Struggling to rent first SFH

21 Replies

Hello BP peeps!

My husband and I closed on our first SFH in a B+ neighborhood at the end of June. After a couple of weekends of hard work to get it where we wanted, we listed the property on Zillow, Trulia, Hotpads, Craigslist, Apartments.com, realtor.com and a few others. It's in great shape with hardwood floors and a nice layout. We have gotten probably a dozen or so requests to tour the property -- several showed up, others never did. Our home has been listed for a month now and I'm getting a little worried. We can afford to eat the mortgage payment, but would rather not of course considering we started down the REI path to build wealth and increase cash flow, not dent our wallets. The monthly rent is comparable to other similar homes in the area. We have stood by the principles Brandon discusses in his book requiring applicants to have credit scores 600+ and gross monthly (or combined monthly) income of roughly three times the rent. We don't want to waste our time on showings to applicants who won't qualify so when they reach out to us via Zillow, Trulia, etc we follow up with an email telling them we are happy to give them a tour of the home, but also tell them to be aware of our requirements. Does anyone have any advice on this? Is this too harsh? Should we be more lenient or stand our ground? Am I freaking out prematurely considering we've only been trying to rent it for a month or should I be worried? Also, does anyone suggest listing our property in different ways -- i.e. leasing agency, old fashion bulletin boards, etc?

THANK YOU so much in advance for your time to answer my questions. We are just starting out and very excited about our first purchase. Now, we just want it rented to great tenants!!

-Stephanie

Originally posted by @Stephanie Grady :

Hello BP peeps!

My husband and I closed on our first SFH in a B+ neighborhood at the end of June. After a couple of weekends of hard work to get it where we wanted, we listed the property on Zillow, Trulia, Hotpads, Craigslist, Apartments.com, realtor.com and a few others. It's in great shape with hardwood floors and a nice layout. We have gotten probably a dozen or so requests to tour the property -- several showed up, others never did. Our home has been listed for a month now and I'm getting a little worried. We can afford to eat the mortgage payment, but would rather not of course considering we started down the REI path to build wealth and increase cash flow, not dent our wallets. The monthly rent is comparable to other similar homes in the area. We have stood by the principles Brandon discusses in his book requiring applicants to have credit scores 600+ and gross monthly (or combined monthly) income of roughly three times the rent. We don't want to waste our time on showings to applicants who won't qualify so when they reach out to us via Zillow, Trulia, etc we follow up with an email telling them we are happy to give them a tour of the home, but also tell them to be aware of our requirements. Does anyone have any advice on this? Is this too harsh? Should we be more lenient or stand our ground? Am I freaking out prematurely considering we've only been trying to rent it for a month or should I be worried? Also, does anyone suggest listing our property in different ways -- i.e. leasing agency, old fashion bulletin boards, etc?

THANK YOU so much in advance for your time to answer my questions. We are just starting out and very excited about our first purchase. Now, we just want it rented to great tenants!!

-Stephanie

 Congratulations on your acquisition.  There are a number factors that can be a problem.  Are you simply over priced in the area for what you are offering?  Are you in a slow rental market (some markets require 90 days)?  What was the feedback from those who did see your property?  That will provide some clues.  

Hve you checked Rentometer/Zillow/Craigslist/Consulted a PM to see what rent should be and then compare to what you are asking?

@Stephanie Grady If it is clean, it is usually price. Are you n a busy street or any other qualities that make your property worse than the comps you used? This should be a good time to find tenants being summer.

When all is said and done, a property will only rent for what the market is.  I have overimproved properties and had to take rents that were to cheap at the beginning and worked  them up in small increments.  I tenant will not move for a 10 to 25 increase in rent.  

You do not want it under priced, but it should have rented if it is comparable to others like it.  I would stick to my guns on 3 times income.  I do not look at credit score, because many of my best tenants have poor credit ratings, due to poor money management but they understand they will be on the street if they do not pay their rent.  

I do not know your price point on your property, I have lowered rents as much as $50 per month from the previous tenant, due to current conditions.  Such as road construction, city pipelines etc.  I just start inching it back up with each new lease, where I need it to be.  

The summer is the easiet time to rent, so make sure you get someone pretty soon.  November through February can get to be a headache.  

Good luck.  

How many other properties are available to rent in the area?  What makes yours stand out?   Can you offer an incentive to the right tenant?   Right now is back-to-school.  If the school in your area is a good one, people with kids want a good school.  But, from the perspective of a family putting kids in school, August was ALWAYS my most expensive month.  School clothes, shoes, backpacks, $100 worth of school supplies per kid!! , school fees, and the list goes on.  So while most people want to move before school starts, coming up with first, last, deposit, credit check fees for every adult on top of all the rest?  Not realistic for many.

This is all a part of being a landlord. You’ve put all this money into something up front, gone through all the aggravations of closing and renovating to start collecting rent to pay the expenses. Problem is all sounds great until you have to list and rent it. Then you’ll have property problems to deal with along the way. 

The better you screen for good tenants, the less headaches you’ll have. It’s realky that simple. If you want lower your standards that’s your choice but be prepared for issues either with damage or non payment of rent and going through the process of eviction all while you’re collecting nothing and having to pay the expenses along with legal fees. Even if you win in that case it doesn’t mean you’ll get the money owed so having good tenants is always the first point of order to start the very long process of getting all that money you put in up front back. That will take many years and many more before you start seeing any kind of actual profit. 

Since we have such little info. On the ad’s and comps in the area, etc.  it’s impossible  to make a rational assessment of what’s wrong. 

One issue i see right away is the location. Milwaukee is not a hothead of employment. Not exactly a good location (Class B or A) to buy in. Therefore that’s a slow and essentially undesirable market to even think about buying in unless it’s a low income area. Those would probably rent quicker since you’re casting a far wider net of demographics of people that can afford the rent. After all if they do have good means they could simply buy a home instead of rent it which is probably what people r looking at. 

You also bought a single family home instead of a multi family to spread the risk. 

Property is cheap in Milwaukee and the area for a reason. Fact is not many people want to actually live their unless they have to. If you provide a link perhaps there a good explanation and solution can be found. As others have said it’s probably your price. 

One interesting thing I have noticed when I have a property listed too high is that it still gets a lot of interest from flakey people.  The kind of people that literally contact everyone out of desperation.  Bringing up the requirements early is important, then confirming on the day of the showing. 

It gives a false sense of demand, but it gets easier to identify that vs qualified tenants with experience in your market.  

Stay firm on your requirements.  It'll pay dividends down the road.  You don't want to relax your standards and end up getting burned with a costly eviction down the road.  You may want to consider undercutting market rents by say 10% to be more conservative.  But I can't stress enough the importance of sticking to your rental criteria.  You made them for a reason.  

If it's in a B plus neighborhood and you've only had a couple of nibbles I'd say it is price. You need to do something soon, by the way because I would imagine Milwaukee is like Cleveland (Which is where most of my rentals are) in that you do NOT want to try to get renters from November through March because of the cold winter months.

Either lower that rental price or.........you may not like this.......but advertise on GoSection8 for Section 8 tenants. Don't laugh when I say that because every time I have a hard time renting out one of my properties.....no matter where the neighborhood is, I know I can advertise for Section 8 tenants and I will get dozens of qualified applicants in a hurry. When it's in a B neighborhood you do NOT need to tell the neighbors the tenant is on Section 8 because it is none of their business. Also....you absolutely can screen the tenants....you are not "forced" to take anyone.

To help mitigate the risk of having potential tenants that are "a little rough around the edges I make sure of the following.

No Smokers, Period....not even vapers or cigars

No Drug Users Period

NO Previous Evictions from within the last 10 years

No felonies 

No pets, period.

I have Section 8 tenants in Cuyahoga County (Cleveland), Alameda County (Oakland, CA) and Contra Costa County (Concord, CA).....and it works.

Hi Stephanie congratulations on your first property! Hard to tell what's going on without looking at the facts. A donzen requests to tour the property in one month is well below average. We usually get about 5-10 emails per day over the first week on a nice SFR, then it starts to slow down to maybe 2-5 a day. We offer showings on Wednesday night and on Sunday early afternoon and usually book people in 10 minute intervalls. About half of them wont show - what I have noticed is that the rate is a lot better if I take the time to call applicants and make the appointment on the phone vs email. Aparently the level of committment is greater on the phone. We usually end up with about a dozend people on the first weekend and maybe 2-3 paper applications. We require a 600 score or better of the main bread winner, whoever has the greater income. Household net income 3 x rent and I am looking for people that seem easy to work with and communicate well. If I get lucky I can rent a property in the first week, two weeks is average and more than 3 has never happened in the last 10 years I have been doing this. We run the main applicants background check on mysmartmove.com and teh second person only if the first one comes back with questionmarks. About half the people we rent to would qualify to buy a home. Most of our tenants carry significant dept, often student loans, typically credit cards and personal loans. Double the annual income is not uncommon. I have learned over the years to trust the recommendation of the background check. I do not call former landlords (waste of time) and managers - I do ask to see the latest paystub, or if self emplyed we need to look at last years taxes. We are pet freindly and charge a monthly pet fee - IME pets are less destructive than some kids.

Sounds like you have done a great job posting it. I usually post only on Zillow.com, which populates Trulia and Hotpads - you've gone above and beyond. The next questions is pictures; with your background I assume you have great photos. Which leaves me with price - if you dont get enough requests to tour the home one of two things are wrong: condition (as indicated by pictures) or price. There is a large market for sub $1500 SFRs, once you break that limit the pool of applicants gets smaller due to demographics and income, but keep in mind that a lot of the downtown brand new class A apartment buildings are charging anywhere from $1700 to $2600 a month, even more in the Third Ward. Feel free to email the a link to your post if you want some feedback.

I agree that you must stick with 3 times income,  it's just too hard to afford life otherwise.  (In average priced areas or lower.  If your rent is $3000 a month, yeah,  someone making two times rent could probably survive.).  But I do not give a crap about credit scores.  I look at them and WHY they are low.  If they had medical bankruptcy or lost their job for a while,  and they can prove current income,  they are in.  If they don't pay their Target card,  that's a problem.  I began this gig in 2010, literally no one for two years had a credit score above 650.  But these were kids who lost their jobs,  moved back home,  and took whatever job they could get to get back on their feet.  Most were great tenants.  So for you,  I think it goes back to price or photos.  Crappy photos really do hurt.  I would also consider section 8,  we have had good luck with that.  Those tenants pay their  share of the rent,  because if they don't, they lose the voucher...no one willingly gives up $1000 or more tax free every month.

Search Yelp for PM companies, and hire the best one ASAP!

You say its a B+ community, its Right before school starts, the economy is the best its been in years...and you can't find a tenant? You live in a state with real weather...once school starts, and the weather starts getting cold, you're gonna be outta luck.

@Stephanie Grady congratulations on your first SFH but in order for us to help you need to respond to some of the questions. Not having more info I would gamble that your price needs adjusting . It is better to make less with the right tenant than more with the wrong one. When I rented my place I was $50 less and a little bit nicer than the others: all my tenants stayed over 3 yrs that's with verbal month to month lease and always one month vacancy or less.

congratulations @Stephanie Grady

1. Sometimes I get a higher quality of tenants for A/B neighborhoods from the MLS. If you don't want to pay a month's compensation of rent, use a flat fee MLS broker. And take GOOD pictures.

2. I had a lot of success recently with FB marketplace and social media for my last 4 vacancies. Better leads than zillow. 

Congratulations on your first property. Here in NY, the tenant pays for the realtor on a rental. I list with a great local realtor and he handles everything. I show up for his open house and many of the showings just to keep my fingers on the pulse. I let him know if someone feels off so he doesn't bother running them (like someone who had an armed robbery tattooed on her leg. I didn't ask lol). My unit is above average but for average rent. People swarm to the open house but only a few apply when made aware of the financial qualifications. You probably need to lower your rent a bit. THankfully, I've had great tenants since I learned my lesson with my first one. I hadn't known about BP so broke every rule I didn't know about. Stick with the rules. THey are there for a reason.