“Ready to Rent” :: What Does It Mean?

Recently, an Australian Investor reached out to my company in the U.S. stating that he was fed up with his current Property Manager (for various reasons), and asked if we would accept his property for management. We agreed, and one of the first things my staff did was to visit the property to determine what shape it was in. This is Standard Operating Procedure.

The Investor had been told by his previous Manager that the place was ready to rent (after having paid thousands of dollars to them for a rehab), but when my staff went and completed their Intake Inspection, it was determined that the house was far from acceptable, and needed – in their opinion – an additional $6,000 worth of work.

This made me scratch my head. Why would the other manager say one thing, and my staff something else? This was a property that would rent for only $700 per month. Was it worth spending another $6,000? On top of what was already spent?

Leaving aside the fact that about half of the cost quoted by our contractors was to remedy issues with the original rehab, I noticed from the Scope of Work that the other half of the cost was attributable to aesthetic items – things that would make the property “shine”, such as yard presentation, hardwood polishing and painting, and deep cleaning.

From personal experience it’s become evident that raising the standard of a property – regardless of where it is or how much it cost to buy – benefits the Investor in at least three ways: It shows prospective tenants that the Owner of the property actually cares (thus engendering in them a willingness to reciprocate that care), it makes the property stand out when presented in a street where a tenant has a large choice of houses (often the case in lower socio-economic areas), and it shortens the length of vacancy (during which time a property is susceptible to vandalism, amongst other things).

In addition, Property Managers are in it for the long haul, and seek to build relationships with both tenants and owners. A poorly rehabbed and/or presented property only attracts bad tenants, which inevitably leads to abuse of the property, non-payment of rent, eviction costs, and ultimately another rehab. Burn and Churn. Rinse and Repeat. This kind of process is no good to anyone.

Consequently, your Manager should have some kind of Rehab Standard which is applied to the properties he manages – something whereby subjective opinion is removed from determining the status of a property. We have it, and it works well. It also holds contractors accountable.

Unfortunately, the Investor decided to return to his previous Manager – the one he was fed up with in the first place. The tenant that this Manager ended up placing in the property was one our company had previously evicted, and who was currently being evicted again by someone else. Naturally, this tenant would take anything offered to her.

I hope it turns out well for the Investor. In the meantime, it’s important to make sure you do the right thing by your tenants. Look after them, and they’ll look after your investment.