Is anyone having trouble filling vacancies in Memphis right now? I have a 3bd/2ba south of Germantown and west of Collierville. Brand new house, rent is set at $1495, market value is $192k. I'm having trouble getting it rented through my PM and curious if the market has shifted at all and there is an excess of inventory?
There is definitely not an access of inventory, but there are several factors that could be contributing the extended vacancies. Are you looking to get more than market rents? If you are truly seeking market rent than there could be a problem in the marketing of the property. Is your rental advertised online, is there a sign in the yard? Lastly it could just be the property management company not following up on leads. Also keep in mind that when you have higher priced rents those could potentially take longer only because the potential tenant base is significantly reduced!
@Jeff Bethke sound like you are talking about 38125. Are you sure about that value? Only reason I ask is if you are over valuing the home, maybe over valuing the rent. 192k in 38125 typically is a 4 or 5 bedroom home with 2,500 sq ft and $1,495 would be a slam dunk. Make sure your asking price is competitive with other homes in the area. If price is right and marketing is right, then you are almost doing everything you can. A few other items come into play when trying to rent out a home, but those are the 2 most important. It is also worth mentioning we are coming into a slower season. If you get the home rented out, ask your PM to make sure the lease does not expire in Oct through February. We still rent out a lot of homes during this time, but those months are typically a little slower with holidays and winter months of January & February.
I'm not sure of the local market, but if its vacant drop rents. You don't want to let it sit there.
@Alex Craig , December is pretty much a lame duck for rentals still? We had a bit of trouble getting a 3/2 rented in Cordova but dropped rent and got applications within 2 days.
@Jeff Bethke , maybe new homes there work better as flips?
ie. Even if you get it, $1,495/m gross is arguably not a great return for its appraised value of $192k?
Yes, I know, it probably only owes you say $140k, in which case $1,400/m gross return would well cover the high leverage you may have - but, the building will likely depreciate surprisingly quickly!...
@Dean Letfus in theory, December has always been a slower month to rent houses. However, the last 2 years we did really well in December. I don't think it makes as much a difference in C class, but I do think "A" class properties in December are harder to rent. We typically structure our leases in certain areas, including all "A" classes properties so that they do not expire during the Holidays. Reason being is schools are more important as the districts typically have higher ratings. For example, it is hard to rent out homes in Bartlett during the school year. I believe we only let leases expire in Bartlett during the months of March - September. In the situation of @Jeff Bethke , if his home is worth 192k, then $1,495 is a slam dunk, but based solely on the data he provided, I am guessing the home is probably worth more like 150 to 160k. Which means rent should be closer to $1,295 to 1,350. I bet if his rent was in that range, it would rent quickly. With the middle of the month on us, I would advise he have that conversation with him PM soon, otherwise he will miss November and headed into the holidays, it could be vacant much longer.
@Alex Craig is spot on; YE is a terrible time for SFR rentals - - WHO want's to move during the holidays? Even in my MFU, January is a much better time to fill vacancies. I also try hard to fill them before school starts (but families w/kids is my niche).
@Alex Craig is spot on. Thank you for sharing your feedback on Bartlett rentals.
How long has it been on the market? As others have said, this is the slowest time of year to rent a single family, people don't love moving during the holidays. A few thoughts
- Where is your PM marketing the home?
- How are they handling calls / emails from potential tenants? I am a big fan of shopping your PM.
- If they have it listed on all of the online resources and you aren't getting calls, it is price.
- You may have to provide a discount/incentive to get someone in during a slow time. I like offering 1 month free (last month's rent on an 18-month lease) That will get you out of the holiday cycle going forward.
- Plug into the FB groups for G'Town and C'Ville and share the listing. I've had a really good response from FB groups for neighborhoods and area employers too. That is a convenient location for Fed-Ex.
Good Luck - Keep us posted!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.