Help.. Struggling to rent first investment property
Real estate investor · Alabaster, AL · Member since 2014 · 94 posts · 15 votes
Help.. Struggling to rent first investment property
Most Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes@Katherine T. very common issue I see with landlords especially new ones they don't realize how vacancy can affect the investment.. they try to rent for top dollar does not rent.
its better to drastically lower rent to get it full than to have 4 or 5 months of vacancy.. you just lost 5X 900 4500 dollars... if you would have started at 900 you might have rented it right away and be 4500 dollars to the good.
what we like to do is offer FREE First months rent... just get nice deposit and have rent come in 2nd months.. again ONE free month to not have a vacancy is 12/ 900 = 75 a month discount first year 75 X 12 = 900 compare that to the 4500 you have already lost and will never recapture...
you will learn these things over time its just costly.. to go through the learning curve.. also the risk of theft and vandalism is real.. when you have vacant units.
66 Replies
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes10y
Hey @Katherine T., welcome to BP. I am not an expert but in my area from October until almost May is my hardest time to rent with Nov. to Feb. being the worst.People with kids do not like to move where their kids must change schools, and it gets so cold in my area no one wants to move in below zero degree weather. The time it takes to get good renters is at least twice as long on the average.
There might be more reasons why your property is not renting. Does your add match the type of people you want to rent to? Do you have lots of pictures in your Craigslist add? Have you tried posting it on postlets? Is your rental in good shape with good curb appeal? How does its condition and amount of rent compare to others in the same neighborhood? How close is it to good employment areas? Is it on a very busy street? There are many factors that may influencing this Maybe you can get a local investor to help you figure out your best way to recruit renters. Anyway good luck and hope this helps a little.
- Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes10y
Try postlets. Craigslist is losing the appeal.
- Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes10y
Are you doing the showings or are agents doing them? If it is an agent, the people might be more willing to say if there is a problem.
Have you had any applicants?
- Rental Property Investor · Baldwin, NY · Member since 2009 · 78 posts · 18 votes10y
Hi Katherine..
I buy in Birmingham and surrounding areas currently.
You may be in an area that is just flooded with these rental units. Pockets of these areas surround Birmingham. To rent in these areas, your deal has to be different to catch the eye of a future tenant. Use your imagination. What would you be looking for in a rental? What questions are you asking when doing your underwriting to approve? Are you scaring them away? Have you tried a Realtor or Management company to rent the property?
If you decide you want to sell it, please let me know, I may be interested.
Steve D
- Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes10y
Have you toured other properties for rent in the area? Sometimes small cheap upgrades can help - like a fan in the living room or upgraded shower head & kitchen faucet. Is your security deposit requirement in line with other rentals? If your area has an abundance of similar types of properties for rent you may need to lower your rental amount again - if you lowered it to $850 and got it rented in a few weeks vs holding it for another 2 months at $925 then you come out ahead it would seem. $75 x 12 = $900 lost over the year vs $1850 trying to get market rate for example... Goodluck!
- Rental Property Investor · San Antonio, TX · Member since 2011 · 513 posts · 290 votes10y
Postlets has worked well for us but haven't had to re-lease in winter yet. As others have said maybe just dropping the price more. I like to book several showings back to back (if you are even getting tire kickers) it really does give a sense of urgency. Maybe offer a six month lease as a sweetener then you renew or release in summer. I certainly wouldn't want to get into this as a recurring problem having to rent it in winter due to having one year leases expiring in winter. Hope you get it rented soon! Good luck
- Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes10y
Originally posted by @Katherine T.:
Hello BP,
I bought my first property in Pelham, Alabama September 2015. I am still holdiing it and now I am getting quiet discouraged and almost doubtful of investing via rentals. The property is marketed in Craiglist, multiple MLS, signs on the property/ neighborhood etc. At first, I gave the lack of tenant to the slow winter season. Things are picking up now, more traffic but no serious takers. I have since dropped property from $1050 to $925. This is the fair market value to like homes in the location. The property is in good condition. Its a 3b,1.5 b in a section B neighborhood. I have considered section 8 and I just called our local county to enquire of requirementts. I have put plans was to move to property 2 on hold until I fill this one. Is winter a generally slow period and if so should one avoid buying investment rentals at this time? Any suggestions/ tips/comments will be greatly appreciated.
That is a hard one Katherine. Great question though! Sometimes units fly when vacant, and other times they stay empty for awhile. I would like to think the winter may have something to do with it. Many people do not move in the colder months. They also don't like the idea of moving when there is snow to deal with. (And there is a lot here in Cleveland!)
It sounds like you are doing all of the right things. Listing it on popular sites, having signs posted. Have you thought about asking the applicants (or lookers) why they are not interested? You have already dropped the price so that might not be the reason. Do they see something wrong in the home that you are missing? Is the location not the best for them? Sometimes the applicants information can be the best for you when trying to market it. You'll know how to answer their questions without them having to ask!
Continue to list them online and keep the showings going. Maybe even try an open house. I'm sure eventually you will have someone. Especially as it warms up in the coming months.
Please let me know if you have any questions.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Katherine T. very common issue I see with landlords especially new ones they don't realize how vacancy can affect the investment.. they try to rent for top dollar does not rent.
its better to drastically lower rent to get it full than to have 4 or 5 months of vacancy.. you just lost 5X 900 4500 dollars... if you would have started at 900 you might have rented it right away and be 4500 dollars to the good.
what we like to do is offer FREE First months rent... just get nice deposit and have rent come in 2nd months.. again ONE free month to not have a vacancy is 12/ 900 = 75 a month discount first year 75 X 12 = 900 compare that to the 4500 you have already lost and will never recapture...
you will learn these things over time its just costly.. to go through the learning curve.. also the risk of theft and vandalism is real.. when you have vacant units.
- 10yGavin WelchPro MemberReal Estate Broker · Lakeland, FL · Member since 2011 · 305 posts · 181 votes
@Katherine T. I use postlets as an investor and agent.. Its really helpful. How are your pictures? Get good pictures.. If you are in an area that is flooded with rentals you need to make yours "pop" good pictures will really help..
- Rental Property Investor · Michigan City, IN · Member since 2015 · 530 posts · 741 votes10y
@Katherine T. Get creative! There are many employers that are looking to find housing for their new employees they move into the area. Learn what realtors are contracted to help find housing and make an introduction. Offer local realtors a deal where they get a percentage of rent for finding a tenant and they get a commission each additional year that tenant stays so they have to potential to continue to profit from the work they do.
How many other rentals are in your area being advertised? How do you compare to the competition? How are you setting yourself apart?
Don't get discouraged, get working! Real estate is made out to be easy by too many people. The "if you build it they will come" does not work 90% of the time. Think of this as a business and apply business principles to your investing. Advertising, competitive advantages, and as your concerned about, timing. Your going to have your ups and your downs. Location location location is important especially for single family homes. Be careful and do some competitive analysis before buying another.
- Investor · Foley, AL · Member since 2015 · 47 posts · 6 votes10y
Hello Katherine,
I just got my first rental up and running last summer in southern Alabama. 90% of my leads came from postlets. This site post to several websites including Zillow, Hotpads, and Trulia. I would hire a professional photographer to take pictures of the property. Post an add on craigslist saying you will pay $100 to have photos taken of your rental. Make sure they have a portfolio to prove past work.
Tell everyone you meet that you have a rental property, networking is key. You never know who is looking.
For the future look for good school zones for three bedroom properties. This is a family sized house and school zone is a big concern for familes. I can ask premium rent due to my school zone location.
It will pick up in the summer with more families moving.
Do not settle for a bad tenant though. It's best to let it sit vacant.
Best Regards,
Kody
- Residential Real Estate Agent · Royal Oak, MI · Member since 2014 · 42 posts · 16 votes10y
@Katherine T. I am part of a few FB groups in your area, and see rentals posted often within these groups. They always seem to be inquired about. Feel free to PM me, and I will send you the specific groups.
Good luck.
I think I see your property Zillow. I don't know the Pelham market, but if it's the one I'm looking at, your rent at $1.41 per sq ft is $.80 more per sq ft than the comparable listings in the area. If this isn't yours, then why aren't you on Zillow and Trulia?
- Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes10y
Originally posted by @Mike Hibbs:
@Katherine T. I am part of a few FB groups in your area, and see rentals posted often within these groups. They always seem to be inquired about. Feel free to PM me, and I will send you the specific groups.
Good luck.
Mike makes a great point! Facebook is always a great place to post rentals. Groups, your friends, etc. Many times people will even re-share you posting. Or tell a friend. People go on to Craigslist looking for rentals, but they don't always go looking on Facebook.
If a listing shows up on someone's wall it might spark their interest. Or if they know someone looking, they can share it with them.
Great idea!
- Consultant · Providence, RI · Member since 2015 · 117 posts · 37 votes10y
Originally posted by @Katherine T.:
Hello BP,
I bought my first property in Pelham, Alabama September 2015. I am still holdiing it and now I am getting quiet discouraged and almost doubtful of investing via rentals. The property is marketed in Craiglist, multiple MLS, signs on the property/ neighborhood etc. At first, I gave the lack of tenant to the slow winter season. Things are picking up now, more traffic but no serious takers. I have since dropped property from $1050 to $925. This is the fair market value to like homes in the location. The property is in good condition. Its a 3b,1.5 b in a section B neighborhood. I have considered section 8 and I just called our local county to enquire of requirementts. I have put plans was to move to property 2 on hold until I fill this one. Is winter a generally slow period and if so should one avoid buying investment rentals at this time? Any suggestions/ tips/comments will be greatly appreciated.
Everyone has great suggestions and advice here on BP. The last thing I would add to the bunch is to perhaps think about offering a proposed new tenant, that really likes your property, a LEASE-OPTION. You and the tenant would negotiate option terms, which CAN include property maintenance. A percentage of tenant's monthly rent is put away for your tenant's down payment toward the property. The balance would generate monthly cash flow for at least 3 - 5 years that you could reinvest into more properties if you choose. When tenant exercises option, use their down payment reserves, mortgage company, and your title company, your lawyer, and complete sale. Just food for thought. Good luck!
Have you tried advertising at the local university or community college; or any companies that are in the vicinity to the property? Some businesses are willing to agree to short term leases for out-of-town guest.
From Nancy
Originally posted by @Jeff Gates:
Try postlets. Craigslist is losing the appeal.
@Katherine T. I second the nomination. Use Postlets and added one picture - - started getting replies before the end of the day.
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes10y
If you are not getting consistent calls its most likely one of these 3 things
- Not many people want to live in the area where the house is in
- you are asking to much for rent
- the pictures on your listing aren't clear
Hire a professional to rent out your units if you have limited experience doing it yourself. I see this all the time up here in Connecticut. People think filling a rental is simple and their unit sits vacant for 2-3 months.
- Investor · Riverside, CT · Member since 2013 · 8 posts · 1 vote10y
I have had success with Craigslist, post lets and rentlinx. Try them all. They are free. Get the best pictures you can into your listing.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes10y
@Katherine T. you mentioned signs, but have you blanketed the neighborhood? I get arrow signs that cost $5 at the hardware store. I use the computer and print out the address, my phone number and the number of beds and baths. I tape it on to both sides of the sign. Then I place those signs at every intersection surrounding the area pointing towards my property. I will do 5-7 signs per property, but you could do more. It generates traffic for me. It is especially important to place the signs on busy roads.
Another idea is to go to bulletin boards at local grocery stores and post a flyer.
You can also offer a referral bonus if someone helps you get it rented. Try $100 or $200 dollars referral fee. Print out a flyer that is titled, "Help Us Find You a Great Neighbor and Get $200". Just explain in the flier that you are looking for a qualified renter for your home that will take good care of the property and be a good neighbor. Offer them $200 referral fee for an approved applicant. Pass the flyer out to every house in the neighborhood. Who better to find a renter than people who already live in the neighborhood! This will cost you near nothing. If you have extra time, you could even knock on the door and personally hand it to the neighbors. They will get chatting with you, so be friendly and make it clear you care about the neighborhood and finding a great tenant.
You need to hustle and try everything. Someone may tell you one of my suggestions is silly, but at this point just try everything until you get it rented.
@Katherine T. In addition to Postlets and other more digital ways, why not try old fashioned flyers,? Print out 50 full color flyers and post them in areas with high visibility (and where they won't get taken down) -- perhaps on a bulletin board at a shopping center, community centers, adult schools, laundrymat or religious centers. Yes, it could be a complete waste of time, but you're desperate right? By advertising in different channels you will get visibility from more customer segments. You will also advertise to people who aren't looking for an apartment, but who has a niece or nephew who is.
Try offering referral fees to neighbors, or anyone else who might be effective in finding a tenant. Ask to place flyers at different shops. Schedule an open house. Get in touch with large employers in the area to see if they have someone who helps new hires find housing.
- 10yPenny ClarkPro MemberSacramento, CA · Member since 2014 · 513 posts · 319 votes
@Katherine T. These are all good suggestions here. One marketing method that I do is staging our rentals with a few pieces of furniture. We also offer them additional services included in the rent such as lawn and pest control service. Let us know when it rents!
- Turnkey Provider/Agent · Cleveland, OH · Member since 2015 · 167 posts · 37 votes10yOriginally posted by @Katherine T.:
Hello BP,
I bought my first property in Pelham, Alabama September 2015. I am still holdiing it and now I am getting quiet discouraged and almost doubtful of investing via rentals. The property is marketed in Craiglist, multiple MLS, signs on the property/ neighborhood etc. At first, I gave the lack of tenant to the slow winter season. Things are picking up now, more traffic but no serious takers. I have since dropped property from $1050 to $925. This is the fair market value to like homes in the location. The property is in good condition. Its a 3b,1.5 b in a section B neighborhood. I have considered section 8 and I just called our local county to enquire of requirementts. I have put plans was to move to property 2 on hold until I fill this one. Is winter a generally slow period and if so should one avoid buying investment rentals at this time? Any suggestions/ tips/comments will be greatly appreciated.
Hi Katherine,
I don't know your particular market but I can tell you that general rule of thumb in any market when it comes to lack of response/interest is price point. Based on what you are saying let's assume you are in the right price range. Winter can certainly be a slower time (and I don't know exactly how your climate is) but I am finding there is still a good amount of traffic. Sometimes there are these "one offs" that just completely throw us off. Have you held any open houses? This isn't nearly as popular as it once was but can still generate some traffic. Are you advertising on Zillow and/or Trulia? Craig's List is definitely great but the additional exposure will help too. Also with Craig's List, make sure you are regularly re-posting so it goes to the top of the search - otherwise it gets pushed too far down and people searching will end up not seeing.
I have used www.rentometer.com for a general guideline of rental rates, not sure if you have utilized any similar tools but something to consider.
Feel free to reach out with any additional questions. Don't let it discourage your investment career - everything is trial and error - if you've done something you shouldn't have on this one, you'll do it differently next time! If it was easy EVERYONE would be doing it :-)
Good luck!
~ Val
Lot of searching for a mysterious reason it doesn't rent. It's typically not really a mystery. The value of your product to the customer is not there. IE the price is too high. I'm guessing you could rent it for $1 a month in a very short time. Somewhere between the $1 and your asking now is the right rent.
Doesn't matter if there is a defect to the unit of some sort, that defect is factored into the perceived value so it doesn't matter finding out what it is unless doing so would allow you to fix it. Doesn't matter if it's a bad neighborhood, that is factored into the value.
Priced way too high over perceived value - typical no calls
Priced too high over perceived value- calls but all sorts of baggage and weird rentors
Priced right at perceived - enough calls to eventually rent it in a relatively short time 1-3 months
Priced below value - lots of calls, lots of candidates to choose from, rented very quickly 1 month
Price way too low below perceived value - no reason to do that.Lower the price every week by a fixed amount, when you start seeing the call volume increase you're getting close, when you start seeing the call volume increase AND showings increase you are almost there, when volume increases and showing increase you're there.
It's the price it always is. As the saying goes there is an *** for every seat!
I feel your pain. I have a 3 BR/2BA SFH that I put on the rental market in early November within a week after closing on it, and we are still trying to get a renter in there. We reduced the price once, and are offering a referral bonus on the property. We have had a fair number of viewings, along with two "almost" tenants (one backed out and got their deposit back within 24 hours, and the other was a long distance transplant who just decided to never show up to sign the paperwork and take possession of the property). But, my PM is getting a fair amount of email traffic now that we are into the New Year.
It's frustrating, considering my other two rental townhouses rented within 3 days during the summer. But as others have suggested...use some different approaches to get interest.
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