In just six months, rental arbitrage expert Dee Coulson successfully expanded her portfolio from one apartment suite to 14 units. Her business, luxhighendproperties.com (opens in new tab), specializes in offering flexible-term housing (mid-term rentals of 30+ days) that is all-inclusive for traveling medical professionals. To ensure her properties are as attractive and inviting as possible, she makes sure the apartment complexes have superior services and amenities, including access to swimming pools, gyms, and rooftop lounges.
Dee decided to enter this specialized market after realizing the high demand for temporary housing among traveling nurses during the difficult times of the COVID-19 pandemic. She started speaking with landlords and property managers, describing her rental arbitrage business model and the advantages it provided to both the property owners and the traveling medical professionals in need of upscale lodging.
Dee leases properties, furnishes them to a high standard, and rents them out at competitive rates. She only engages in rental arbitrage. Dee ensures transparency by developing close relationships with property owners who are aware of her rental arbitrage operations, despite the fact that many apartment buildings have strict policies against subleasing.
Due to Dee's effective financial management, her business was able to grow quickly. She was able to finance the furnishing of her next property by using the deposit and first month's rent from her first rental property. She continued in this manner until she reached her current 14-unit portfolio. She notes that it cost her $6,000 to fully furnish her first apartment.
Insurance and Arbitrage
Insurance is a crucial aspect of rental arbitrage, and Dee Coulson emphasizes its importance in protecting both the property owner and the tenants. While rental properties typically require renters insurance, even in cases where the owner is not personally occupying the unit, Dee shares a close call incident to illustrate the significance of having appropriate insurance coverage.
In this particular incident, one of Dee's tenants, exhausted from a 14-hour shift, started cooking on the stove and unintentionally fell asleep. As time passed, the food on the stove began to burn, filling the unit with smoke and triggering the smoke alarms. Fortunately, the fire department arrived promptly and managed to extinguish the fire before it caused any significant damage. Dee highlights that having the proper insurance coverage was instrumental in this situation, as it would have protected her from potential financial liability for damages and injuries.
As a result of her experience, Dee is able to provide valuable advice for property owners who rent out their properties: it is essential to have landlord insurance designed specifically for rental properties, as opposed to just renter's insurance or homeowner's insurance, which wouldn't cover losses in this situation because they both require the owner-tenant to reside in the property and may not be adequate to cover accidents or liabilities arising from rental activities.
Interior Design
Dee Coulson emphasizes the significance of paying attention to the space available and choosing furniture that appropriately fills the rooms when furnishing rental properties for medium-term stays. A well-designed and tastefully furnished space not only improves the aesthetic appeal overall but also provides tenants with a practical and cozy environment.
Selecting the proper-sized couch is a crucial component of furnishing living spaces. The couch should be in proportion to the size of the room; it shouldn't be either too big or too small to be inconsequential. A well-matched coffee table next to the couch creates a focal point and offers tenants a useful surface to set things down on or congregate around. A TV stand or mounted TV with a piece of furniture underneath, like a credenza, also adds visual interest and makes good use of vertical space.
Once the essential furniture pieces are chosen, it is relatively simple to add thoughtful finishing touches to the remaining space. The addition of indoor plants not only adds life and vibrancy to the space but also fosters peace and natural beauty. Wall hangings, mirrors, and other decorative accents can turn plain walls into eye-catching features and create a cozier atmosphere. The coziness and comfort of seating areas can be improved by adding plush pillows and throws, and carefully chosen decorative accents, such as vases, sculptures, or eye-catching lighting fixtures, can add character and style.
Area rugs are also a great way to add color and pattern to a room. And don't forget about the importance of proper lighting! Layering different types of lighting, such as overhead fixtures, table lamps, and floor lamps, can create a warm and inviting ambiance. Finally, incorporating personal touches like local city photos and artwork can make a space feel truly unique and special.
When choosing these extra decor items, Dee advises property owners to strike a balance between functionality and aesthetics. These finishing touches can be carefully chosen and arranged to personalize the area, increase its appeal to potential tenants, and create a warm and inviting atmosphere that distinguishes the property from others on the market.
In a rental arbitrage business, the cash flow that each unit generates can vary greatly depending on elements like unit size and market competition. It can be challenging to set rental prices because there is no universal formula; however, many people price their units at twice what their base rent is. This permits a comfortable profit margin while maintaining market competitiveness.
Dee considers apartment buildings to be especially beneficial in terms of "bang for your buck." The availability of on-site staff within apartment buildings is a significant factor contributing to cost efficiency. By relying on the on-site staff, Dee can minimize the need to hire external contractors or maintenance personnel, reducing additional costs that would otherwise eat into her profits. The staff members take care of various maintenance tasks, such as addressing plumbing or electrical issues, fixing appliances, and handling repairs within the units. This streamlined maintenance process not only saves time but also eliminates the need for Dee to personally attend to each maintenance request, allowing her to focus on other aspects of her rental arbitrage business.
Furthermore, the on-site staff is in charge of grounds maintenance, ensuring that the overall property is well-kept and aesthetically pleasing. This includes tasks like landscaping, lawn care, and communal area maintenance. They also manage amenities such as swimming pools, gyms, rooftop lounges, and any other amenities provided by the apartment building. These sought after amenities are available to Dee for just the cost of her base rent, increasing the attractiveness of her rental properties and allowing her to charge higher rent, all without incurring significant expenses.
In the early stages of developing her portfolio, Dee noticed that the typical cash flow per unit ranged from $500 to $900. The main factors influencing this variation were unit size and market demand. Larger units typically command higher rental rates due to their increased square footage and ability to house more tenants, but they also have a smaller pool of potential tenants. Dee has discovered that studio and one-bedroom apartments have a number of benefits for her portfolio, especially in terms of ease of furnishing. These smaller units call for fewer furniture pieces and other accessories, which translates to lower initial costs and quicker setup. She has streamlined her processes and improved her efficiency in getting her properties ready for rental by concentrating on these unit types.
Additionally, her preference for one-bedroom and studio apartments meets the needs of her target market of traveling medical professionals. These people frequently need a small, comfortable home that can accommodate their mid-term housing needs while on assignments or rotations.
Keycheck
Dee uses Keycheck (opens in new tab)to assist with tenant vetting and background checks. Keycheck is a comprehensive platform that streamlines the tenant screening procedure and gives landlords the tools they need to choose tenants with confidence. Keycheck provides a number of useful features with its simple interface and powerful tools. In-depth background checks, thorough credit analyses, eviction history reports, income verification, tenant scorecards, customizable criteria, and prompt results are some of these features.
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