from rental, not land. Those landlords vet tenants.
2. Fortifying Your Rental Units
If you’ve got a house that you’re renting to tenants, a duplex you’re renting to families, an apartment building full of units, or an industrial building that’s been made into rental space, it is definitely worth your while to proof your rental property.
The link has some suggestions to explore, including glossy paint, door stoppers behind all doors, TV mount prohibition, and shoe racks. Another strategy you may want to consider involves requiring certain things in rental agreements from the outset. For example, you could put a “no smoking” stipulation in the rental agreement, on the pain of eviction.
You would have to enforce such a stipulation, but including it in the rental agreement can help you mitigate damages so you’re able to acquire more tenants over the long run. One apartment rented to one tenant for five years at $700 a month is $42,000. That’s an average—rental rates gradually expand over time; maybe this rent started at $620 and became $750 a month.
But what will be more money? One tenant for five years at that average rate, or five tenants at thirty years? Thirty years six times as much as the five-year interval. One unit can bring in $252,000 inside thirty years at an average of $700 a month. But if the rental community, or the single unit, is in decline, you can’t command rent that high, and it loses money. Quality rental units are more profitable in the long run.
3. Stripping Down Properties
Another option is the reverse of fortification. Strip the property down to elements so basic, it’s next to impossible to damage; then market it as a cool loft. Strip up carpet and flooring so only cement shows.
Have blank walls. Still charge a deposit so you can repair anything you need to for the next tenant; but stripped-down lofts are stylish, they last long, and they can be cheaper to maintain.
Making Your Rental Properties Stronger For Longer
Systems of order break down into chaos over time. This is the basic concept of entropy. There’s a scientific concept called the “ultimate heat death of the universe”. Eventually, entropy will get us all—at least according to the scientists. And while entropy can’t be avoided, it can be managed.
This is especially notable when it comes to property damage over time. Choose your renters carefully—don’t just take the first one who walks through your office’s doors, answers an ad, or calls you up.
Fortify rental units which require fortification and can’t be stripped down; strip down units that can be stripped down. Between these three approaches, you should be able to get the most out of your rental property, maintaining it beyond entropy over the long-term.