First time investor - Am I over thinking?

14 Replies

Hey Guys!

I closed my first investment property near Atlanta a month ago and I haven't got a tenant yet.  Here is what I have done so far.  Should I be worried (yet)?

Property type:  Type B. 

Demographics: Decent demographics in the salary range of 50-70k.  

Rent is 1100-1500. My property is listed at 1300. Aligned with all the other open listing in MLS

Posted in Craigslist, MLS (Zillow etc)

Response:  Lots of calls but 3-4 applications so far all with major red flags (evictions, etc)

My Thoughts:

1) Reduce 50-100$ to see if we get a decent application - Part of me also tells that, if it wasn't priced right, I wouldn't have got so many inquiries and other part says - Reducing 50 is not a bad strategy as it would keep the property occupied.  I'll make the difference in a year

2) This is still winter - Keep it as is.  One month in the long run is not a big deal and it is better to wait for someone good / decent than to rent it out to someone with eviction history of 500 credit score.

Am I doing anything wrong.  Appreciate your help !

Hire a property manager and have them do this for you.

Oh. Forgot to mention.  Yes I have a property manager doing all these for me.  I'm an out of state investor.  He says he is getting lots of calls but majority are garbage with 400+ credit score and that's why he is not forwarding those to me.   He says he is confident that we will get someone with 600s and asks me to wait as renting it to wrong person would do more damage than leaving the property empty.   Seems like a good advice but worried at the same time - You know the first time investor dilemma 

What @Joe Villeneuve said. I understand your thought process. If it's a class B area. So if you're getting a lot of inquiries then you shouldn't settle for non-credit worthy tenant that might be a headache later.  It's only been a month. I'm from the Atlanta & South GA area. Where's your property exactly?

No I wouldn’t worry. It’s been colder this winter and that has slowed down a lot of markets. Now if it’s been 5 months and it’s not rented then you’re probably overpriced. It may rent sooner but I’m guessing you’re looking at early March or so.

This time a year a lot of people move after they get their tax refund which won’t happen until March for a lot of people

About one month shouldn't be concerning. Where is your property located. I typically find tenants within three to five weeks. Atlanta is good market and B class areas should be quick to fill. I would say wait and watch.

@Sachin H. I would say definitely wait. A tenant that takes 1-2 months to find but that is reliable and passes all checks is infinitely times better than a poor tenant who is showing major red flags.

Save yourself the headache and make this as easy as possible. The right tenant will come along especially being near a major city. I am in a "city" of ~60,000 people and I was able to find someone, I'm sure you will too!

Originally posted by @Al Pat :

About one month shouldn't be concerning. Where is your property located. I typically find tenants within three to five weeks. Atlanta is good market and B class areas should be quick to fill. I would say wait and watch.

Villa Rica, 30 Miles west of Atlanta. 

@Scahin H, ok I have few properties not too far from you and closing two more next week 10 miles from Villa Rica. Be patience, but at the same time  $1300 is little too high for that market. You rentometer to gauge the market. Again, it' all about location.

Originally posted by @Al Pat :

@Scahin H, ok I have few properties not too far from you and closing two more next week 10 miles from Villa Rica. Be patience, but at the same time  $1300 is little too high for that market. You rentometer to gauge the market. Again, it' all about location.

Thank you.  That makes me feel better!  Yeah the rentometer, zestimate all said that I have priced less for the # of bedrooms and bath. Even the housecanary said it was priced right.  Keeping my fingers crossed!  Thanks again!

Your Moneyball in this case is the Property Manager. If he's local, experienced, manages many houses in the area and has good reputation then he should also know how to price and market the house and you'll be fine.

It's ALL up to the PM.

Another thing - I never count on rentometer/Zestimate algorithms to determine rent. Especially not in a small town like in your case. I have seen them make bold errors in much bigger towns.

Originally posted by @Amir Boneh :

Your Moneyball in this case is the Property Manager. If he's local, experienced, manages many houses in the area and has good reputation then he should also know how to price and market the house and you'll be fine.

It's ALL up to the PM.

Another thing - I never count on rentometer/Zestimate algorithms to determine rent. Especially not in a small town like in your case. I have seen them make bold errors in much bigger towns.

The property manager is local and experienced.  But he is mainly into selling (Realtor) and does property management for very few (hand full) properties.  The property manager quoted $50 less but I wanted to test the water by adding $50 to which he said it shouldn't be a problem.  

I would listen to the PM who has a pulse on the market. That said, you dont want to be penny wise and pound foolish. That $50 you are trying to get is definitely an opportunity cost. I like my PM because they screen their tenants very thoroughly and place rents slightly under market value strategically for a larger tenant pool and less vacancy

On the marketing- you specify what kind of people(FICO # min) you want. This saves property managers time and start dropping $50 every other week. My feeling is your B neighborhood is probably less desirable and your asking price is not attractive enough. I rarely show properties unless I have a good feel there is a fit. When they show up it is often time to sign a contract.

Originally posted by @Bo Kim :

I would listen to the PM who has a pulse on the market. That said, you dont want to be penny wise and pound foolish. That $50 you are trying to get is definitely an opportunity cost. I like my PM because they screen their tenants very thoroughly and place rents slightly under market value strategically for a larger tenant pool and less vacancy

Here are the comps that are available in the market - 

11 Properties available for Rent: All with in a distance of 3 miles from my place

 *** My Property***  $1250 - 4 bed 3 bath 2 car garage. Huge private backyard (Fully fenced)

House 1:  $1095 3 bed 2 bath.  No backyard, much smaller - In market for 14 days

House 2: $1325 3 bed 2 bath.  Little bigger and no fenced backyard - In market for 19 days

House 3: $1500 5 bed 3 bath.  Bigger and no fenced backyard - In market for 22 days

House 4: $1200 3 bed 2 bath. Smaller and no fenced backyard - In market for 47 days. I don't see this in MLS site. Just shows up in Zillow so I'm not sure

House 5: $1095 3 bed 2 bath. In market for 65 days (But doesn't show up in any MLS site).

Few more in the range of 1350-1500 - Newer house.  4 bed 3 bath.

So I went with $1250 because my property has +1 bedroom and a huge fenced backyard.  

Zillow analytics shows that my property is being viewed atleast 2x times more on their site but I don't think I can interpret that in any ways as I am not getting any applications - Although there are tons of inquires with low credit. 

So do you guys think that I have over priced the property?

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