Home Staging is Important

Before I start on why home staging is important for fellow landlords, let me go off topic a bit. I have been busy with business development and a lot of new ventures, but property investing remains my lifeline and main hustle. It has been a hectic period with short stints at part time employment. It is great to be back here.This is the space that keeps me focused. I share for my own benefit here too.

property cleaned up

 For about three months I have been revamping properties for new tenants and restructuring the rental types themselves. I turned a commune into a single-family property, installed prepaid meters in a multiple family property and worked quite hard at ensuring that the properties look amazing. You must have heard it before...I only let a property that is good enough for me and my family to occupy. I will provide details of the work I have been busy with in the next few blogs. Today is introductory to that with regards to why home staging is important.

Home staging is important

A number of people cant take the stress of fixing stuff and dealing with contractors. This is true with tenants too. A number of people who do not prefer home ownership prefer a simple stress free life without the pain of replacing broken tiles. I on the other hand am one of a few people who makes it a point that stuff is fixed each time it breaks. Sitting with a problem distracts me. If a cabinet drawer is broken, it should be fixed or replaced within a few days. Maintenance is one of the most important aspects of home ownership and being a landlord. The longer it takes to fix a problem, the higher the cost.

This also helps with upgrades on the property in between tenancies. Prospective tenants never see potential. Frankly, potential is not in their interest. All they want is a “ready-to-move-in” home. That is probably the reason they avoid the stress of building their own homes themselves. I shy away from showing a place before it is completely turnkey. You’d be lucky to show a house to a prospective tenant twice. They take the first impression and take their decision based on it. Avoid showing a property prematurely with statements such as: “the cabinet will be fixed; we will replace the cracked glass; the electrician is coming tomorrow;" etc. This is why home staging is important.

I have also viewed properties that are packed with stuff resembling some kind of a storage facility. Some with those thin and shallow cracks that take minutes to fix.  Properties that are sometimes fixed but not cleaned. Its worth taking a week extra to go through fixing those nuisances and hiring a cleaner for one day to remove the dust.

I always take a minute to imagine myself living in the place. Once again, if the place is not good enough for me and my family, it is not ready for my tenant. This has little to do with the value of the finishings but neatness and state of repair. I will go through ways of ensuring easier maintenance in the coming posts. This was just to welcome myself back to the space that has given so much back to my life.

Expect diversified investment posts and guest bloggers with real life wealth building posts.

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PREPARING A PROPERTY FOR RENTAL

I will never exhaust the topic of preparing a property for rental but I can always share a project of my own. This is my latest property renovation which is now tenanted, thanks God. This is a 4 bedroom, now 3 bathroom family home with servants quarters that house their new full bath.
Apologies in advance for the possible slower loading of this post due to the number images.

Rental Property Kitchen

I never took the picture of this kitchen in a good light day. The wall tile is the nice shiny glass mosaic one. A good tile can make or break the kitchen. Rather use the tile minimally and buy a great looking one. Most people's choice to rent of buy a property is influenced by how the kitchen looks.
Below is how our kitchen looked when we bought the place. We followed the layout of the original kitchen to save costs on plumbing and electric wiring. Besides, a kitchen this narrow is not easily maneuverable.

Preparing a Property for Rental

Nothing was good enough to be reused in the old kitchen. This is a typical galley kitchen; quite narrow but long enough to give a lot of storage space. There is a separate laundry area on the other side too. It is so worth it cleaning up the kitchen and bathrooms. You don't only get a tenant quicker, but increase the probability of getting a higher quality one too. The more the applicants, the better the chance, right!

Bathroom of a Rental Property - before

I could not add more photos of this room than necessary, but this was a guest toilet without a hand basin. We added a corner basin as space in this bathroom is an issue. That took it to an ideal 3 full bathroom house. And South Africans do love their bathrooms in numbers. Two bathrooms are viewed as minimum but throwing in a half makes your property more marketable. Modern houses usually have the equal number of or more bathrooms than bedrooms. OBSESSION!

Bathroom Remodel Project

This is definitely not a fancy job. I sniffed loads of dust in this process. Remember I am hardly ever on site when this happens but I still feel it. Replacing tiles, basins and toilets with better looking and modern ones increases the marketability of your property.

Cleaning the Bathroom up for Rental

Always remember to go towards neutral colours. Can you spot a white dado rail disguising an uneven wall but also serving as a nice trim? It is far cheaper than re-plastering the wall. You need not break the bank when preparing a property for rental. A can of paint will always up the value of your property.

Recycle when Remodelling

 I personally spray painted my old wooden curtain rails to reuse in this project. I would have used a nicer looking rust-oleum if the dark stain one was in stock. These had to be left to dry outdoors overnight. Did I mention how much I saved by reusing these old rods? I also used existing metal rails. I still wish I painted those in black.
Now to the really scruffy part of the project.

Fitting a Shower in a Small bathroom -before

Yes, this is the "before" of an outdoor toilet in the Servant's Quarters. The tenants in this area insist on a fully usable SQ bathroom. And as we all know, what the tenant wants, the tenant gets. I had a number of hand drawn ways to fit a shower in this tiny one metre wide toilet. At the end, I had to have the basin inside the shower.

Preparing a Property for Rental - shower fitting

 Exciting to see that everything is fitting nicely. I bought the smallest of everything. That basin is the tiniest. We couldn't even get a mixer that fits in the middle. Did you notice that the mixer is on one side of the basin?

Adding a Shower in a Tiny Bathroom

Space this small is better off tilled from floor to ceiling and on all walls. This addition was made a little expensive by the fact that water drainage pipes did not exist anywhere close to the space. We had to drill and add pipes inside and outside the room.
I never took the "AFTER" photos as this room was completed the day the tenant moved in. In my defense, they moved in a few days earlier.  And finally...

Securing a Rental Property

 Sadly, the cost of security is what we cannot escape. This house is made of glass doors. All bedrooms and living areas facing the swimming pool open up to it. I loved these vintage doors but they cried "restore me". Trellis are also not a bad option as they completely slide open during the day. That's how I go about preparing a property for rental. Now to the business side of things.

Why We Bought this Property

1. This property is in a street that is fast becoming a business street. Across the street are mainly offices, doctors' rooms, a garage, and the like. It is also in close proximity to restaurants and a shopping complex. What is even more awesome is that it is a walking distance from my home. We have plans to turn it into a commercial property in a year or two.  
2. I know I am a location freak but this was an additional strength. There is a reasonable demand for property of this nature in this suburb. Most of the house viewers were corporate clients for their expatriate families.
3. Family homes like this one have to be very close to schools and most recently in Gauteng, Gautrain stations. A number of people commute between Pretoria and Johannesburg daily. This house gets a tick on each of those.
4. I am sort of transitioning to this kind of market specialisation. The plan is to limit the scope to semi or fully furnished corporate homes. This will further limit the quantity of properties I manage (when I start self managing) but hopefully increase the quality and returns. 
5. The price was right. When I first saw the listing which only showed the back of the property, I called my agent to investigate who the owner was and get the property for me. This was done in a day. It was quite cool to get interest from buyers after the clean up, but we are not property flippers.

I enjoyed this project but it took longer than planned to complete. I am already craving something new to work on. I tend to feel idle in between projects. The life of a serial renovator can be exhausting but definitely exciting. What do you think of my minor renovation?

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2015 PROJECT PLAN 2

Remember my decision to document the projects I plan on undertaking this year to build onto my 2015 goals. The first project being a furnished rental, with the hope of doubling the income. That was my first of maybe five projects I will work on this year. I don't know about you, but setting and documenting goals pushes me to act on them. I just try to avoid failing to achieve what I promised myself to do. I fail or change my mind sometimes, because this is real life. That will never stop me. Well, the second planned project is a small development in a small town.

2015 Project Plan 2 - Small Town Property Development

I have a few posts about the deceased estate acquisition. The main reason I actually wanted us to buy this property was to develop it further. The land is not so small, at above 800m². I changed my mind several times about this development project. The small town figures are very low given the low rental amounts. You need huge quantities to see what you are doing. And I am definitely not a quantities kind of a girl. I try to reduce the management demand of an asset to the bare minimum. Now, with the high returns (low cost) from these kinds of developments, I decided to just throw myself at this project again. The other interesting part of this project is that I can develop it in phases. It may take a full year or longer. This is how things are done in the town of choice. And like the locals I won't take a loan for this project.

Unlike in my small town, we are quite strict in Gauteng on project time frames. Even building plans expire if one does not construct on set time after submission at the local municipality. Well, my small town gives more time because, I guess we don't really have that kind of money lying around. The idea of starting on this project is getting more exciting by the day. I have a hand drawn sketch of the development with six or eight bachelor flats. The target market is young professionals like teachers, nurses, policemen, young doctors, bank employees, etc.

The Development Project Plan
I am trying very hard to not over capitalise by trying to match the standards of the existing properties in the area. However, I will definitely pay attention to the quality and maintenance of the development. The rental will be based on the local market range. Screening the tenants will have to be done with caution to lower the cost of maintenance, vacancies and ensure the longer term occupancy. I generally like a lady with a school going child. They tend to occupy the place for a longer term. Seeing that these are bachelors, I will have to see how I get tenants that are promising to stay for long. I already have a manager who lives in the area to look after development, the tenants and the units.

Those who have followed this blog for a while will know that I like to keep my rental income as passive as possible. This means getting a property manager among other things. With the location of this property, it is even more important to have a manager that is easily accessible. My manager and myself have assessed the town and saw gaps in the current rental income properties. We are looking at low cost ways to make ours more attractive. One of said ways is having all units fitted with a shower which saves space and water. We also plan to have tiny L-shaped kitchenettes in each unit.

Some of the strengths of this development include: 

• The location of the property in question is within a walking distance of a very popular school and close to a big hospital. My manager has already done the market research and has a few tenants awaiting the project. Yeah I know; my manager is pretty amazing.

• Whilst the rental prices are low, the cost of the project is even lower in comparison to metro project costs. This ensures higher development yields.

• The prospective development meets my rental property acquisition rule. Even if it were to be financed by the bank, it would generate positive passive income from the first day of occupation.

If this works out as well as I hope it will, I will repeat the process in this same town or another town of similar size. I am planning to start with the project before March and complete the first two units in a couple of months (I think two). We will have to target completion of the first two bachelors by the end of June. I think this is the target implementation time for the first project too. This will be the busiest six months for me then. But busy is always a great thing.

There goes one of my projects for 2015. Do you have plans for the coming year? 
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ASSETS ARE FOR INCOME

Indeed, assets are for income. My friend visited last night to drop her son who had a sleep over with my boy. This girl inspires me so so much. She drives an old car and is very busy. She left her posh job to work on her consulting business. When that was slow she started a catering business, which delivers dinners to people’s homes. She has different menus from Monday to Friday. She later added take away lunches.

assets are for income

Last time we had coffee which stretched up to lunch and late afternoon snack, we talked about business. She was quite busy renovating and extending her house at the time. So yesterday she mentioned that her house is now too big for them and she decided to rent it out. Her prospective tenant is a business that will live in the first floor and operate in the ground floor of the house. My friend will get R50,000 in rental and has found a home for her family in a nice neighbourhood. She will be paying R8,000 per month for the smaller house. Off course she is still busy with the lunch/ dinner delivery business and is moving on to build another commercial property in the neighbouring town.

She says, when her friends were buying nice cars, she was busy buying land. I can totally relate. She has hectares and hectares of land in various cities, land by the ocean, land in tourist attraction areas, land for commercial property, etc. She has started with her second construction project. I was totally humbled by her zeal and courage. Something about girls like this (who drive very old cars and work hard) inspires me. When she started renovating her house, it was for her own comfort. Off course she later wondered why she had such underutilised asset. Assets are assets because of their potential to earn money, right? YES, assets are for income. That’s why a house you live in doesn’t add much to your wealth. Even if you sell it, you will still need to buy or rent a home.

I wish I didn’t love huge spaces the way that I do. What I take from my smart friend is that, you can delay the luxury a bit whilst you start collecting assets. Most people have confidently judged the frugal saying “you need to live a little”. The same people who “live a little too large” are not sleeping at night thinking about the tricks to carve their way out of paying debt. A wise man told me that we are only in the 1%, which means, the 99 percent of the people don’t get this. I don’t know about you but I love being in the 1%. This story is so similar to one of my friend in Namibia. I will ask her to narrate it herself. She quit her job and is now a real estate businesswoman I have come to respect. I am so blessed to be surrounded by such girls in my life.

This makes me think because, like I mentioned in my previous posts, we are searching for our next home. We are a family that loves space. I am thinking very hard about this. What about you dear friend? Do you believe that Assets are for Income? Would you let your home for rental and downgrade? Would you move to a smaller town to cut the costs?

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RENTAL UNIT RENOVATIONS

I don’t know where to start. My life is quite hectic. We lived in the construction site for two weeks. After leaving the construction site slash townhouse being renovated it was all dust and no kitchen, no second bathroom and no shower frame. But I had to leave the good but slow handyman behind sweating it. It took me too many trials to finally get a trustworthy handyman. I feel very blessed.

Shower during renovations

 The kitchen design looks amazing. The kitchen company is delivering the wood today. And they promised to have the kitchen working on Wednesday. I just cant wait. Everything is done through the email exchange and whatsapp at this point. Photos, more photos, then approval, then more stuff that we forgot to buy. It never ends.

Shower during renovations

Some people ask why I go all out with finishes in the rental property. I understand their concerns because this is the very property that the poorly managed tenants trashed. But all my properties have to be at a certain standard. My property investment business is my true passion and the reflection of myself. I am not going to put tenants in a place I can’t live in myself. And that has paid dividends. I haven’t had much vacancies and had mostly long term tenants. On the plus side, my rental income will get a boost.

New kitchen for rental unit

Now that I am more relaxed in a dust free house, I am managing the renovations digitally. Its not ideal but I have lots of other stuff to do. Besides, I missed my stove and oven so badly. I am not good with dining out. This is the kitchen design I want for the rental unit. The kitchen company delivered the wood in the townhouse yesterday already. They will fit it next week. I just cant wait to go visit the place by mid June. Everything looks perfect from the photos taken by my sister and handyman.

Thats it people. Thats what I've been up to.
PS. We probably have finished paying up our only mortgage and our ONLY debt. Ecstatic doesn't even begin to describe how I feel.

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LOWEST RENTAL INCOME

What a month September proves to be. My lowest rental income month. I am so not thrilled but I try to keep my rental property in as comfortable a state as I love my own home to be. My adorable tenant is my very young brother in law in his first job. He shares the 3 bedroom duplex with his two room mates. Its a great feeling to know he is there to see to it that his brother's investment is taken care of. Knowing that he will do just that, I reduced the rental and will not be taking it up anytime soon. I know and wish he buys his own place as soon as he can. That will sure hurt but he has to grow up and invest in an asset too.
I also had a chat with him a few months ago about demanding stuff to be done to make the place comfortable and not letting things slide because he lives in his brother's place. Indeed he took the chat to heart and in the process had me a great property and an empty bank account...Love you still lil' brother.

apartment fixing invoice and lowest rental income

That's the invoice I got from my property manager, not from the service provider. As you probably know that I choose to have a property manager and I like it that way. See how its dated July and the work done this month. Handymen and builders' style. But he seems to be doing a great job for my manager. He fixes and replaces stuff in all the properties he manages.

• I just learned that changing door locks in between tenants is critical. With all the crime, we want to protect our tenants as much as we can. Another cost to avoid by having low tenancy turnover, if you are a landlord. So we had the security gate welded and repaired for R350. There are electricity costs hidden somewhere there. I don't even know how much electricity that takes. I am very happy with the lock replacement. One of the realities of investing in property in South Africa is the high costs of residential property security.
• Two of the three bedrooms now have brand new doors. This is the very first time that I replace doors. I really never buy vandalised properties. I was in a bit of a shock to see that I need to replace the doors. Even the closet doors and the cute geyser cupboard door. What were the former tenants doing with the doors in this house? I so get why people don't do residential rental property.

There it is my friends. My life is more interesting and costly this month compared to August. But I'm more than glad to be alive. I will just have to spend less, if that is even possible with so much craziness of this month. We just came back from a holiday, which proved to be way too expensive than I expected. My brother has some graduation craze going on, and that means COSTS AND MORE COSTS. Come month end to view how I managed to survive the expensive month with the lowest rental income this year. This is the reason most people do this property investment business part time. A salary always gives great security. Ag, no need crying, I know I will live, I always do.

I would love to hear from other landlords. How do you survive high repair costs and the high cost of security in our country?

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Preparing a Property for Rent

A lot of planning goes into preparing a property for rent. You can’t cut corners and get it right. This is how I do it with my own properties in my real estate investment venture: 

1.      Setting a Target Market

    I actually set a target market before even investing in that particular property. Everything else is done according to the set target market. Do I want to attract students, single parent families, young couple, etc? Once I know the target market, everything falls in place nicely. 

My two bedroom duplex is just perfect for a single parent. It’s close to every facility that one can think of. You can walk your child to school, walk to your work, pass by the supermarket to grab dinner on your way back and still make it on time to pick your child up from school back home. It’s also big enough for an arrangement like that and has a small cute, low maintenance garden for a great playtime. My preparations for renting this place out includes child proofing the garden.

2.      Budgeting

The target market will determine the budget for you. High end market tenants demand the highest quality finishes and facilities. Easy as that. With my diversified tenancy, I know how much I will spend on a stove for one property and not on the other. 

The location of the property will also assist you in taking that decision. Think of the returns on your investment. It is a waste of money over-investing in finishes in an area where the rentals collected are the lowest in the city. Renters pay extra for comfort, and it’s only fair for landlords to ensure that tenants get what they paid for. A $7000 may prepare the rental unit fully in one neighborhood and not even scratch the surface in the similar unit based in another neighborhood. Stick to as low a budget as you can to get the best quality space possible. Your contractor will definitely help on the estimates.

3.      Specifics on Preparing the Property for Rent

The house has to be deserving of a prospective tenant. The exterior has to be welcoming and neat. The paint has to be fresh, garden and lawn has to look alive and flowers not in slumber. I usually get a garden service guy to freshen everything up. Trimming the edges is essential. 

The walkways, porches and verandas are to be cleaned and completely de-cluttered. Window treatments should look pleasant from the outside too. Everything has to be cleaned and hanging and loose odds and pieces removed or replaced. The house has to look picture perfect. Better than you would wish your home looked after spring cleaning it. In my case, because I am hopelessly lazy, and always long nailed, I get a cleaning team to help me out. I outsource any kind of cleaning in general, so that decision is quite easy. 

Enhance your home’s interior by: The interior has to be as spotless as the exterior. I cannot emphasize the hiring of a cleaning service company enough. It helps. I say this from experience.

Kitchen counter-tops are usually victims of clutter. Make sure your granite tops shine with only the essential appliances. Check the window tracks for broken and falling parts. Appliances should be in working order and so should the plumbing, heating, cooling, alarm systems, etc.  Do it all whilst trying to save on costs where you can. You may need to invest in new cupboard doors for instance, instance of changing the whole kitchen.

Please read the article on how much rent to charge for more tips.

Done Preparing a Property for Rent?Head to our latest article.

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Costs Associated with Owning versus Renting a Home

I am a fan of buying and owning one's home, my choice for now. It’s the only way for me and my family. I realize though that the benefits are more psychological for me than they are financial. I feel very empowered when I know I can chop and change things in my space. I seldom make structural changes, break walls, but I still want to know I can, if I wanted to. I am a far from being converted to a "renter by choice". However, I am very objective and see the high costs associated with home ownership.

There are a number of online financial resources that assist individuals to take a decision to either own or rent their homes. most of those base their results on the costs of buying versus that of renting for a given period. The results don’t usually take into account other non financial aspects of home ownership. They also tend to fail to encompass the ‘hidden’ costs of home ownership. Apart from the initial down payment and the cost of capital, a home owner needs to afford rates and taxes, insurance, improvements and maintenance. These costs are often higher that home buyers anticipate. That I know. 

 The Cost of Buying a Home

The cost of buying and owning property has risen steeply since the ‘baby boomers’ home buying days. The current generation of home buyers spends a lot more than their parents did. The first time buyers often rely on their parents and even grandparents to help them with achieving their dream of owning their first home. 

 The National Association of Realtors reported that 24% of first time buyers in 2004 received gifts for a down payment from friends or relatives compared to 18% in 1991.

 Other financial help options include having adult children stay at the parents’ homes for longer than it would be expected in the past, whilst they raise the down payment for their first homes. Some parents buy their adult children their first properties or co-sign their mortgages as second owners. It is clearly becoming more difficult for the young professionals to buy their first homes, and with the home ownership pressure they receive from their peers and family, renting is also not an easy option to take. 

Renting is also not so cheap. The obvious is the negative equity that renters get from the renting, and the unexpected rental rate hikes. Not to mention the loss of any improvements they may have made to their rented homes.

 The Cost of Owning a Home
Buying a home can be a very costly exercise and even more so, owning one. The question that each family should be asking is whether these financial costs outweigh the benefits. In most cases, families blindly choose ownership. I am like that. Just remember to budget for your:

1. Interest rates as they go up and down, 
2. Monthly rates and taxes are really not always cheap, 
3. Home insurance is essential, 
4. Home improvements is inevitable. Properties get outdated and need some changes from time to time. 
5. The responsibility of maintenance also adds up more costs

When you know what you want, you make it happen. Just be ready for the responsibility, whatever your choice.

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