Ep003: Which Amenities To Add (& Avoid) in Your Rental Property

Laci Leblanc
Yes, this is a good one. This is like every episode of Flip this House, chris, but like with a twist. So you have to come up with your budget and your plan for the house. You have to do all the work, you have to navigate the inevitable problems you find behind the walls.

Chris McAllister
Right.

LaciLeblanc
Always my favorite part, but in this case it's a home that you have to market and sell over and over again to renters for years to come. So there's this big consideration that most of these you know really cool Flip this House shows on online or on TV don't consider. So it's, these decisions have a lot more weight in some cases. So very exciting.

Chris McAllister
Yeah, you know, if you're crunching the numbers and you're trying to figure out how much to pay for an investment property, if you're considering a new purchase, you have to consider how much money you're going to need to put in on top of the purchase price for any necessary upgrades or amenities, and that's a different calculation than just budgeting.

You know a certain amount of reserves for ongoing repairs. You know, like we discussed in our last episode and the key here is the trick on this to maintain profitability is only add the amenities that are common to the neighborhood that you're going to buy in, and only are. Those are the only amenities that you can expect to get a return on your investment. Right, I mean, if you're talking about putting a jacuzzi tub into a neighborhood where you know everything's a stand up shower, you know that neighborhood is never going to command a premium because you put a jacuzzi tub in. You know, I mean it's a real simplistic example, but it's something you have to keep mindful of that you only want to be adding amenities to properties that are going to get you a return on your investment and you have to let the neighborhood dictate your amenity budget.

Laci Leblanc
Yeah, that makes total sense. And this is a tough one, right, because for a lot of folks who are in the financial position to own investment properties, right, we don't necessarily live in the neighborhood that we own those properties in, and so it can be kind of battle of the wills you want to put stuff in that you think would be great, that you know you would like to have, but the neighborhood standard just doesn't always command it or allow for it.

Chris McAllister
Exactly If you have a property in a neighborhood that rents, you know, for 2000 a month or 3000 a month. That's a whole different environment, A whole different set of considerations than if you have a property in a neighborhood where the rents are close for two, you know, seven, eight, $900 a month.

Laci Leblanc
Yeah, I mean assuming you want to make money and that's why you're doing it.

Chris McAllister
Yeah, if you want to make money, that's true.

Laci Leblanc
If you don't want to make any money, there's a whole different conversation. That's another podcast.

Chris McAllister
So one of the things that you know, one of the strategies for you know what your personal investment strategy might be. There's this concept out there in the world called BRRR, and it's BRRR I think it's for Rs and what it stands for is buy for the B, rehab, rent, refinance and repeat. And the BRRR method it's an investment approach that involves rehabbing a distress property. Obviously, the trick is finding a distress property at the right price. But you rehab it, you rent it out and then you go to the bank and you get a cash out refinance on it and that money allows you to go buy your next property.

So the trick on any BRRR is that first of all, you've got to buy it at such a price. So say, you find this house for you know a hundred grand or whatever, and you've got to put 50 in it to bring it up to the neighborhood standard. And the trick on this is that it would be I would appraise, let's say, for 200, right. So you buy it for 100, you fix it up for 50, and it appraises for 200. And let's say that you get a 75% loan to value and you get to borrow 75% of 200,000 from your bank. That would give you $150,000 back from the bank using the BRRR method to get your money back for the purchase and the rehab and you could take that money and go on to the next property. But, of course, if you're not making good decisions as far as how far you're going to take that rehab, if you're not making the right financial decisions as to how much you're going to put into the rehab, of course, then that could jeopardize that BRRR opportunity.

Laci Leblanc
Yeah, that reminds me of the video we just recorded, which was about your investment strategy, your real estate investment strategy, and how important it is to have one. But this is a great example, I think, of a strategy to make money doing this and be very intentional about it. Do you have an example of this kind of like a real life story for us to kind of illustrate these points?

Chris McAllister
Yeah, I've been working with one of our owners in Columbus the past few days and he has a five unit. It's five connected townhouses close to the inner city in Columbus and I think four of them are two bedrooms and one is a three bedrooms and it's a C or D neighborhood. I guess people would refer to it as I mean, it's got some opportunities in the neighborhood. Let's just say that. So he bought the house Let me get sure I get my numbers straight but I think he bought the house for $180,000 or the property Five units for $180,000. And he put a little over $100,000. In the house. So he had to reduce some kitchens and appliances and bathrooms and electric. I mean he did a lot of work, you know, fix up the parking area, things like that.

We've been working with him on managing that property since he bought it and I guess it was 2020. And we finally got it to the point where you know it's stable, fully rented, everything's fixed and so on. So what he's thinking of doing is cashing out that property. So let me back up. So he's got 180, he bought it for right, he put $100,000 in it and if we were to put it on the market today.

I'm pretty confident, based on the comparables and on the financials, that property will command roughly $450,000, right, it'll sell for that, but it would also appraise for that. So the cool thing is, and from a Burr perspective is if you take that $450,000, let me just check by math one more time but if you have $450,000, and let's say your bank is willing to give you 75% of that as a cash out refinance, he's going to get $337,500 in his pocket. I mean there's closing costs and things like that. But if you take that $337,500 and you subtract out the $280 he put in it, you know he's not only going to get his money back, he's going to walk away with over $50,000 that he can put towards his next property. So that has a beautiful you know Burr example. So what does that make sense? Does that really?

Laci Leblanc
illustrate the point perfectly and I love the thinking, which is you could cash out that property. Right, you could sell it for $450,000. But you know, depending on your investment strategy, you could also take that cash out, refinance and, like you said, you've got your money back and then you've got extra to put towards that next property.

Chris McAllister
Absolutely. And the cool thing was in this case, you know, again, it's a lower in property. So you know, these units don't have air conditioning, there's no dishwashers or anything like that. I mean they are basic, functional, safe, livable units. So when he redid the kitchens he did them to the neighborhood standard. He didn't install new appliances but obviously they were, you know, super builder basic appliances.

And the other cool thing about this property is, you know, when you don't have air conditioning and things like dishwashers or garbage disposals, the ongoing maintenance costs every month tend to be less too. So again, that's the critical point of not adding amenities above them, beyond the neighborhood standard, because it's going to cost you money down the line as well to maintain those right. But he is giving these tenants in this price range exactly what they're paying for. He's offering fantastic value in the neighborhood and he's being compensated adequately. Right, he's making his numbers, and perfectly appropriately. You know he's not gouging any, he's not overcharging anybody, he doesn't have excessive tenant turn because he's asking too much rent. You know it's pretty much textbook. And he didn't try to, you know, over improve, did what he had to do with plumbing, he changed out fixtures, he had to do fixed water heaters and so forth, and he did a great job and he is really he's sitting pretty. I'm so happy for him that this worked out for him. Just a textbook.

Laci Leblanc
Yeah, I think this is something that my family, who's been in real estate for you know, since before I was born, has always done really well and I've lived in some of their properties as before I bought my own home and they've always been safe and secure and clean and maintained, but they've never been too nice for the neighborhood.

I might would don't like hopefully Nana's not listening, but I might even call some of them a little outdated but they rent fast, people stay for a long time for the most part, and they get the same rent as other properties in the area and I think that was just part of their strategy. So the neighborhood standard to me is this it's like a if you're listening to this right as an investor, this is the golden rule.

It comes into play when you're buying, when you're selling, when you're rehabbing, when you're maintenance, like all of it. So what it talks to me about, like the neighborhood standard and amenities and where how you can kind of frame your, your upgrades or your renovations or just your maintenance in general by the name neighborhood standard and what that means.

Chris McAllister
Yeah, well, you know, like we said, you know, many times, down there with standard comes into play almost every element of rehabbing and maintaining and especially amenities. You know, when I first started, I think I bought my first rental property. I guess it's 22 years ago now. You know, I tried to do that I wanted to do and I tried to make decisions based on what I thought other people would appreciate, based on what I would appreciate as a tenant. And you know that's just the wrong way to think about it, right? I'm not building this rental property for me, I'm building it for, you know, my perspective tenant and I was I didn't even think about, you know, tried to, I didn't even try to put myself in the shoes of a prospective tenant and what's important to them and what they expect. I completely disregarded that and it was sadly all about me. And you know I fell into the trap of wanting to buy, you know, appealing amenities and you know some were just stupid, right, you know please give me an example.

Laci Leblanc
I can't hear that.

Chris McAllister
Many blinds, many blinds in a low end property. We're talking to an owner we have in Springfield, dennis, yesterday, and he says you know, many blinds have gone from $10 to $36. Do I have to put it in many blinds? No, you don't. And the thing is, if you've got 10 windows, it's $360 every time you lose a tenant. Maybe you don't add many blinds right Now. There was another argument at one point where we said okay, let's maybe put many blinds in the first floor so that, if you know, people who maybe want to steal something from the house or damage the house are less likely to do so if they can't see what's in there. So you put many blinds. But you know, but even many blinds, it sounds like a small number, but then you get the habit of every time there's a turn, you know you're replacing these cheap many blinds and that adds up over time.

Laci Leblanc
Yeah, you've got a five unit property and they each have, you know, fiber, fiber, 10 windows and you're replacing it every time. I've never thought about that, but I will say what I have seen on many occasions is you drive by a home and the many blinds are, you know, crumpled by the door where they, like, have been thin to look out or like a child or a pet has gotten the hold of them or yeah.

Chris McAllister
So there's many times you know maybe it's better off not to even have them, right? So but that, especially depending on the rent you're commanding in your neighborhood, you know maybe it doesn't even make sense to have many blinds in there, but I ended up spending. You know whether it was paint, the type of paint I bought. You know it's cheaper to put two coats of. You know Lowe's basic, you know than it is Benjamin Moore, of course you know and nobody cares. You know.

You know the types of cabinet. I chose it just. There's just no payoff right and the you know. So we finally learned our lesson that you know if you go to the back wall of Lowe's, they have cabinets. You know basic cabinets that you can buy off the shelf and you make the kitchen fit the size of the cabinets that are available and on the rack and cheap, right, there's no reason to try to build the kitchen and, you know, make it 2% more functional, but you have to end up doing a special order on a cabinet. There's a zillion examples of stupid things that I did and I just hate for people to make those.

Laci Leblanc
That's a whole other podcast.

Chris McAllister
Yeah, that's the stupid mistakes podcast. But you know, there's just things. I never recouped that investment. You know I lost it and it took me a long time, but I finally learned the lesson.

Laci Leblanc
Well, I'm glad that you've learned the lesson and that you're willing to share that with all of these wonderful people who are listening, because that's really this is kind of Chris's mess up podcast notes in a way.

You do include a lot of the things that you've done wrong, so that other people don't have to make those same mistakes, which you know. I think last time we talked about this being a very noble profession and that's a very noble activity to share all this stuff. But let's talk about some specifics. Let's talk about you know when you're trying to decide, you know you got it again.

Chris McAllister
Like I said, you got to think about what a prospective tenant wants, needs, expects. You know, and also to a huge degree again, this goes back to the neighborhood what are competing properties offered? And you don't want to go above that. You don't want to go below that and the true message on this is you got to rely on facts and you can't rely on your personal emotions or magical thinking. You know it's like you said, you're not going to, you know, be living in that rental property that you own, right? You're not the person that's going to move into that property.

So it's critical to think about, you know, and get yourself okay with the fact that what might not be acceptable for you and your family is perfectly acceptable and, in some degrees, aspirational for you know, your target tenant or your target applicant.

You know, if you have a property in the higher end though think about this for a minute, because I always tend to adhere to the lower end, because that's where, you know, people tend to gravitate, because the purchase prices are lower or investors tend to gravitate but you know, if you go to a higher end neighborhood, you know that two, three, four thousand dollar rate, you have to be competitive, right, you have to not just meet, but it may make more sense to go above and beyond, you know, to command rent, especially if you're in a place where rents are going up.

So that's the one place where I think it's critical that you do keep up with the Joneses, right, you know it's a different, it's a different investment. The other place where you know some fancy wow factor amenities can really pay off is if you're investing in short-term rental properties, like in vacation destinations. Or, you know, here in Columbus there's a lot of short-term rentals around the Ohio State University that get booked up years in advance, you know, during Ohio State football season. And any wow items that you can add and feature in your Airbnb page there, those will pay for themselves. So you know there are investment strategies that do require you to think about well, this is what I want in a property, and in that case, you know, you probably should go with your gut. But when you're going the other direction and you're providing, say, basic, adequate housing at a fair price, you just want to guard against that sort of inclination.

Laci Leblanc
Right, yeah, I think that's a good point, because I too, because again, that's where my family's investments are I think about I mean, you know, lower end. I think you called them C and D neighborhoods earlier, you know, and I've lived in some of those neighborhoods because I lived in some of these properties, so there's no judgment there, but there are folks who really gravitate towards the kind of this style of rehabbing or and I think it's important to think about that when you're building that overall investment strategy. But yeah, so what are some examples of the amenities that tenants in high income neighborhoods or some of these Airbnbs might expect out of a property?

Chris McAllister
I think you want to go with upscale kitchen appliances. You know this is where you need your fancy designer collars or your stainless steel. You want to upgrade the cabinets. You want to have them have that luxury feel. You know that they close themselves you know, everybody loves the soft clothes.

Laci Leblanc
You're looking at granite countertops.

Chris McAllister
You're looking at premium flooring. You know big spa like bathrooms, high end light fixtures, and these are furnished. So you know, obviously you want to have quality furniture but by the same token, you also want furniture that is going to hold up and it's going to be easy to clean, especially in a short term round where you've got, you know, people passing through there. Everything is a single week and it could be very hard on the furniture. But the other place where people really are really looking for these days is I've even used a term luxury outdoor living, right decks and entertainment spaces and, you know, down in Florida, pools and hot tubs and so forth. I mean, those are the things that people are looking for when they go on vacation. So you know, I have investments on the lower end and you know we have a couple of houses in Florida that we ran out and in Airbnb and, yeah, you got to put a different hat on when you're thinking about improving different properties.

Laci Leblanc
Yeah, I mean, I know that's what my family always looks for. Is that spaces? You know, we even scrunch in on the inside, honestly, if it's got a really dreamy which. We live near the mountains in North Carolina, so we spend a lot of time up there and we can squeeze everybody into maybe not quite enough bedrooms, as long as there is a place outside to the weather and the views, and so, yeah, I think that's definitely real life there.

Another area, though, where I think it might be smart to really consider your investment level is the capital improvements, right? So I don't think you want to. I mean, definitely there's a neighbor. What is the? How does the neighborhood standard apply to capital improvements, to your space like your? You know, your big major renault?

Chris McAllister
Improvement is a significant improvement to your property that you end up taking a tax deduction for depreciation over time. It's these are big things. They're not routine things. These are your. You know your initial major rehabs, like on the five unit I was just talking about these are when these are the things that you're setting aside 20% of your rent every the cover eventually, right Like these are those expenses.

Yeah, you've got to have reserves, not just for maintenance, but you have to have reserves for future capital improvements. You know, every 20 years, or even shorter in Florida, you've got to replace a roof. You know windows have to be replaced. You know, from time to time, I mean, windows last quite a while, but when you're fortunate enough to buy a lower priced property, the windows tend not to have been replaced. So to replace windows is a capital improvement.

Laci Leblanc
Yeah, we just had a guy come by and quote us for windows and siding and doors and I bought my house for my family and I got a great buy on it. I was just bought at a time when, you know, the market wasn't super inflated and I got a great rate on my mortgage. So, all in all, this guy came out and quoted us. This is a perfect example of a neighborhood standard not being addressed. And his quote for siding, windows and doors on my like 1200 square foot home was about $5,000 less than I paid for the home itself. So he clearly did not have a neighborhood standard in mind.

Chris McAllister
Well, you know it's like you can pay for Pella windows. But you know, unless you're in a house where people are looking for Pella windows, there's really no point. You know you can get great windows in a lot of different places for, you know, a super fair price. But again, capital expense, it's something that and again you have to talk to your tax accountant about this but that you really shouldn't be in. You aren't really allowed to expense immediately against the property and take it off your taxes. You know, basically it's over 27 years or whatever the number is, that you get to divide that capital expense by and take a portion of it every year and through the life of the property. But at some point I'll take another thing and you know, honestly, I don't know if we were, if we were able to expense this or not.

But you know, I have a lot of older properties in Springfield, ohio, and we had a rash a couple of years ago. I had three, at least three houses where the sewer lines or the water lines went bad and went bad, went bad, bad. You know we had to dig up the yard and everything. It was five, six thousand a pop. And you know, sadly, those things you don't get to expense out immediately or at least I wasn't advised to do that and they have to be, you know, depreciated out over time. But at some point making capital improvements it's going to be unavoidable, whether you make it at the time that you buy the property or some point during the life cycle of the investment. So you've got to get, you've got to get comfortable and build your budget conservatively so that you know when that rainy day comes and they always do come eventually that you're ready for it and you know thinking about improvements. And I guess I'm just going to rant for a second and feel that I'm listening.

You know I am all about landlord profitability. There's just no point in messing around with this if you're not going to be profitable. But so many landlords put off capital investments or just refuse to do them. And again, this is my personal rant. But there is no room in this business, you know, for cutting quarters, hiding defects, trying to rent properties in poor condition and get neighborhood standard price or in some cases, you know these people are trying to get even more than that for a property that they haven't done a thing to.

And you know that is the definition of a slum board, that you know that term gets thrown around and I hate the term, but I have to say I know where it comes from.

You know, if you haven't set yourself up or you just flat out refuse, you know that you're going to make any improvements to a property to make it safe and so forth or the neighborhood standard, then you are a slum board and we don't manage for slum boards.

You know all of our properties are maintained and managed to the neighborhood standard and if we have an owner who's not willing to do that or not able to do that, you know we have to part ways and our property management agreements. They all say that either one of us whether it's us, we, the property managers, or they, the owners can terminate the relationship by giving one another a 30-day notice. And there have been many times where, whether we took on an owner that we shouldn't have which you know, another one of Chris's mistakes or we had an owner that we thought was, you know, going to do the right thing and it turned out they didn't and we've had to, you know, let them go. But our company values, you know, dictate that our properties and the properties we manage more, that they're clean, they're moving ready, they're functional, the lights work, the furnaces, the electric safe, and you know, at the end of the day, that's what tenants deserve. And sometimes there are capital expenses involved in getting to that.

Laci Leblanc
Yeah, I think that you've always said you're in the shelter business, right. So that's part of it is, you're in business not just with the owners but with the tenants. So I think that's really that's a standard that I'm proud of for Roost and I know you're really proud of it too. But you know there are some advantages to this kind of neighborhood standard and set, and that's one of those, I think, is that it gives you kind of a checklist right. You don't have to think so much about what you're doing to these properties because you're doing the same thing to each one.

I know in a past conversation, which I'm sure you'll talk about, this is you now have a paint and a carpet and a type of cabinet that you go to readily when it's time to rehab a property you know within a certain neighborhood standard. So if you're in, you know B neighborhoods, then these. If you're in a C neighborhood or an A neighborhood, it's these, and so you know I love that. It's like a checklist. What's the checklist for these kind of amenities for rental properties in kind of low to mid income areas?

Chris McAllister
Well, here's some things to consider, and not all of these are going to be appropriate, but I think almost all of them are. But you know, if you're going to offer appliances, they have to be functional and affordable. We have owners that are continuously looking for deals at used appliance stores, for instance. I have never, ever, and I used to try to do that too, and every time I would buy a used appliance. You know it was cheaper than going to Lowe's, but you know, it only lasted six months. Right, you know, I found that if I do have a property where I'm going to offer appliances, then I put new ones right, yeah, like a new white appliance better than a used stainless steel appliance.

Laci Leblanc
That's a general rule, right it's?

Chris McAllister
not going to have ice makers and you know it's just going to be a basic. You know refrigerator box, but you know functional and affordable appliances. Laminate or vinyl flooring. You know some storage solutions. You know closets with shelves in them. Exterior lighting too, from a safety standpoint, is critical. And if there's common areas, if we're talking about an apartment building or a multi unit, you know maintaining the common areas and the parking areas. You know some of the basic stuff. You know many houses. You know old toilets. Replace the toilets. You know at a minimum. You know replace the seat. You know it's funny, a lot of these old houses they have tiny toilets relative to what you pick up those today for a new toilet. So you know you want to rent the property. Spring for a new toilet.

Laci Leblanc
The other thing, that's the Easter egg of the whole podcast. Yeah, spring for a new one In this bar and heard that seed one thing yeah.

Chris McAllister
And then you know handicapped accessible. You know bathtub grab bars, for instance. You know that's something that everybody's going to appreciate. You know a mom with small kids. You know an older person, whatever. That's something that is never going to, you know, be destroyed and it's something that is going to enhance the property for a little bit of money.

Many people these days have pets. You know dogs, and if you restrict, you know, all of your properties to people with no pets, you know more power to you. I respect that. But you know, on the other hand, there's an argument for you know making your properties pet friendly. So if there's a partial fence, you know maybe both neighbors, you know, on either side have a fence up and maybe it's in your interest to fence off the backside at your expense and get the whole yard secure. You know installing gates that can be secured if gates are missing. I can't tell you how many houses I see where there's fences but the gates have been torn off years ago. Storm doors, you know, yes, I know storm doors get torn off, but you can also get a quality storm door at any type of storm door and if it's installed correctly it's less likely to be torn off. But you know there's something to be said for being able to open the front door and let some light into a property.

I don't ever expect anybody to put a washer and dryer you know in a property and offer those you know. But at a minimum, if there's any way at all that you can get washer and dryer hookups in your property, in the basement or in someplace else in the house, that's going to help you rent your property for top dollar for years to come. I don't care what neighborhood you're in. Nobody likes to have to pack up and go to the laundry path and that's why apartment complexes that you know tend to have, you know, washer and dryer common areas in them. But washer and dryer hookups, I think that's a great investment. You know a new mailbox and house numbers. You know it's. I won't say it's exactly like a new toilet, but you know if there's something fresh when you walk in. You know I think that goes a long way.

Laci Leblanc
Now we've moved from flip this house to curb appeal. Yeah, and you know like we talked about windows.

Chris McAllister
You know, in Ohio vinyl replacement windows are a huge selling point and there's so many people who skip that. But again, Home Depot, lowe's, local sources, you know there's still some places to get affordable windows. Here's another thing, and I think this is something that really helps you rent properties anywhere, but clean the basement. Get the cobwebs out of the rafters in the basement, paint the walls, paint the floor, paint the stairs. Make sure the stairs are set up with railings and you can actually get down to the basement so somebody could use it for storage or whatever. It just goes a long way to show that you know, you care and you took the time to do the entire house.

When you do a rehab, this is something that is just one of those little things, but I absolutely believe it matters. You know, when you're doing the basement, clean off and the furnace and the water heater right, make them look like they're, you know, if not brand new, make them look like that they've been maintained and obviously you want to maintain them as the owner. But you know, maybe touch up paints a little bit too far, but you know, I've seen some grungy, corroded, just flat out filthy, dirty water heaters and furnaces that look like they're on their last legs. So if that's what you've got in the basement and the tenant sees that's not going to help you, it's going to hurt you.

Laci Leblanc
Yeah, and scare good folks, I think, away from what otherwise is a good property, because those are the types of you know, accidents. If you think that the water heater is going to go bad just because it looks bad, then that's a huge pain for a renter, even though they don't own the property and they're not going to be responsible necessarily for fixing it or cleaning it up, but it's going to be a real pain in their life for sure. So those things can scare people away, I think. But like this checklist kind of thing, it saves time more than anything, I feel like right.

Chris McAllister
So, like time, is money your time is worth money, right.

So, whether you're managing for yourself or you know what we do for others, you basically only have to make those decisions once, so you don't have time to make a decision for every unit. We just want to do what works. So and you know sort of the wrapped up section you know you're going to save a lot of money in the long run by ensuring that whatever updates you make are going to last. So we're focused on longevity and quality, and that's where I learned my lesson in cheap final mini blinds. Right, we're looking to do things that are you know are going to last from tenant to tenant. Sometimes it's tempting to buy more expensive materials and make you know changes that you could bring in money, but they likely won't. But just be cost effective. Go for value, prioritize longevity and quality over extravagance. You know, in a nutshell, don't spring for grant and countertops when basic permicates are going to work.

Laci Leblanc
Yeah, so that's what we have had talked about in a past conversation in one of our sessions was, you know, the saving money when choosing updates and amenities? You just pick what works and then you follow through with that, and that's where we were talking about paint and hard floors versus carpet, right?

Chris McAllister
Yeah, so you know, paint every room the same color you know. Just because you have an extra can of paint laying around that's a different color, it's not going to be worth it. Paint every room the same color. It's going to save you time and money down the road on touch ups and maybe you don't have to repaint the whole unit when somebody moves out. Maybe you just have to do a room or, if you're lucky, maybe you don't even have to do the entire room, as long as you're always using the same color paint in the unit over the years and in every unit that you have. Think about affordability, think about durability. Whether you're talking about fixtures, countertops or flooring, you know you want to look for the sharpest look that you can get without overspending. I think they call it LBT luxury vinyl. It's like it looks like hardwood floors, like a plank.

Laci Leblanc
It's a man made material.

Chris McAllister
Yeah, that is a great long term investment. Yeah, you know it's very durable. You can get it easily in basic colors and I always urge our owners, you know we're trying our best to get away from carpet altogether. And that can be expensive, though, and you know, sometimes you can't do it all at once. But especially if you have a property where you have pets, you know going to the expense and time to refinish hardwood floors that are going to last for years. You know maybe an extra coat of poly from time to time we're putting LBT into, you know, floors, so that you don't have to keep spending money over and over on carpet or shampoo, and carpet is going to save you a ton of money down the road and it's like you know.

Just to reiterate, you know those cabinets on the back wall of Lowe's and Home Depot. Those are the key. You know, buy mass manufactured cabinets and hardware. You know don't buy unique sizes or whatever. You know don't try to buy used cabinets and make them fit. You know, just get the package that works in that kitchen. You know the first time you get the same ones every time, good quality. They're going to last. And the other cool thing is, you know a lot of those back walls, cabinets. You know. If a door breaks off, you can buy a door. If the drawer goes bad, you can buy a drawer. Right, you don't have to replace the entire cabinet. Sometimes you can actually buy parts. And one of the other things too that you know. Other kind of cost effective upgrades you know. Install energy efficient lighting fixtures. You know and here's another trick, and again I don't care which you know what your price range is. You know for the property, but you know how now, lacey, you can go out and buy like bulbs and the colors don't match anymore.

Laci Leblanc
Oh, I do. I so do. It's one of my pet peeves as a human being. I was going to say as a whole owner, but really just as a human.

Chris McAllister
Yeah. So you know you want to make sure you buy the same light bulb and the same color you know and put them in every room and get enough wattage that it lights up the room. I was talking to our team at Columbus the other day and we were going over the the rental report that shows how many days a rental property has been up for rent and it hasn't rented yet. And you know we had one that was well over 30 days and I said what is going on with this? Who's seen it? And they said oh, it's just dark, it's just so dark.

Let there be light, and it's just what it is, and literally they get the creeps, you know, and they turn around and leave. So what do you got to do there? So well, maybe that's where you don't want any wall cover or window coverings, right, you want to get light in there. But you know, let's say somebody looks at the property and it's dusk or after dark. You know you go ahead and spring for the light bulbs and make sure they all match, make sure they're bright, you know, maybe put something on a timer. So you know, things come on whatever, but energy efficient lighting fixtures and just from a renting perspective, just make sure that they all match and that they all work. Landscaping right, durable, low maintenance, you're not really looking to. I don't want to say you want to enhance the curb appeal. But you know what? If the neighborhood standard is overgrown and grungy, then don't be that standard, right, you can keep the grass.

This is the time when it's okay to over achieve a little, you know just doing the right thing and be above the neighborhood standard, and you know this isn't the place to go out and buy bushes or to do this, and that the tenants just are not going to take care of them as you might and it's just going to aggravate you. So durable, low maintenance, but keep the grass cut, keep the foundation you know, weed-wacked and clean. Another thing to think about are programmable thermostats. You know some tenants are going to appreciate that, maybe some of them won't, but you know, at a minimum you can set it up the way you know you want them set up, you know, before you rent the property. But again, try to choose affordable materials that look good but will hold up over the long term.

Laci Leblanc
Yeah, so that's an interesting point about the programmable thermostats and the energy efficient lighting, because people are, things are constantly changing, right, and so there's this neighborhood standard. And then there's where everybody wants to live, like one day or in a it has stainless steel appliances and granite countertops, like I don't think there are many folks out there looking to rent who wouldn't like to have that stuff if it were available. They just maybe don't have the budget for it, so, but things are constantly changing. Like all of our light bulbs are the same because we have Alexa light bulbs, so we can say, alexa, turn on the bedroom lights, which will probably happen now. But how do you know? You know, like, how do you know what, like the neighborhood standard is maybe not quickly changing, but it is constantly changing, I feel like. So how do you know and keep your finger kind of on the pulse of that neighborhood standard?

Chris McAllister
That's interesting that you say that, because we are seeing, especially in Columbus and Florida, where we are, where the markets are vibrant and the economy is incredible right now, that there's a lot of neighborhoods that are improving right before our eyes. And you're right, you know, as the values of the neighborhood goes up, as the rent rates go up, you know you do have to kind of reassess. You know what is it appropriate to add on to these properties right now. But you know, I think the key is that you need to partner with a local property manager that is involved in sales also. You know, but knows their rental rates, knows what things are selling for, can help you, you know, do your return on investment calculations, figure out your cap rate, things like that.

But a property manager with local market knowledge can give you insights to. You know neighborhoods, tenant preferences, the whole thing. They can help, advise you and help you. You know, collaborate with you to make decisions on. You know cost-effective updates and you know the amenities that align with your target tenant demographic, whether it's, you know, long term or you know if you're doing a short term furnished Airbnb rentals. But you know a good property manager can help you optimize your budget you know, set your expectations for what's going to happen financially with that properly, appropriately, over time, and also help you recommend where to buy in the first place. So again, like everything else in this business, having somebody who's in entire life's work Israel estate and knowing you know how much things are and what things sell for and what things rent for that's the key. If you can find that person or that property management team, you're going to do much, much better over time, no question.

Laci Leblanc
And yes, I am partial. This is where the Christmas mistakes podcast comes in to play.

Chris McAllister
Yeah, I am partial, because that's what we do for a living, but I can't tell you how many. You know people who have bought properties on their own manage them on their own to the point where they can anymore, and then they come to us and we're happy to do it, but they hire us to, you know, put things back together for them. So you know we do that as well.

Laci Leblanc
Yeah, it'd be great if you just didn't have to put anything back together and you just went that way, right?

Chris McAllister
on the gate.

Laci Leblanc
I guess right, Not a sales pitch, just me making an observation.

Chris McAllister
All right. So I think we hit the high points today, but I guess maybe it's time to sum up a little bit.

Laci Leblanc
Yeah, I think this has been, again, always insightful, but I think this time in particular, we've gone over a lot of really specific information that goes almost like a checklist, like if you took this with you and we'll transcribe it and put it up and then people can use it to literally go down the list and check off and make sure they have a large toilet with a new seat and exterior lighting and all the things.

Chris McAllister
But you know, I guess in closing, you know, choosing amenities for rental properties, it doesn't have to cost a fortune and it really shouldn't.

You know, and it's true that some investment properties that you know you'll purchase or maybe you want to purchase, they're going to need maybe some more work than others, you know, for needed upgrades, upgrade dates, maintenance, amenities, repairs.

But again and I know I sound like a broken record but it's critical you've got to focus on the neighborhood standards. That's going to dictate the level to which you want to improve your property and maintain it to for the rest of the life cycle of that property. You know, even if you think you'd want a nicer dishwasher or a bigger outdoor space, you got to keep in mind that there's a tenant for every rental property and the people who end up renting your property will be thrilled to live there as long as it's clean, everything's in good working order and you're willing to make repairs as needed to ensure as it stays up to the neighborhood standards, which now includes your tenant standards. And then you know a selfish plug you know you've got to have the right team by your side. You know managing your investment property is going to be a lot easier if you're working with a professional on the ground there, your eyes and ears. That's just going to help you sleep better at night and, you know, make more money. That's the trick. So this one was fun.

Laci Leblanc
Yeah, that's how you do it in the shelter business.

Chris McAllister
That's how you do it in the shelter business. That's right. So all right. Well, thank you very much. We will talk to you next time. Thank you all for listening to the landlord profitability playbook podcast.