As a Charlotte
property manager for a good nine years now, I’ve seen a lot of rental homes
come and go; some rented quickly and some didn’t. Most of the houses weren’t perfect, but
almost all of the houses that rented quickly had one thing in common- they were
really clean. And you may be surprised
on how many really dirty homes are on the rental market!
“Cleanliness is next to godliness” is the popular axiom, and
it’s also a heck of a differentiator in the rental home business. The #1 secret of renting a home quickly is
making sure it is really clean. That’s
it. If you can get someone to look
inside the home and it is really clean, the closing ratio is 80%-90%. I’m not joking. If the cleanliness does not meet the tenant’s
expectations, it is the top thing property managers hear about.
But how clean is clean?
Is a $150 baseline cleaning job sufficient or is a $600 cleaning job
necessary (where every surface is touched by a great team of maids and one
could ice skate on the floors after eating off of them)? That’s a tough question. Every tenant has a different idea of what is
“clean”.
Rental homes are about ROI.
So the real question is, “Is $600 a good investment that will procure a
higher rental rate?” Most owners are not
going to be happy paying $600 to clean a home that they don’t live in, when
they would never pay $600 to clean a home that they do live in! But is it smart to do it anyway?
Renting out homes isn’t rocket science. It’s about the value proposition each house
makes versus the other houses on the market.
For example, if you go to the grocery store and see that regular bread
is $1 a loaf and the whole wheat bread is $2, which do you pick? If you don’t see value in paying an extra $1
for whole wheat, then you’ll pass and buy the regular loaf. If a clean house is renting for $1,500 and a dirty
house is renting for $1,400, which do you pick?
It’s that simple. And a lot of
people will pay extra for the value of a really clean home.
Before landlords have a heart attack and think that it is
necessary to get a $600 cleaning job on all their vacant rental homes, I’ll
give the caveat that it isn’t always prudent.
The higher the value of the home, the nicer the cleaning job should
be. This also works from a ROI
perspective. If a really clean house
allows the market to charge an extra 5% a month of rent (which isn’t unreasonable),
then:
1. $1,000/month home
becomes a $1,050.00/month home. On a
one-year lease, that’s an extra $600 annually.
A $600 cleaning probably isn’t warranted (0% ROI), but a $300 cleaning
would deliver a nice ROI (100%).
2. $2,000/month home
becomes a $2,100/month home. That’s an
extra $1,200 annually. A $600 cleaning job
would be warranted if it produced a ROI of 100%.
Besides the empirical ROI dollar figures, there are also the
soft numbers to consider. Clean tenants
who take care of rental homes like to move into really clean, rental
homes. And guess what? Most of them are turned off by dirty homes
and won’t move into them. The tenants
who are willing to move into dirty homes usually are not concerned about the
condition of the homes like the clean tenants are. So which type of tenant do you want to
attract to your rental home?
With rental homes, ROI is king.
And a $600 maid service can push you further into the black!
Brett Furniss is the President
& Owner of BDF Realty (“Charlotte’s
Most Innovative Property Management & Investment Company”), and Rent-To-Sell Realty (“When You Need a New
Solution to Sell Your Home”) which specialize
in rent-to-own (lease options) and rent-to-sell homes. His newest book, A Real Estate Agent’s Complete Guide to
Representing Rent-To-Own (Lease Option) Tenants (Delight Clients, Fill Vacant
Homes, and Earn $2,250* Upfront! (*Minimum!)
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