Before I get too far along in this post let me make one thing clear – I’m not a real estate soothsayer, prophet, fortuneteller or palm reader. I don’t have a crystal ball. If I did I wouldn’t be here typing this post. I’d likely be on the beach, or the golf course.
The information I’m about to share with you didn’t come from studying macro economic reports from the likes of Case Shiller and then drawing my own conclusions based on median price trends and affordability charts.
On the contrary, like many successful business owners and entrepreneurs I had a hunch. That hunch came from a mistake I made with a fix and flip I purchased in the greater-Milwaukee suburb of West Allis, Wisconsin in 2013. This property, located on S. 74th Street, was meticulously remodeled and marketed for sale on the multiple listing service for almost six months. It was priced competitively and situated in a quiet, clean area of the city. However, it lacked one key ingredient practically every retail buyer wants: three bedrooms.
Because the home only had two bedrooms I could not sell it, for a profit anyway. I’m sure I could have sold it for a huge loss, but I’m not in the business of losing money. So I decided to do what most fix and flippers do when they have a bad deal on their books – they rent.
After speaking with numerous property management companies in the area and doing rental pricing research using CraigsList, Zillow and Hotpads it was clear that the high end for rent would be around $800 a month.
Now here’s where my hunch comes into the story. You see few of the properties I researched had been recently remodeled. The ones that had been still weren’t like new inside. The owners clearly cut corners, electing to only remodel the kitchen while leaving the bathrooms and other areas of the home untouched.
And here’s another thing I noticed – the presentation of their properties was absolutely atrocious. The pictures, if there were any, were dark, grainy and poorly lit. The descriptions of the houses and surrounding areas, if there were any, were vague and confusing.
This got me thinking, what would a home that’s like new inside and outside rent for? Would tenants really care? If they did care how much extra would they be willing to spend? What if I advertised my property with professional photographs and a thorough description of the home’s features and neighborhood amenities?
It didn’t take long to get my answer. Within 24 hours of advertising this small but updated little two-bedroom home in West Allis for rent at $1,195 a month the calls and emails came pouring in. I had my choice of highly qualified tenants practically in a bidding war for the property.
By presenting and providing the customer (tenant) with a quality product I had become a rental market maker in the area. I bucked the pricing trend in this area by almost 50%.
With over $1,000,000 in assets under management now I can tell you that we’re rental market makers in other areas of the city as well, including Waukesha and Riverwest (more on that in our next post). You can be a market maker too. Remodel right and promote professionally and both your tenants and cash flow will improve.
To see a video tour of 74th Street click here. Be sure to visit our Featured Properties page to see video tours and financial information for all of our fully remodeled, turnkey investment properties for sale.