Use a RE agent to rent out a higher-priced rental house?

22 Replies

I bought a house in the Chicago northwest suburbs and need to rent it out. Market rent is $2,500-$3,000 per month. This is a house that I plan to move into 3-5 years from now, but need to rent it out in the meantime. 

I have never rented out a house before, so am looking for some advice on whether I should post the listing myself on craigslist, zillow, etc... or if it would be wiser to have a RE agent post it for me, along with putting it on the MLS.

Are renters looking for higher-end rentals more likely to be working with an agent and would need to have my rental on the MLS? Or would I be wasting my money having an agent list it instead of taking care of it myself? Thanks!

As a realtor who has no interest in listing your property here is my advise.
And yes you are correct in the higher price points people use realtors to help them find property. But that's another discussion on why. Some options

1) find a realtor who will do an open listing. Meaning you only pay them if they find a tenant. So you can advertise it on your own. If the realtor can get you $100-$200 more a month it works out after you pay the commission.

2) find a list for a fee company that you pay $250-$300 for to list on the MLS for you. Save at least 1/2 month rent and it's still an open listing and you get more exposure.

Good advice from @Nick Patterson  

Realtors typically won't run around showing rentals to tenants who are not qualified - so most of the applications you receive through a realtor will be pre-vetted for financial ability to pay rent. That's a big plus.

Also, how much is your time worth? How many times will you need to show the property, wait around for folks who don't show up, etc.

We happily pay other brokers commissions and bonuses because I find they typically bring higher quality tenants who pay top rent, and units are vacant for a shorter time. 

I think it depends on the market.  Where I am it only really makes sense from a commission stand point to take on rentals that are $1000 and up.

@Lee Badragan - I am a broker myself and can post open listings for my properties on the MLS and only pay the agent half commission, but I still rent out my units myself outside the MLS. My units are considered higher end and I charge more per month than my neighbors, and I usually rent them out in 2-3 days. I use postlets.com which is free to advertise them. I will post it and do a 2-3 hour "open house" showing a few days later. We usually have at least 10 people show and I give them all an application deadline and then choose the best qualified one.

I would try this first and then if you can't rent it after a week or two list it with an agent.  

I agree with Brie 100%. I am a broker but rarely use the MLS for my properties. It may be true the MLS would draw a more professional selection of tenants but do your due diligence and you will be fine. The market is pretty hot especially this time of year. Go for it but DON'T MESS UP on the lease! Perhaps that alone would be worth the cost of a professional marketer. Cross all of your Ts and dot your Is. The leases can be complicated especially here in Chicago.

No mention of a property manager ?  They will lease and they do not have to manage the property. They likely will charge you a flat fee for finding a tenant, running credit checks and actually vetting the potential tenant .  Most agents do not know how to screen tenants, property managers do that daily.  Qualified property managers have heard every sob story imaginable and don't fall for bs that may sway a agent.

Thank you all for the great suggestions! @Brie Schmidt I especially like your idea about doing an open house a few days after posting it.

When it comes to the lease, would I go to a RE attorney for a standard lease template? Is that something that may be available through BiggerPockets? 

@Martin Scherer I called two property mgmt companies I found searching online, and both said that they didn't offer property mgmt services to individual landlords - just to associations and apartment complexes. 

If anyone has any recommended property management companies, I'd love a reference to at least talk to them. Thanks!

contact your local REIA for PM companies. Apparently you picks companies that do larger properties. there has to be several that deal with SFH that will love the commish for your rental. As mentioned they will provide the lease as well as the tenant screening.

You can also go on craigslist and find PM's there since that is were they post their available houses to lease

@Lee Badragan  

Use Craigslist, postlets, and a for rent sign.  Screen the applicants yourself.  You have to deal with them at the end of the day, so you might as well make sure you are comfortable with them and they pass your gut check.   

As a broker/investor/manager myself I think you can do it yourself and save the money but the crappy/shady tenants prey off of "for lease by owner."  Make sure you have a proper screening process in place.  If you want I will send you our application and all of our requested documents we want at application time so you can steal our process and be prepared.  Have a company lined up that can run the background/credit/eviction check for you too.  

Listing it in the MLS does more then just market to other agents because brokers have tools to generate leads from tons of websites like we do. We list all of our properties on the Mls and it generates leads from end renters.

@Lee Badragan  

@Mark Ainley I'd love to get your application and requested documents! [email protected]

Thank you!!!

@Lee Badragan  Here is the CAR 2015 lease if you are in Chicago.  

http://chicagorealtor.com/wp-content/uploads/2014/...

@Brie Schmidt  You mentioned you do a open house.. in the case that the apartment is occupied by a tenant at the time, are you able to just get their permission to step out during the time? How much time in advance of the lease expiration do people usually first list their rentals?

I have normally been going with an agent just for convenience and it seems to indeed bring high quality and serious applicants.

@Ruthvik B.  -  In Chicago the tenant has to give 30 days notice prior to the end of their lease that they are vacating.  Landlords also have the right to enter the premise at any time with 24 hours notice.  I always tell my tenants that I am going to do open house showings as it usually limits the time I have to bother them, and of course try to work around their schedule.  

Last year I had tenants with a 3 month old baby who were moving out of state.  The father was home with the baby when I showed and I literally had over 15 people waiting outside when I got there and had to bring them in one by one to avoid disturbing the baby.  My tenant kept laughing and asking if I had everyone come in a clown car!  But he appreciated that I only bothered him for 2 hours and we were done and they were free to pack and move in peace.  

I also found that listing a rental the first weekend of the month gets wishy-washy people, they still have a month to go and aren't feeling pressure to decide yet.  But if I list the second week they are more serious and ready to sign if they find a good place.  The third week you get procrastinators and I try to avoid that and if ever it is the 4th week you get desperate people....  

I was in a similar situation as you where j bought the house last year and needed to rent it for a year and planning to move in it after the 1 year lease is up. After purchasing the property I had my RE agent put it for rent. He charged first months rent. I'm sure I could've saved some money doing it myself but I definitely don't regret him doing it. I didn't need to do anything. He ran all the backgrounds showed the house to many people and he just told me about the promising ones. After I agreed to accept one we just met at his office with the tenants. Signed the contract and the tenants gave me a check for first months rent and security deposit and I wrote my agent a check and that was that was that. He got the house rented in 2 weeks after my closing and I didn't have to do a thing. He got over 20 phone calls and showed it over 10 times. I'd say it was worth it

Have you tried listing it yourself first? We deal with higher income houses (although not that high). We have had no issues renting the house out ourself or self managing. IF you have any questions feel free to pm me. 

It depends how much work you want to put into it. It's my opinion that rentals in the higher price range take so much less to manage and collect rent, that it's throwing10% out the window every month to hire a property manager, not to mention a hefty placement fee.

I thought about taking the easy way out by hiring somebody for  house I formerly lived in located in a great neighborhood. I'm glad I didn't because I have great people in there now who treat the place as their own, and a steady dual income. It was a little more of a time investment up front, but it's definitely paid off. I have a few other units in not as great neighborhoods which may be more worth paying somebody to screen and take calls for me.

I used the NOLO legal guide for landlords by the way to get my lease and some definitive answers on a few things

Hi all, just wanted to update you. I decided to go with a flat-fee broker and it only cost me $199. Of course they offered only limited support, but they did have standard resources available such as the lease contract and disclosures. Posting in on the MLS through the broker also got it automatically posted on Zillow, Trulia, etc... so that was great. And I personally posted it on Craigslist which generated a couple of calls so Craigslist seems to work as well.

Ultimately I'm very happy with how I proceeded because the great couple we found had an agent working through the MLS, so they probably would not have been brought to see the house if we didn't have it posted on the MLS. We had a 2-year lease signed within 2 weeks of posting it, and for full asking price. Background check run, they have good income, and just awesome people so it looks like we got lucky.

Hi lee. I also have a 2300 rental in the Northwest suburbs of chicago may in ask which 199 fee only broker used?

Thank you.
james

Originally posted by @Lee Badragan :

Hi all, just wanted to update you. I decided to go with a flat-fee broker and it only cost me $199. Of course they offered only limited support, but they did have standard resources available such as the lease contract and disclosures. Posting in on the MLS through the broker also got it automatically posted on Zillow, Trulia, etc... so that was great. And I personally posted it on Craigslist which generated a couple of calls so Craigslist seems to work as well.

Ultimately I'm very happy with how I proceeded because the great couple we found had an agent working through the MLS, so they probably would not have been brought to see the house if we didn't have it posted on the MLS. We had a 2-year lease signed within 2 weeks of posting it, and for full asking price. Background check run, they have good income, and just awesome people so it looks like we got lucky.

Prello Realty - FlatFeeGroup.com

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