As I get more experience with other forms of rental such as Airbnb and rooming houses, micro suites, furnished suites, roommates, bed and breakfasts, and travel apartments versus unfurnished yearly rentals, I’ve come to realize there is probably quite a trade-off between intense property management with functional programs like roomers or executive travel apartments versus unfurnished yearly rentals, which are the simplest form of landlord property management other than possibly old fashioned mini storage buildings.
You know the types of places that are basically unheated garages where folks even have to provide their own locks.
The trade-off probably looks a bit like this:
And then there are micro-suites, possibly the hottest trend in real estate in NA. Small, self-contained units–bachelor or 1-bedroom with (preferably) their own ingress/egress from the street.
High ROI, but low investment in terms of property management time.
Also, tenants in micro-suites likely stay longer (than, say, roommates), lowering your churn rate, decreasing damage to your building, reducing your marketing costs as well as your cost to prep a place for your next tenant once it becomes vacant…
Why do folks prefer micro-suites to being a roommate?
It avoids arguments like:
“Who ate my (leftover) pizza?”
“Who drank my beer?”
“It’s your turn to clean the bathroom!” “No it isn’t. I did it last week.”
“Could you please not leave your dirty dishes in the sink!”
Anyway, I created a notional table based on my experience:
Next, I plotted this out and got:
Which gave me two outliers:
Basically, I believe that microsuites and industrial condos probably give you the highest ROI/cap rates for the least amount of your property management time.
Industrial tenants tend to stay 3, 5 even 10 years and are pretty independent types–if something breaks, they are just as likely to fix it themselves as to call you the landlord/property manager.
That isn’t quite the case for microsuite (residential) tenants, who are likely to be less independent and not stay quite as long either. Still, they’ll probably generate a decent cap rate and be less time intensive than Airbnb where tenants can be very high maintenance and change every week…
Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD, Ottawa Senators founder, Real Estate Investment and Business coach, ROYAL LePAGE Performance Realty broker, 1-613-762-8884 firstname.lastname@example.org twitter.com/ProfBruce profbruce.tumblr.com/archive brucemfirestone.com
MAKING IMPOSSIBLE POSSIBLE
postscript: things I like to add in microsuite design include–
postscript: see also,
Greyhound Racing and Real Estate Investment, https://profbruce.tumblr.com/post/156711205864/greyhound-racing-and-real-estate-investment
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