Hope is not a strategy. I’m sure you’ve heard that many times before. Yet I can’t tell you how many real estate investors I speak with that tell me about the great deal they got on a rental property, only to find it difficult to rent out.
As I look into their situation to help them fill the property I often discover that they missed a critical piece of the puzzle.
When you’re investing in real estate, the most important things you can do to attract great tenants to your rental property start before you even buy a property.
Once you own a property, good maintenance, fair market rent pricing, and putting up plenty of ads will make a difference in your ability to put good tenants in your place, but the critical pieces to finding and keeping great tenants begin before you buy and apply to all of your marketing efforts once you begin to put tenants in the property.
Principle #1: Know Your Tenants Before You Buy
Spend a bit of time figuring out what other prospective tenants will want before you buy. Visit open houses in the area and chat with Realtors or call a few property managers in the city. Ask them about must-have features of homes being sold and homes being renting. Ask them about the people who are renting (and who are buying in the area). Why are they choosing this location (is it a local school, easy access to transportation or some other feature that is attracting them to the area)? Do they have grown kids, young kids, or are they seniors or students?
Once you have a good sense of who the area is attracting, walk around and chat with people in coffee shops and parks. We typically will take our dog Bram around the area for a walk. With a dog there’s an excuse to stop and chat while he sniffs and marks his territory around the area. When you’re chatting with residents in the area, find out where they work, what they like about the area and other general information. When you tell someone you’re thinking about buying in the area, often they are happy to share the things they like and don’t like about the area.
You should also pay close attention to apartment buildings with no vacancy signs. What size are the units? Where are they located – perhaps near a subway or bus stop or across from a park? Do the units have any special amenities?
When you do this regularly for a month or two, it will become apparent what it is that tenants in the area are hungry for. You might learn that air conditioners are a critical feature for a rental, or maybe it’s two-bedroom units with dishwashers, or maybe it’s the three-bedroom homes near the high school that always rent out quickly. That’s the kind of property you want to buy.
Principle #2: Find a Unique Selling Proposition for the Rental (a USP)
This doesn’t mean you want to have a unique property – unique often means hard to rent and even harder to sell in the future. What you want to do is ensure that the property you’re buying has appeal to your ideal tenant. You want to have something more to say in your marketing than it is a 3 bedroom and 2 bathroom home.
The more appealing it is to your target market, the higher the rent you can command and the easier it will be to sell at a great price in the future.
All you need to do is think about what you’ll say in your ads for the property. Is it positioned for perfect sunset viewing? Is it a short walk to fabulous shopping? One of our rentals is 1/2 a block to an award winning (yet affordable) restaurant. We make sure we always note that it’s steps to the famous and award winning Pear Tree restaurant. You can also note if it sits on a peaceful tree lined street that kids play street hockey on every Sunday or that is has a gorgeous yard that brings a country feeling into the city. Basically you want to know what will appeal to your ideal tenant and market to that feeling and that benefit.
Principle #3: Focus on benefits, not features
I’ve already alluded to it above, but when you write an ad to attract tenants to your property you want to base it on the juicy USP you created – and include plenty of additional benefits that demonstrate to your ideal tenant that they will really enjoy by living there.
The typical ad – “Freshly painted 2-bedroom, 1 ½ bath apartment on Beach Street, dishwasher, washer/dryer, hardwood floors available September 1” – is all features. Instead, you want to focus on things like the spectacular view or the apartment’s easy access to award-winning schools or that it is steps from the trendy shopping district in the city.
It’s important to appeal to the positive emotions that might make someone want to buy your property. Because you’ve done your market research leading up to the purchase of this property you aren’t just trying to rent to anyone. You have a target market with an ideal tenant in mind. And you’ve created your USP thinking about what will attract that person to your property.
Use that same emphasis when you write an ad to attract the best tenants at the highest price. Describe how convenient and comfortable your unit will be for your prospective tenant. Allow them to imagine themselves enjoying their life in their new home.
If you plan to do all of this before you even buy the property you’ll find it is quicker and easier to not only fill your property at a great price – you’ll likely attract the type of tenant that will want to live in the property for a long time because it’s perfectly suited to them and their life style.
Image Credit: © Jerome Moreaux | Dreamstime.com