What does HGTV have to do with real estate investment? Apart from the romanticization of flipping housing, it may have more to do with investing than you thought. Yes — that includes you, buy-and-hold investor.
You might not have your own show on the network yet, but that doesn’t mean that homebuyers — and your residents — aren’t taking a cue from these popular home and DIY shows.
What is the HGTV-Effect?
In essence, the HGTV-effect is the phenomenon of hyper-awareness of home design trends among consumers. While the aesthetic appeal of a rental property might seem like a secondary, even tertiary detail to the real estate investor, it matters. Your residents are no different than would-be homebuyers in their aesthetic desires for a home — even if they’re just renting.
The fact is, we’re more aware and more exposed to home trends than ever. Shiplap, two-toned cabinets, farmhouse chic, original wood floors...we’re sure you’re tired of hearing about it.
Quality Renovations in Real Estate Investment
Of course, this isn’t to say that real estate investors need fall sway to every new up-and-coming interior design trend to be successful. In fact, we don’t recommend it. However, what these trends point to, for real estate investors, is the importance of quality renovations on the right properties.
Real estate investors are chiefly concerned with resident retention in terms of preserving capital. After all, vacancies are the most expensive time for investors. The more you can minimize turnover and, when there are vacancies, the time spent without a resident, the better.
If aesthetics and quality both matter to rental residents and homebuyers, that should inform how we renovate our properties. If one’s environment impacts mental and emotional health, then we should work to optimize that environment for our residents.
Ask Yourself: Would You Like to Live There?
It’s unlikely that you would consider one of your rental properties a “dream home.” They’re not meant to be. However, when we think about the standards to which rental properties are held, we should be able to say, yes, we would be perfectly happy living there. Real estate investor, get in the head of your residents! What do they value in a property? How do they want their home to look?
Even if it’s temporary, even if they don’t own it, for this period in time, it is their home. We can’t think about properties and their qualities in terms of transience, but longevity. A property shouldn’t be “good enough,” or “passable.” If you want to maximize retention and property values, you need to target these key qualities.
3 Qualities in a Desirable Rental Property
Attention to Detail
For our part, we at REI Nation know the value of the details. You’ll hear our head of renovations talk regularly about avoiding “death by papercut” — that is, the little details that add up and cost the investor. Attention to detail encompasses a great range of issues in home renovations. The quality of paint and its trim, properly fitting fixtures and appliances, and properly installing lighting fixtures matter.
Details are those little things that you may not notice at first, the things you learn to live with even though they bug you. As an investor, you want to present an impeccable property to a resident — one that they struggle to find complaints about.
Does that mean hardwood floors and quartz countertops? Not necessarily. In fact, probably not! What it does mean is that everything goes together, is without superficial flaws, and works as it is designed to work. The ergonomics and flow of the home, in addition to its physical features, plays an enormous role in resident retention.
Timeless and Versatile
When we talk about the HGTV-effect, it can be easy to dismiss it as full of temporary trends. Trends change, after all. And that’s not incorrect. However, investors would do well to at least be abreast (or have a renovations team that is abreast) of trends, both current and enduring.
Because your property will not be a “forever home” for someone, renovations must be both timeless and versatile. Versatility in a rental property means that different people with different aesthetic preferences and needs can still envision themselves and their belongings in the space. In that way, the ideal property is “neutral.”
Avoid weird layouts, fixtures, and color choices. You’ll find that if you look through our many before-and-after renovations that we have a “clean slate” approach to renovations. Clean, neutral, and versatile.
The ideal rental property eliminates many of the frustrations that can come from a stereotypical rental. It sounds contradictory, but hear us out. Our cultural consciousness has instilled in us this idea that a rental is somehow less desirable, less good, than a home that we own. And while this is true to an extent (you can’t get everything you want) your rental property must have desirable, not frustrating, features for its residents.
This is where modern trends...the HGTV-effect...plays a role. What do buyers and residents value? You’ll find kitchen size, closet space, an en suite, and outdoor space at the top of the list, especially now. These are things renovations teams must take into account. The functionality of the space for long-term living is key in investment properties.
So...does the HGTV-effect impact real estate investors?
In some ways, yes. While investors, especially turnkey buy-and-hold investors, are not actively involved in or concerned with the renovations process, knowing that your property is being renovated with the highest standards in mind — including resident retention and long-term property values — is key to your success.
At REI Nation, you’ll find that our standards exceed others in the industry. We’re at the top of the game when it comes to selecting, renovating, and managing the best of the best in turnkey properties.
Partner with the team at the top and see how premier renovations and property management transform your portfolio! Call your advisor today.