The probability of attention-getting “extras” paying off strictly depends on the location and type of real estate project you are investing in. For example, if you’re refurbishing a four-unit residential building, you should canvass other comparable buildings in the area to find out what they offer as “building standard” and what typical rental rates have been achieved. For this type of project, the items to be considered in building standard would be carpeting; painting; kitchen appliances and cabinets; air conditioning units; television access by means of an antenna, cable, or satellite; and lighting fixtures to name a few. Unless you’re certain that your tenants would pay a higher rental for a building standard that includes items that would normally be “extras,” I suggest that you offer the tenant optional upgrades that you would be willing to supply for a higher rental rate. For example, the building standard refrigerator could have a 17.5 cu. ft. capacity but an option could be one of higher capacity. Standard kitchen countertops could consist of Formica or similar laminates. Options could include granite, ceramic tile, or solid surface materials such as Corian or Stilestone, the extra cost of which is included in the rent.
In any real estate deal, it’s important for you to identify your target audience and focus your attention on accommodating it. If your target is middle-class families and you elect to provide amenities typically found in developments catering to those with higher incomes, you won’t recoup the extra expense. However it is a fact that most people, no matter their income level, will pay a little more for luxury. Although you may be targeting middle-income buyers, you should identify the cost-effective upgrades that will dazzle them and make them willing to pay a little more than they otherwise would. People who can afford luxury will recognize more extravagant extra touches such as heightened security, 24-hour doormen, and closedcircuit cameras or gated and manned entry areas. These are things they can appreciate as having added value. Unfortunately, the lines between low-income families, middle-income families, and highincome families are blurry at best and difficult to pin down. After you’ve obtained all the knowledge of your likely buyers or tenants as you can, then go after that target. Having said that, be willing to quickly revise your ideas about what your customers want, if you learn new facts that warrant such a change. Success in any real estate venture has a direct relationship to appropriate timing and the changes in circumstances that occur in any timeframe. Be aware of everything that’s happening in the local economic and real estate climate that could affect your decision making. Smart real estate investors, just like entrepreneurs in general, have to stay flexible.
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