Scattered Site Rental Toolkit:
Business Planning for Development & Management
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V.A. Producing a Marketable and Durable Unit

As discussed in the previous module, understanding the needs of your expected tenants is vital to Scattered Site Rental (SSR) program success. The development of quality units that are energy efficient, durable and include amenities most desired by prospective tenants will lead to marketing success. How can you determine what clients are likely to want? One way is to interview local realtors to find out what people are looking for. Another possibility is to find out what amenities are offered by existing similar rentals with low vacancy rates. The most thorough approach is to commission a professional market study that surveys the competition and offers a series of recommendations about unit type, interior and exterior finishes, and amenities.

Advice from the Field: What to Build

• Build and/or rehabilitate homes to high construction quality standards on the things that matter. A sound foundation, good framing, quality mechanicals, and good quality siding and trim will ensure that the homes will be a part of the quality housing stock for many years to come.
• Design new construction and/or redesign rehabilitated homes for the way modern households live. Put in plenty of electrical outlets, including dedicated circuits for microwaves, computers and other appliances and equipment. Add a second bathroom and plenty of closet space. Pay attention to likely foot traffic patterns through the house.
• Make the houses attractive and offer some amenities. Add some nice windows and decent cabinets and countertops. Install adequate appliances such as a range, refrigerator, dishwasher and a washer and dryer. Include parking and attractive landscaping. Pre-wire for cable and internet. Find a balance and don’t get extravagant. A good market analysis should help you determine which amenities will offer the greatest payoff in terms of rents and attracting desired tenants.
• Don’t go overboard on things like trim and doors. Again, a balance is in order. Those several hundred dollar six-panel cherry doors and the matching trim are better left for the custom home builders. On the other hand, use something that will hold up under hard use and can be easily refinished or painted.
• Make the houses energy efficient. Install plenty of insulation and give attention to proper air sealing of the building envelope. Install energy efficient appliances including the furnace and water heater. Put in programmable thermostats. Add good quality, water-efficient plumbing fixtures and install energy efficient lighting. Be sure to educate tenants on the use of energy efficient appliances and fixtures.
• Ensure units are durable enough to stand up to tenants over the long run.

It is also important to understand the realities of rental housing. Rental houses take a certain amount of abuse and in some cases units are trashed by the tenants prior to eviction or turnover. This can happen for a number of reasons. Tenants may not value the property because it is not theirs. They may be careless, or may be sloppy housekeepers, or may have habits that are hard on units. For example, some tenants cook in such a way as to generate large amounts of grease in the kitchen, which soon coats many of the surfaces and can ruin the appliances, cabinets, and walls. For all of these reasons, maintenance costs are high and adequate replacement and maintenance reserves will be important to ensure adequate funding. To make matters more complicated, with SSR it is more difficult to keep an eye on the units to ensure they are well cared for. It also costs more to maintain them due to of higher travel costs and a lack of uniformity in components.

Advice from the Field: Lowering Maintenance Costs

• Screen tenants carefully
• Cluster units to reduce travel time and make them easier to keep under watch.
• Attempt to add uniform components whenever possible. Using a specific furnace, water heater, paint, faucet and so on in all units will reduce maintenance costs due to familiarity and may allow for bulk purchases for additional savings
• Develop durable units. Items such as hardwood flooring, better quality faucets, and upgraded siding will reduce the amount and costs of maintenance over the long run and will be worth the additional upfront costs. Avoid carpeting because of the added costs at turnover for cleaning and replacement. Use solid surfaced material instead.
• Conduct regular and/or seasonal maintenance. Being proactive on the maintenance will add another set of eyes on the unit and ensure units are well maintained.
• Educate tenants on how to care for their units.

Next: V.B. Approaches to Producing and Managing SSR Projects