Prepare your investment property for occupancy

This article describes a set of general best practices to prepare your investment property for leasing or for sale. These practices cover a wide range of topics, from general maintenance, to repositioning the asset in preparation of an exit. The aim is to help property owners understand the steps needed to manage and maintain their property. Many of the practices discussed here are inspired by years of property management experience and are meant to provide guidance for anybody with a property in transition.

These best practices aren't one size fits all. For example, you might successfully maintain a property without some of them, but others are fundamental. In particular, general maintenance and upkeep of a property is something you should always strive for. Repositioning the asset is something you may only consider after analyzing the cost of the improvements and the anticipated increase in price you might achieve.

To get the most out of this article, you should currently own a property that you are preparing to rent or sell. For advice on how Foster Realty can guide you through this process you can contact a property manager.

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Assess the property

Assessing the property is the first step - you gather information about the condition of your property and the work necessary to prepare it for occupancy or market. Knowing what needs to be done and the resources necessary to achieve your goals is crucial.

The process for assessing your property may be different depending on the stakeholder. A property owner will consider the budget, the condition and finish of competitive properties, the depreciation schedule of capital improvements, and whether or not there are opportunities to reposition their asset. A tenant might consider what they are obligated to clean or repair according to the lease.

Get started making the assessment by going through the following steps:

Step 1: Perform a property inspection

Visit the property and perform a thorough inspection. Perform this inspection yourself, or contact Foster Realty’s team who uses specialized inspection software to document the condition of the property and generate a detailed report. Certain types of inspections may require a licensed expert who is trained in building, environmental, structural, or other specialized inspections.

Step 2: Review the results of the inspection

Review the inspection report and determine the necessary repairs or modifications needed to position the property to fulfill your needs. For rental properties, consider the Nevada real estate laws and requirements to determine the extent of work that is required by law for a property. Next,

Step 3: Perform a comparative market analysis

Gather data about your neighborhood and analyze the trends to determine the best price for your property.

Safety first: Address any issues that could pose a risk to the safety of others or property. These items could include leaks, exposed wiring, tripping hazards, unsecured entry points.

Determine the scope of work

Rental properties require year-round vigilance, especially when it comes to maintenance and repairs. Ascertain the scale of work needed in your home and select a vendor that best fits your needs. General minor repairs to major construction projects can cost you valuable time and money, so determining the best option for your property is pivotal to the success of your investment.

General maintenance and upkeep

There are some maintenance issues that you can anticipate or avoid by following a maintenance schedule and inspecting the property. If your property is in good condition, but requires some minor repairs to upkeep basic requirements for habitability and to have positive showings, you may only need a handyman and cleaning services.

Ensure your property is well maintained and running smoothly. Some items that should be checked for property maintenance and operation include but aren’t limited to:

  • Plumbing lines

  • Electrical outlets and fixtures

  • Air conditioning and heating systems

  • Appliances

  • Lighting

  • Doors and locks

  • Irrigation systems

Make a list of any items needing attention. Everything at the property should be safe, operational, and well maintained in order to preserve the value of your property. Check with your property manager and legal counsel for laws and regulations specific to your property and area.

Capital improvement projects

Look for capital improvements needed at the property. These are major additions or changes that can increase the property’s value or it’s useful life. Examples may include installing a new air conditioning system, plumbing system, roof, floors or other building component that has reached the end of it’s useful life. You should check with your tax advisor regarding what is or isn’t considered a capital improvement and the tax implications related to one.

Repositioning of the asset

The desire to get the highest value out of your property can be facilitated by repositioning the property. To do this, you must determine what it will take to reclassify the property into a more valuable asset. First, survey the market to see if there are properties of a similar size and footprint that are selling for significantly higher. Next, determine what changes can be made to the subject property to become a peer of the significantly higher priced properties. Evaluate the cost of the changes needed compared to the increased value to determine if the property is a candidate for repositioning.

Hire vendors

Some properties require minor repairs while others require something more extensive. Selecting the right vendor for the job can facilitate timely and successful projects, ensuring minimal downtime to maximize profitability.

Determine trades

Based on the scope of work, determining what trades are needed is crucial. Some vendors are more specialized in their fields, while others are more broad in their capabilities. It’s important to determine what the project needs are and fulfill the roles accordingly.

Solicit Bids

Typically for larger projects, using multiple vendors for estimates is recommended as costs can vary from company to company. Vendors should be instructed to send their best price in order for you to choose the best option for your needs.

Award the contract

After reviewing the different bids it’s time to select the vendor to move forward with the project. You may have the option to hire a handyman or for more intensive work, a general contractor. Establish an agreement for a deadline, form of payment and final cost. The best practice would be to have everything that was agreed upon to be in writing. Some vendors may require a down payment for the job as a show of good faith.

Supervise the project

It’s a great idea to oversee your project to ensure timely completion and quality workmanship. Visiting the property on the initial day of the project will allow you to confirm the details with the contractor to avoid any misunderstandings. Depending on the length of the project, you should periodically follow up with your contractor and schedule any in person meetings if visual inspection is required. Foster Realty can direct contractors to your property with detailed work orders and routinely inspect the project to protect your interests.

Inspection of completed work

Upon completion of the project you will want to verify that everything has been completed properly. You can do this inspection yourself or hire a professional inspector to verify it. Specialized inspectors are also available to you if the project requires a professional opinion.

Perform inspection

Visually inspect each item on the work order and confirm that the project is completed as you envisioned it. There are a variety of tools available to assist you in this process. Be thorough and ask the contractor to correct anything that is not to your liking and hold them to the standards of your expectation.

Compare inspection to work order

Using the work order as a checklist can help you verify that all work that was agreed to has been completed to your satisfaction. Let your contractor know if there was anything missed or if additional work is needed. At times, this can create an increase in the cost, depending on who’s error it was. That’s why it’s important to set the expectations with your contractor during the initial steps of the project.

Ensure quality of work is satisfactory / recall vendor

If the work you inspected is not satisfactory, send the contractor back to correct any issues or complete anything that was missed. It’s good practice to meet with your contractor on site when this occurs, so the confusion can be resolved precisely without further mistakes.

Confirm final completion

You should send the payment immediately, contractors appreciate prompt payment. Send the payment in the method agreed upon prior to the commencement of the work. It is recommended that you save the invoices and discuss with your tax specialist regarding any deductions you would be eligible for.

What's next

Take the next step

Talk to us about your property. A Foster Realty property manager will help you find the best solution.