4 Ways to Ensure Your Property is Up to Neighborhood Standards

I always coach our property managers and other clients about maintaining the properties they buy to the standards of a neighborhood. But to keep your property up to the standards of a comparable market, you first need to have an understanding of what it all means. 

What are neighborhood standards? 

This term encompasses a lot of different elements of property ownership, from how much you’ve paid for a house to how much money you should put into rehabbing and maintaining one. 

One of the main elements to consider when thinking about neighborhood standards is how to ensure your property keeps up with others in the neighborhood. By looking at real estate comps, it becomes easier to determine whether the house you want to buy, maintain, or sell is a good investment. 

Ask yourself:

• What is the average list price for houses in the neighborhood? 
• What is the average rent for houses in this neighborhood?
• What updates do houses in this neighborhood usually have?
• What amenities do most properties offer?

Answering these questions will help you determine where the neighborhood standards lie as well as what other property comps look like – and that’s exactly where you should keep yours. No more, no less. 

Now that you’ve gained a deeper understanding of “neighborhood standards,” there are four strategies I hope you’ll consider when assigning resources and budgets to investment property rehab and maintenance. Because this is an area where investors lose so much money, if you know where to spend – and where not to spend – you’ll be able to dig yourself out of any debts you may have and ultimately turn a greater profit. 

How to Keep Up With a Comparable Real Estate Market

1. Don’t Pay More Than The Standard Price For A Property

Every property in a neighborhood has a given price range, rent range, amenities, and other areas that are considered “standard” when compared to others. The trick here is to know the information on comparable property values upfront so you can first ensure that you don’t buy a property for more than it’s worth. 

If you are looking at houses within a specific neighborhood, and you come across one that is selling for way higher than other comparable properties, it might not be the best investment. 

2. Don’t Rent A Property For More Than The Neighborhood Standard

Likewise, when you go to rent a property, you also want to be mindful of neighborhood standards when it comes to the amount you charge for rent. 

For example, if you are asking for rent that is considered much higher than “standard” when prospective tenants look at other comparable properties, they are less likely to want to rent from you. 

3. Don’t Fall Below The Neighborhood Standard With Property Rehab

One of the hardest lessons I’ve learned stems from one behavior I see clients doing almost every day. It’s incredibly important not to fall below the neighborhood standard when you’re doing property rehab. If you don’t maintain your property to the level that other comparable houses are going for, you may not be able to rent for as much as others. Also, you want to ensure your property does stay up-to-date in important areas, such as plumbing, electricity, a good roof, etc. 

Regardless of whether you’re putting money into a property to maintain it, make slight improvements, or do a more in-depth rehab, you need to be conscious of how much you’re spending and ensure that amount isn’t ultimately going to cause you to fall below the neighborhood standard. If you put too much money into a property, you risk decreasing its overall value down the road when it comes time to rent it out. 

4. Don’t Improve Properties Beyond the Neighborhood Standard

The flip side of the coin regarding falling below the property standard where sinking money into maintenance and rehab is concerned is making improvements that go above and beyond the neighborhood standard. If you think that there’s a chance you’ll be able to charge more rent for a property that has extra amenities and is far and beyond other comparable houses within the same neighborhood, I’m here to tell you that this won’t happen. 

We might think we deserve this because we’re nice and we’ve added extra amenities and updates to a property, but that is simply not the case. 

The fact of the matter is that tenants may or may not be looking for specific amenities – and that’s why it’s so important to be mindful of neighborhood standards when you make improvements. Our tenants are often looking for a place to rent that has fully working utilities, a good roof, some security, and maybe a few other perks, but they might not need items like a brand-new dishwasher or a completely remodeled bathroom. 

Final Thoughts

When determining whether an investment property is right for you, or during those times when you need to do rehab or maintenance on your investment property, knowing real estate comps in the neighborhood is a smart strategy. By ensuring that you are keeping your properties up to the neighborhood standards, you are spending only the money you need to spend. 

Needing to do maintenance and rehab on properties is unavoidable – but you can make smart, calculated updates and repairs as needed. Don’t sink your money into unnecessary updates and amenities, but make sure you are taking care of the tenants you do have and giving them a good place to live. By ensuring their needs are met, you are also increasing the odds that they will care for your property as if it was their own. 

And, when it’s time to update between tenants, don’t spend your budget on expensive renovations or updates you don’t need unless the property comps in the neighborhood have changed. Staying informed is key to staying ahead of the game and ensuring your property will be a good investment for you in the long run.