I expected that the aces of real estate did everything possible to improve ROI of the inferior performers. Which was true. However, the approach that they have taken was counter-intuitive at first, but made perfect sense once I’ve applied industry-backed numbers to it.
What is the best rental property flooring?
The highest achievers spent time carefully considering direct and, even more importantly, indirect costs associated with their rental property maintenance.
Most successful investors spent much of their research figuring out how much time they would need to allocate towards a certain activity over a period of time (usually 10-15 years), so they could calculate the cost of that time hassle.
Let’s look at the example of a very common morning ritual:
Making a cup of coffee.
Since I like espresso:
There are mainly 2 ways I can make it home:
- Buy an espresso machine (decent ones start at $700-S800).
- Buy a Nespresso coffee maker which uses capsules (costs about $100).
Both make great quality espresso.
Which one would you get?
Here is the catch: with a regular espresso machine you can buy a 5 lbs (2268 grams) of great coffee bean for about $40 (yields ~ 225 cups), while my Nespresso machine only takes specific capsules made by Nespresso at $0.85 a piece.
At this rate an $800 espresso machine will become a better investment after 1041 cups of coffee. Family of two at 2 cups per day, that’s 260 days.
So in 260 days a machine which is $700 more expensive, instantly becomes cheaper, because of it’s maintanance (read: indirect costs).
You say “Who would even buy that Nespresso machine? It doesn’t make sense!”
But, believe me, a lot of people did, do and will do. (Even after I show them this math).
And that’s what have truly separated A-players from the rest of the league.
They always consider “sunk costs”. They value their time (cost of the actual coffee beans).
Do you know how long it takes to come out to fix a leaky fridge? 2-3 hours? What is the cost of your hour? How many times per year will you need to do that? Would getting a new fridge allow me to justify charging higher rent? How I can benefit from the time saved from NOT having to deal with repairs? How many days does my unit has to stay tenant free while I’m fixing stuff yet again?
Those are all very logical questions true A-players ask them every single time they have a maintenance dilemma.
So it’s this longer-than-a-lifetime debate: Time Vs Money.
Should I be proactive with my maintenance or should I solve issues as they arise?
Should I keep fixing that fridge once a month or should I purchase a new one and have warranty take care of that in case something happens?
Should I seal those windows once a year (or more often) or should I replace them?
True gurus always act proactively when it comes to maintenance, because even if the upfront costs are higher, it still makes sense to do it, because they wouldn’t have to waste their time on repairing things continuously.
In other words, they value their time way more than the others and consider “sunk costs” as the main part of their equation.
Think about it, ROI includes not just income you see from a given property, it also includes the stress you get (or don’t get) maintaining it… AND the time you yourself put into making a property tenant-ready or fixing it.
Preaching to the choir… right?
Right now, you are probably saying that you too only rely your decisions on hard true facts, based on statistical analysis and backed by experiments and never make those emotional decisions.
But do you really?
Always? Most of the times? Sometimes?
I thought I was a very logical person, but you know there were a few times (perhaps, even too many – that Nespresso machine) when I made decisions based on pure emotions.
Do you know who makes their decision based on pure emotions?
3-year old kids and puppies!
Do you know what else 3-year old kids and puppies do? Shit on the carpet.
So I went back to the office, pulled up 12 years of data and went to work. This time I wanted to find out what flooring types have consistently performed better over a longer period of time.
Not the ones that were the cheapest outright, but the once that were the most cost efficient overtime. Because investment properties only make sense if they bring you money overtime.
After carefully considering all the costs (materials, labor, maintenance and the cost of your time hassle), I have found that Luxury Vinyl had no competition. I included Carpet, Laminate, Hardwood, Tile, etc; however, luxury vinyl has always come out on top. (you can check yourself by downloading my ROI calculator here).
You would waste $6700.00 on a 1000 square feet property over a 10 year period if you had carpet in that property.
And the worst part…
By not charging higher rents with luxury vinyl you are leaving a good chunk of your money on the table too, so the real difference is even greater. (again, you can check for yourself here. It’s free)
Here are 3 quick reasons (of a list of about 79!) why Luxury Vinyl floors should be in as many rental properties you own as possible:
- Luxury Vinyl is the most low-maintenance floor you will ever find. Unlike carpet or tile, Luxury Vinyl doesn’t take hours of hands-and-knees scrubbing or expensive professional cleaning
- Luxury Vinyl is waterproof and versatile (so you can use it rooms that other materials wouldn’t make sense), and it’s durable enough to ride out rougher tenants (Seriously – we’ve seen refrigerators topple over but leave as much of a mark as a cat’s paw print…meaning NONE)
- Luxury Vinyl beats out Laminate and Tile flooring because it’s less expensive per square foot and it looks higher quality (because it is)
In other words, Luxury Vinyl is the durable, cost-effective solutions to make your rentals stand out from other properties that go with “good enough” carpet or scratch-n-dent prone wood.
High quality rentals attract high quality tenants. Luxury Vinyl makes that a-heck-of-a-lot easier.
(Here we go again, preaching to the choir!)
You and I both know there is no magic pill for anything. However, there are choices which are better than others. I have worked for 12 years with not only rentals, but also with commercial and residential properties’ flooring and other materials like tile, laminate, wood, and carpet. So I could technically install whatever you want in your house, but I chose not to, because it’s this more-than-a-decade experience with all these other materials that’s shown me Luxury Vinyl is the best choice.
The only question remains: how much more money can you make by switching your rentals to luxury vinyl?
Do you want to know how much money exactly you can save and gain over a 3, 5, 15 or whatever period of time from now by installing luxury vinyl in your rentals? Download our calculator here.