Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
Hey BP!
Need some advice!! I listed my SFH with a property management company back in May. The PM initially listed it for $1450 which was a bit high for the area, but I was not moving out until July, so he said there was some time to see if it could rent for a bit higher. The weekend I moved out, I had them lower it to $1350, and still nada. Today I spoke with them to have them lower it again, to $1300. They said in total there have been 55 inquires and 10 showings.
The house was built in 2014, is in a very nice B+ neighborhood, it is a 3/2 with a fenced in yard.
I can afford the mortgage payment, however, with being vancant for so long it is killing my cash flow for the year!
I hired the PM to take care of it since I moved out of state. Should I look at getting out of my contract with this PM and get a different one? Should I start advertising it myself?
https://www.zillow.com/homedetails/1221-Teakwood-Dr-GREENVILLE-NC-27834/102229016_zpid/
Any advice is welcome!
-Heidi
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
8y
You made extremely novice mistakes. You rented it too high to begin with. As a result it sat for months. Then you dropped the price out of necessity. Tenants and home buyers alike (if you were selling the place) are going to wonder what's wrong with the place when it has sat for so long and had a price drop to boot. Shortly, it sounds like your house is in great condition and in a great neighborhood, but your rent is too high and it has sat for too long on the market. If you don't rent it out by the end of September, good luck to you filling it in the fall and winter...not impossible but a feat.
I haven't been a renter for a while, but I use the same concept when I look at houses to purchase as rentals. If I see the listing sit forever, price drop after price drop, I know there is something off about the place. My favorite is when it goes pending and back on market 3-5 times. I stay away from those because I KNOW something is wrong....
Rental Property Investor · Red Bank, NJ · Member since 2018 · 17 posts · 8 votes
8y
Yup Pics make it look like a beginner is in charge. Take new ones with landscape (horizontal) mode. Some tenants may not like carpet and prefer the other places with hardwood. Much easier to clean. Lower your price and get someone in. Much better to get 100-200 less a month than be vacant and get nothing while you also have utilities, yard upkeep, etc to pay in addition to everything else.
Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes
8y
@Heidi Kenefick - I was recently in your same situation. The issue was the PM. Hire a different one ASAP.
To give you some insight into my issue, I was getting tons of showings and "Likes" or "Hearts" on Zillow, etc., but little to no apps. I finally read my PM's application forms and found he was charging nearly $80/ adult to process apps/background and was requiring apps to be snail-mailed to a physical address, which is unheard of in this modern era. Long story short, we ditched him and hired a new PM. We had our house rented in under 2 weeks with the new guy.
Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes
8y
Oh and want to add that I'm not familiar with your area, but do analyze rent prices in your neighborhood and price slightly under to get your home rented ASAP. Good luck to you!
Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
8y
@Ana Marie B.
Hey. Anna for the advice. How hard was it to ditch your PM? My only concern is the contract I signed with them... did you have any issues getting out of it?
Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes
8y
@Heidi Kenefick - I fortunately did not sign a contract with this particular PM I wrote about. I did however, pay a small fee as a kind gesture for the time he spent preparing my listings and handling showings.
As an aside, I do have a contract w/ a different PM for my out-of-state rentals and can say that they typically hold you to their agreement for the first year, if I'm not mistaken. Perhaps you can try to simply talk and reason with your PM. Be as "human" as possible and say that you're in a really difficult place (as he well knows) and need to go a different direction. I doubt he'll come after you, but worst case scenario is he'll ask for partial payment for time spent working on your case.
Try to research reputable PMs in your rental area and make the switch. Have a list of questions ready before you call each one. I spent one afternoon doing this and found an excellent PM who I told you was able to get our home rented in less than 2 weeks. Price is not "always" the issue.
Real Estate Broker · Dayton, OH · Member since 2010 · 245 posts · 186 votes
8y
Spend $100 on a pro photographer. People are looking online, and your pics are their first impression. What kind of first impression do you want to make?
Real Estate Agent · Boise, ID · Member since 2017 · 557 posts · 376 votes
8y
Heidi- You should consider managing the property yourself or at least doing the showings/taking the calls. With this much activity there must be something everyone is noticing that is causing the vacancy. Are the rental requirements possibly to stringent in comparison to other PM firms? You may even consider calling the folks that viewed the property (from the 10 showings) and asking why they did not move forward with your property. Last you can always lower your rent which will allow for a larger pool of folks.
Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
8y
In my opinion #1 get out of the contract with your PM. #2 dress from the front of the house, I don't see any photos of the front but make the colors with plants/flowers look different than it does right now so it has a fresh face lift (don't spend alot) #3 bring your rent just below market with a clear clause for increase in year 2. Get someone in there! and good luck, keep us posted.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
8y
@Heidi Kenefick
some thoughts ;
Zillow says your rent is too high .
Your rear patio furniture is hideous
There’s no curb appeal from the front
There’s no view other than a flat large open field
That looks swampy
Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
8y
@Heidi Kenefick. Hi Heidi, my first thought as a renter is am I getting a furnished place? What If I dont like furniture? If its not furnished why are the pictures showing a furnished place? Secondly, looking at Zillow, there are only 3 houses within a 2 mile radius for rent... 2 of them are in the 950 range and the other just got listed yesterday for 1,300. How many people in that area are renters and how many are owner occupied? If its not a huge rental market, your rent needs to be much lower to attract renters. Two pennies.
Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes
8y
I looked at the listing and landed on the pictures as probably not serving the house or your best interests. I can't see the house beyond the furniture. Your eye goes to and stays on the furniture rather than seeing the house.
Real Estate Broker · Greer, SC · Member since 2013 · 548 posts · 271 votes
8y
@Heidi Kenefick
If you can the PM. I bet in 3 days you could seller finance this house for 5k down and 1100 per month with your current pics on Craigslist. More "buyer's" out there that arent bankable than are. Also, more tenants that have cash to put towards a house than you'd expect. Of course your underlying debt needs to be long term and fixed for this stratagy.
Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
8y
@Mel Hayes
Greenville in general has a lot of rentals, but this neighborhood is mostly owner occupied. I know of two rentals on my black, there may be a couple more that I don’t know of though.
I looked at the listing and landed on the pictures as probably not serving the house or your best interests. I can't see the house beyond the furniture. Your eye goes to and stays on the furniture rather than seeing the house.
This was also my big issue. You may want to try Air bnb.
I think you should talk to the PM and say something along the lines of "Clearly this isn't working and doesn't make sense. If you were advising an investor what would you suggest?" The answer is to separate. "Hopefully we can work together in the future, no hard feelings."
You're a new client. If they sue you for the 12-months they are a bit desperate in my opinion.
As others have said --- New pictures that are brighter, show the house staged or vacant and offer a better description would be good. Also, Craigslist is still a good platform.
I don't have access to MLS info, so one thing I do when I'm looking at a listing (in order to get a feel for potential rent amount, and how long it might be on the market) is to simply enter the address (minus the house #) and add "hotpads." When I google "Teakwood Dr, Greenville, NC 27834 hotpads," the 2nd item that pops up is 1204 Teakwood (no longer on the market), which is bigger and photographs nicer than your place (but even these guys took a bunch of stupid portrait shots). You priced yours above that to start, which most certainly set you back.
Your hotpads listing is particularly unflattering IMO. Those first two pics look like a possible short sale! HINT (assuming you have more than just a flip phone): wait til dusk, turn all the lights on in the house, and take a landscape picture of your exterior. Fill the frame with the house--not the house and the driveway and the yard LOL. Your hotpads listing says it's been viewed 29 times this week, and the PM has only been contacted once. You're simply not getting any action, for a number of reasons. When I start getting a 25% engagement rate on hotpads, I know I'll typically have my place rented in a week or less; rough rule of thumb.
No sense renting at $1300; why not do $1295? Those century marks are psychological barriers; retailers figured that out eons ago...
Investor · Rocktown, IL · Member since 2012 · 238 posts · 69 votes
8y
So the rent appears to be +/- the 1% rule at 1300/month. But thread consensus says sub 1000/month -- so, 0.7% +/-.
I'm not sure what all is being covered by the property owner in terms of utilities, garbage, etc. -- plus a property manager -- plus taxes -- plus all the other stuff and maintenance and cap ex., etc. -- given the apparent value, cash flow seems like it's going to be pretty negative. Am I wrong on this?
So, is cash flow possible in a neighborhood like this?
Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
8y
@Kurt F.
When I ran the numbers is using 5% vacancy and 5% for repairs, plus pest control, PM, HOA, and Mortgage, tax, insurance, it still cash flowed at $1300... but not well. Now I’m above the 5% for vacancy so it may not cash flow at all.
The beauty of it is in the cash on cash return. I got it for zero down (actually made money at closing), and for the time I lived there I house hacked it and earned well more than my mortgage. If I sell in 3 years, I still get the gains tax free, and it has appreciated 4% per year. So when I sell, the cash on cash is infinite, the house will be worth more, and someone else paid for it the entire time. That’s why I kept it since it made sense economically.
Investor · San Jose, CA · Member since 2011 · 355 posts · 90 votes
8y
Besides piling on to tell you it's overpriced, I'll key on one specific mistake you made twice: A small rent decrease. Don't do that after having ten showings with no bites.
This has nothing at all to do with pictures. You'd had a lot of people go there, look at it, and leave. Lower the rent a BUNCH next time. Like maybe down to $1000. You can always adjust it back up a bit next year. And you may be surprised to find that the lower rent isn't actually below market for the place.