finding (quality) renters?

so my 1st rental closed on the 15th of february. i had put an ad in the newspaper february 1st. the ad stated it was available Feb 15th. i have advertised on Craigslist.org, and have a big For Rent sign in the yard. i even have a website i made and put link in the paper for the house.
http://www.6320peachorchardroad.com/

i have shown the house to married couple and a young girl and her sister. i have gotten a half dozen calls, a few of them telling me they are Section 8's.

i am asking $1325 per month.

i am not getting that much response. what am i doing wrong?

do i sign a suspect renter because i need renters or wait? do i lower the price? i am frustrated.

any suggestions?

vegas

Edited: 06/26/2010 at 03:23AM

Frank Adams

· Loveland, CO

1170 posts
1209 Influence
4 Awards

Icon_minipost Feb 22 '07, 04:56 PM

When you were doing your " due diligence" what did it show the market rents for that neighborhood to be?

Have rents changed? Since I've been hearing about a soft market in LV for awhile I'm guessing they have. That will tell you whether or not you should lower the rent.

Keep in mind that by lowering the rent, and attracting a larger tenant pool, you are automatically getting more " suspect" tenants. Just by the fact that they are people with lower income and expectations.

What is your negative cash flow with it empty, and what will your cash flow be like when it's been rented?

NEVER, NEVER, NEVER rent to " suspect" tenants. By that I mean anyone who clearly is stretching too much to pay the rent, or has to have " some buddies" , or other " extra" tenants move in to help afford the rent.

You stated that this is your first rental so let me explain about the TWO kinds of vacancies. The first kind is what you have now; now income coming from a " market ready, showable, move-in-able" place. All you need now is a paying tenant to turn around your situation.

The second kind of VACANCY is the kind you have once you've allowed a " suspect" tenant, aka a DEADBEAT to move in. At that point you still don't have the income, you're facing extra expense to get the deadbeats out and bring the property back up to where you were on February23rd.

After close to 30 years of doing this, with 16 SFHs at one point. The FIRST kind of vacancy is the best.

BTW, how much will this place cash flow?

all cash

Edited: 06/26/2010 at 03:23AM

N/A N/A

21 posts
1 Award

Icon_minipost Feb 22 '07, 10:05 PM

my negative cash flow is $1302 when it my property is vacant. my first mortgage payment doesnt come due until april 1st, 2007.

i am asking $1325 a month to positive cash flow for +$25.

the rental comps in this neighborhood are $1100-$1200 per month. i guess i am asking too much?

i would love to hear more advice from you. i appreciate it alot.

vegas

Edited: 06/26/2010 at 03:23AM

Michael Rossi

Real Estate Investor · Ohio

4587 posts
14256 Influence
14 Awards

Icon_minipost Feb 23 '07, 05:51 PM

vegastud,

I think that you've answered your own question. Your rental is priced too high. Rents are set by the market. If you set yours too high, it will be very difficult to find a tenant.

Do you sign a " suspect" renter because you can't find a good one? NOT ME! It is much better to have a vacant rental than one with a terrible tenant. A terrible tenant will cost you a lot more than a vacant rental.

I would suggest coming up with a written policy regarding tenant screening. Then - don't violate it.

Good Luck,

Mike

Edited: 06/26/2010 at 03:23AM

Joshua Dorkin

BiggerPockets Founder · Denver, Colorado

10626 posts
46473 Influence
24 Awards

Icon_minipost Feb 23 '07, 06:25 PM

Does your rental have any attributes that will allow it to rent for such a premium? If not, I advise lowering your rents to fit in more with market rents.

As for renting to suspect tenants, I would highly advise against it. I acquired a building a few years ago that was fully rented. The problem was that most of my tenants were suspect. Payments were late, I got excuses, things kept breaking, etc. I got rid of all of them and put in some quality tenants. The losses you can face by renting out to " low quality" renters are way worse then having to find a new tenant.

Be patient and get someone who meets your standards.

Edited: 06/26/2010 at 03:23AM

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