I cannot say it enough. The number one thing you can
do to make your property both marketable and desirable is to invest in your
investment! Whether your goal is to lease or sell, you want the
biggest return possible. So, how do you do this?
Take a look at your property through buyer’s eyes. If
you were looking to lease a space at top market rate, what would your
expectation be? Does your property have curb appeal? Would a fresh
coat of paint or a small investment in landscaping make your property more
marketable to a larger number of prospective tenants or buyers? In the
competitive market we have today, if you want to get the highest and best
return, you need to be willing to invest a little to make a lot in the long run.
What are tenants looking for?
Tenants in the top of the market are looking for class A,
move in ready, space. What does this mean as a property owner? At
NBI Properties, Inc. we like to think of this type of space as “vanilla
box.” A neutral fresh coat of paint, neutral flooring, all minor flaws
taken care of, and fresh clean lines which allow the tenants to make the space
their own. A vanilla box space allows the tenant or buyer to have a
vision without getting distracted by out of pocket expenses. When I am
walking tenants and or buyers through a space and there is old, chipped, or
dirty paint on the walls and ripped or stained carpet on the floor, 99% of the
time, that is all they can see from this point on. Once the expectation
isn’t met, the first thing prospects want to do is negotiate the price.
This is even the case when tenant improvements or incentives are on the
table. My advice to owners is to put your best foot forward without
blowing the budget up front. Paint the walls, replace the carpet, and
repair any obvious flaws that you plan on repairing anyway; such as light
fixtures or blinds. These small items can mean greater returns in the
If your space isn’t quite class A, the goal is still the
same; you want the most for your investment. In this case, it may not be
worth the investment to replace the floors but rather allow free rent for the
tenant to make their own improvements. Tenants are much more open to
making their own improvements when they feel they are getting a reduction in
the market rate. If you are not looking to put any money into the
property at this time, this could benefit both the owner and tenant in the long
run. Any structural or exterior issues will still need to be addressed by
the owner to keep the property competitive with even the lowest rental
rates. Roof leaks, major plumbing issues, exterior eyesores or code
violations are all items which must be addressed in order to keep up with the
current market. Prospective buyers and tenants alike are easily deterred
by these major issues without huge market deductions and no matter the
condition of your investment property, it’s never ideal to lease or sell below
market rate. Bottom line is, make the investment upfront, do the small
repairs or the major ones if needed, and see the gains in the long run.
The longer a property goes neglected, the more it will cost to get it up to a
competitive market rate which will cost you in the long run. Take my
advice, make the investment. You won’t be sorry.