BiggerPockets

I began rehabbing a duplex last year in McKees Rocks, PA. I finally finished the job this year and completed all the inspections with the borough. I've been marketing the rental with an agent at ERA Showcase Realty since May but I still don't have any renters lined up. Is there anything more I can do to find renters even though I'm out of the area?

Also, I began this project to ultimately sell the property. Once the rental is occupied and has cash flow, what's the best way to find a buyer?

Please advise.
JonB

Jon, you make a good point about why I'm trying to rent it instead of just outright sell and let the buyer find their occupants. I decided to rent it out because I have been utterly unable to sell it. I started listing it with an agent for $79,900 when the final work was completed on the house, but before I had the occupancy permit. After several months of very little activity, and after dropping the price down to $57,900, I decided to rent it simply because it was just sitting there. I guess I thought the property might be more attractive with positive cash flow already in place.

I've been taking the advice of my agent for rental prices in the area, but the last conversation I had with him last week, he couldn't give me any reasons for the lack of interest or any time tables. I'm beginning to think my agent is unmotivated. He said that he's been marketing the home on the MLS and the internet on sites like Craig's List and has only had a few responses.

Ditto. Sounds like you need another agent. Is he an experienced property manager or just a real estate sales person? I shudder to think what will happen if the property is rented and you have tenant problems. The first thing I would do is conduct a rent survey.

It looks like McKees Rocks is a suburb of Pittsburg, so there should be ample listings on Craigslist to get an idea of rents. Alternately, you can often find rents in the online edition of the local newspapers (you do read the local newspapers in the area you invest, don't you?).

Find out who runs the local real estate club by Googling "Real estate clubs in Pittsburg" and also looking some clubs up on Meetup. Ask this person if he can refer you to some local rental investors and call them. They too can give you an idea of rents, and more importantly, the names of competent property managers.

Call the property managers and discuss rents again, along with the possibility of using them to manage your duplex. Ideally, you'll find a property manager used to working with out-of-town investors. Hopefully, you have other properties in the area. This makes you a little more appealing.

I know you don't want to hear this but no matter how many rentals there are in the area, I guarantee you can rent your property tomorrow for $1 per month. Three months vacant is way too long. This is just going to boil down to what the market will bear, how your property shows, and how competent your manager is. Someone dropped the ball here.

Getting on an airplane is the best way to do all of the above, but not required. How motivated are you?

I don't know what your exit strategies were but I can think of three for you:

First, your property will be more appealing to an investor if it's fully rented and actually cash flowing. Sales price will be a function of neighborhood comps as well as ROI. As you might have found, out of town investors have a tendency to overpay, based on cash flow and not comps. With the help of your new and hopefully competent manager, market your property to out of town investors. In addition, the local contacts you made above might know some interested local investors.

Two, rent one unit and market to owner occupants looking to live in one unit and enjoy the cash flow from the other - maybe a young couple starting out with limited cash.

Three, hold for your own cash flow and sell in years to come as the market maybe picks up. This is not really an exit strategy, but your money is sunk. Anything you can get is better than nothing and is hopefully an adequate return.

Above all, get some competent help.

Jeff

Originally posted by Jonathan Buerkert

So you definitely think the property would be a more attractive buy with renters already in place, right?

What I definitely think is that absolutely nothing is going to happen to this deal unless you figure out what you want.

Reading between your lines, it appears you have a number of disinterested parties managing your business - your seller, your builder, the city, and your selling agent. Nobody in Pittsburg is waking up in the morning asking themselves how they can help Jonathan make money today with his property.

It's 100% up to you to decide what you want and to communicate it clearly. Unless you know what you want, a "not well defined exit strategy" will continue to cost you money.

Jeff