Successful landlording isn’t about having beautiful property in the hippest locations. While those aspects may be nice to have, creating long-term success as a landlord is more about having formulaic systems and setups… universal systems across a portfolio of properties, creating consistency and predictability. No surprises, in other words — both for you and your tenants.
Take, for example, the hotel chain Hyatt. I have young kids, and when my wife and I want to get away for a week as a family, we typically head somewhere in the Caribbean. The destination/resort needs to be kid-friendly but also suit our tastes. Hyatt Ziva is one such product we’ve visited on a few occasions and loved.
It’s not that Hyatt Ziva is the most luxurious resort one can visit, but it’s elegant and consistent whether you’re in Jamaica or Mexico. Taking those two examples, you’d barely notice a difference looking at the two resorts despite being in different countries. From the tiles on the floor to the roofing, balcony railings, and exterior, the product is the same or very similar — as is the service — no matter the location. Hyatt has many benefits for running a formulaic chain like this, and it’s a system every landlord should follow.
Hospitality giants are what landlords should emulate. The hotel game is challenging to survive in, yet they’ve mastered this competitive industry by delivering ‘consistency’ and removing the element of surprise. If they can do it with 50,000 to 150,000 rooms globally, you can do it with a small portfolio of rentals within one or two cities.
Presuming you’re not all over the map with the type of rentals you offer (i.e. your properties should serve a similar demographic), they should have a comparable, if not identical, look and feel. Real estate wizards, such as community-planning home builders and successful hotel chains do this — for very specific reasons.
Generally speaking, one particular demographic often has similar tastes and expectations. Your rentals should have the same cabinetry, paint, flooring, appliances, etc… as much the same as humanly possible.
If you have several units, this symmetry will enable economies of scale. Furthermore, replacement costs are predictable when everything is the same, and one can calendar the life of appliances in all units. What landlord doesn’t want predictable amortization and repair schedules?
Going for this interior consistency will establish relationships with equipment and supply vendors, both for acquiring and servicing. It also streamlines the tenant turnover process. Tenant moves out, you call your painter and tell him such and such rental needs painting. There’s no need to try and remember the colour of the paint because he already knows. It’s the same Oxford White used in every one of your rentals! Time to replace the furnace filters or smoke alarms? No problem. All the furnaces require the same $14.99 filter from Home Depot, and you always buy the same smoke alarms for every rental.
Predictability is the goal of any successful landlord. Like the most successful hotel chains in the world, wash, rinse, and repeat in every possible aspect of your rental property portfolio. Build a real estate business devoid of surprises.
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