SubscribeWatch a very typical day in preparing an apartment to get it ready for showings in one of Justin Palma’s apartments in Troy, NY, where the Tenant was freshly evicted!
- The Motto: Clean, Repair, Replace! Go Cheapest first always, replacing everything is a great way to lose money fast in Rentals.
- Carpet Cleaning – Always try Steam Cleaning carpets first, before replacing. A lot of the time, that is all that is necessary to make the rental shine.
- Painting – Justin appreciates expensive paints in his homes, but in Rentals, its always best to give it a quick cheap coat of a neutral color. ALWAYS use the same color throughout all your properties so you can buy in bulk! Buy a 5 gallon bucket of the cheapest paint you can find and store it for use later. Also later, if only 1 or 2 rooms needs a coat the paint will still match.
- Sometimes replacement is necessary. But that doesn’t mean you buy the best. In Rentals, it is always a matter of time before it will be replaced again. Keep it cheap but make it look as good as possible.
- People never go into a unit and get excited picturing all the cleaning they can do to make it move-in ready! The entire apartment must sparkle before you allow Tenants to view it! Otherwise you are wasting everyone’s time!
I would like to know more about the whole eviction process. Everyone says its the one reason that they wont be a landlord, they are terrified of it. Is it really that much of a nightmare situation?? Thanks
Great Question Brian! I plan to do an episode very soon about Evictions because I get this question a lot, but basically, if you have a strong Rental Agreement (drafted by your attorney, not a free one on the internet!!) and a good eviction attorney there is absolutely nothing to fear. The court system and police help you with EVERY aspect of dealing with anything crazy that could happen, but I’ve personally never had a tenant do anything but move out by the Court Ordered date.
Thanks for the Question!
- Justin
Great job, Justin!!! I’m so proud of you, keep up the good work!!!
Justin,
I found your postings on YouTube, they are all great esp the one about tenant’s security deposits etc. I am a land lord but of two smaller places, one of which is my condo in a new place, building is fully occupied and my renter will be going into his 2nd year, we normally treat the tenants very well. However, all that one is doing is paying my mortgage and in this market, I am glad that it is!
Any tips on how (going forward), can I make more and walk away with some profit. I look at comps very closely and frequently visit the neighborhoods; my place is in LIC. Shall I furnish it with a small budget in place since its a 450 Sf Ft studio?
Any pointers will help, I’ve also signed up on your RentCheck software.
Thanks,
Biren
Hey Biren,
Thank you and congratulations on breaking even! You’re right, right now breaking even is definitely a big accomplishment! To increase profit on a condo, you have a couple options depending on your budget.
The cheapest option (and most likely the most profitable) is to offer it as a furnished apartment, but to know if this is a good idea, look in your neighborhood for comparable furnished apartments. How many are there and how long do they take to rent (watch the same ad for a month, and see if it keeps getting reposted, or price dropped)? Then, look at HOW it was furnished. If you can make your unit competitive with a budget of 12 month 100% ROI (return on investment – you’ll make EVERY dime you spent on furnishing it back within a year), then definitely do that!
Second option is remodeling. How does your unit stack up against comparables in your area? If you have old white appliances and carpet floors and your competition has stainless steel appliances, and hardwood floors, then maybe this is your best next move. Again, aim for 100% ROI in 12 months or less, then THIS is a good move! Especially if your exit strategy is to sell the unit when the market turns around, you’ll have a free remodeling job since your new tenant will have paid off your remodeling! AND on a 450 sqft apartment, upgrading isn’t terribly costly compared to a 4 bedroom house!
Another option, also most likely the most expensive, is depending on the mortgage on your condo, is refinancing it. Right now rates are RIDICULOUSLY low, so if for example you had a PMI payment, or higher rate, spending the money on lowering your payment would be money well spent. However right now its very hard to get a mortgage on residential investment properties, so depending on your loan to value, this option may not make any sense at all (but if you do qualify for a refi, then this is the BEST way to permanently increase cashflow).
Not all of these answers will make sense for all situations, but depending on your market or mortgage situation, hopefully these will get some ideas going for you on how to move forward! Generally speaking, the more units you have per property the easier it is to cashflow (and more room to get creative on increasing cashflow with coin-op laundry, adding or splitting units, etc), therefore condos typically are best for making money when selling them after appreciation (which stinks right now, but will be better very soon!), so the fact that you are breaking even is a GREAT place to be in right now, and at the very least, your time is being WELL invested in your future capital gains on selling the unit, and your tenant is paying down your mortgage while you wait! A lot of investors are thrilled with negative cashflow (although I don’t suggest this!) on condos!
Good luck, and thank you for signing up for RentCheck! There are some awesome features being rolled out very soon that will DEFINITELY help you stay on the path of increasing your profit!
- Justin