If you were to ask a room of SFR investors what the most crucial factor in success was, you would get a whole array of answers: the location, the property itself, the property management, accurate number-crunching…the list goes on!
We won’t deny how vital these things are. After all, the recipe for success includes more than one ingredient. But there is an oft-overlooked factor to your success in this business: your SFR residents. The people who live in your properties.
So, how do rental residents really impact success?
Reliable residents who pay rent on time and go on to renew their leases maximize passive income. This reliability allows investors to plan expenses and further acquisitions more accurately. Reduced vacancies all help investors get the absolute most out of their properties. While even good residents may encounter financial trouble, investors should have an easier time working out an arrangement with them when they have a history of consistency and communication.
Property turnover isn’t as easy as moving one household out and moving another in. There’s a need for professional cleaning in between, repairing damage, and even reno work. That’s not to mention marketing strategies and vetting new residents.
Even great residents will move on from time to time. It’s just the way life goes. And while no investors like to see ideal renters go, you can rest easy knowing they will do their best to make it a smooth transition. These renters are the type to move everything out on time and do their best to leave the property in excellent condition.
On the flip side, not-so-great renters are the type to leave things behind, whether belongings or trash and leave behind extra repair work and messes to clean up.
You would think that anyone staying in a place they don’t own would take care of it – whether it’s a vacation rental, a hotel room, or an SFR. Unfortunately, we know that that’s not always the case! Good residents take pride in themselves and where they live, regardless of ownership status. They’ll keep the inside of the property well-maintained and clean and promptly bring issues to the managers’ attention. This keeps maintenance costs down and prevents problems from snowballing into major expenses.
Real estate investors are a part of the communities they invest in. Your residents, then, influence your reputation within that community and the demand for your rentals. When residents have a good relationship with property management, enjoy an easy renting experience, and bring value to their community, it reflects well on you!
As a passive real estate investor, you don’t want to be left worrying about your properties. When you retain responsible, conscientious residents, there is less room for nasty surprises. Your time and mental energy are freed to focus on the big picture!
Your property management team is responsible for finding residents and meeting their needs. Prompt, communicative, and respectful management ensures that great renters are reluctant to leave. I don’t think we can understate the value of excellent management for preserving and maximizing the profitability of an investment property.
Further Reading: 5 Reasons Renters Prefer Professional Property Management
They say the devil is in the details and aren’t wrong! As investors, details matter. Think about what matters to you in your home. What frustrates you about it? Layout? Lack of storage space? Too-small bedrooms? A difficult kitchen? What about a door jamb that sticks or a lock that doesn’t work?
These details matter. We’ve all seen a “landlord special,” where repairs and renovations are made haphazardly – with more care for speed and a low price than the experience for the people living there. When you buy properties and make decisions, do so with your residents in mind. Do so as if you were going to live there. Things that seem inconsequential on the outside may drive good residents to leave early.
This business is relational. Your residents are people – people with their own hopes, dreams, needs, and fears. You and your management team should approach them with respect and compassion. This isn’t to say you compromise where it matters. But it is to say that prioritizing communication, healthy dialogue, and constructive feedback is critical to making it all work!
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