Help!!! Why won’t this SFH rent?
Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
Help!!! Why won’t this SFH rent?
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
8yYou 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....
73 Replies
- Investor · Rocktown, IL · Member since 2012 · 238 posts · 69 votes8y
Originally posted by @Heidi Kenefick:
@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.
Hi Heidi -- thanks for the reply. Sorry for getting way off topic. I'm always trying to learn on the whole SFR idea of investment. It always seems pretty tough to get cash flow. I hear what you're saying about the benefit of getting your house for zero down. At the same time, the idea of infinite cash on cash return can offset pretty quickly by negative returns, even with some expectation of appreciation.
I think it might be worth rethinking the numbers, and leaving open the possibility of a different strategy...? I'm hoping someone smarter than me will give some input on this -- as in, say this is hypothetically another BP contributors house -- what would they do at the point you're at... Sounds like step one is to lower the rent, but then what? What's the next step with a house like this from a smart investor's viewpoint?
- Member since 2018 · 1 post · 0 votes8y@Heidi Kenefick — Do a rental rate market survey of the area to see if your asking price is right. And yes, you may have to advertise yourself and start showing it yourself. I am in the field of property management, and I’ve learned that some people in the field are not aggressive with leasing. A lot of times you can find someone who will rent it for the price you are asking for, but I you can’t be lazy. However, if it sits for too long, you should drop the price (even if other comparable rentals in the area charge the same amount). You would rather get someone in there at a lower rate so you can start generating income, than to keep losing money every month. Also, once their lease is up and they go month to month, you can raise their rent.
- Investor · Pawleys Island, SC · Member since 2015 · 324 posts · 385 votes8y
I self manage my units. When I go to post a for rent ad, I start buy looking at it like a renter. I go to rentometer, but my main source is current rent ads. I check out craigslist, zillow, and Facebook. No matter your opinion of Zillow zestimates, other will take that number seriously if you list on Zillow and the same page says you are overpriced. I try to never by the most expensive similar unit currently listed. If it takes an extra month to get an extra $50 a month. It will take 15 months to make that up.
- Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes8y
@Dennis M. Zillow is not ALWAYS right. But the market is. ;-) Prime example: I just rented a property in La Mesa, CA @ $3200 a month. Zillow said $2500-$2800. But I know the market is hotter than a firecracker on July 4 AND I spent $50k renovating EVERYTHING. I had an open house and got 5 GOOD quality choices for tenants. It was rented immediately.
@Heidi Kenefick, you need to ask yourself if you would be in a better place to sell. As you stated, you lived there. Has it been a rental previously? If not, you can take ALL the profit now by selling, without paying tax.
If you are going to continue to rent it, I would ditch the PM. There are a LOT of easy ways to self-manage a remote property. I've done it for 10+ years while being in different countries, on planes, timezones, etc. I could manage it from the moon as long as I have an internet connection and/or phone. ;-)
If you can't rent it in a weekend to a good tenant, your price is too high. ;-)
- 8yTyler GibsonBusiness MemberReal Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
@Heidi Kenefick Double check your contract with the PM. The contract I have with my PM stated that if they weren't able to fill the unit in 60 days I could walk with no penalty. I suspect there is something like this in the contract.
- Boca Raton, FL · Member since 2016 · 29 posts · 7 votes8yWell, just about everyone agrees that the furniture is dominating, so I’ll skip the commentary. I am always suspicious of a listing that doesn’t put the front of the house as the first picture. The advice you were given about taking a picture at dusk with all the lights on was great! About the “no cats” policy- why not? Maybe instead of saying that , the ad could say “dog friendly”. You could advertise $1295 as suggested and maybe get another $25 for Fluffy on the back end or a NR pet deposit . Good luck!
- Investor · SANTA BARBARA, CA · Member since 2017 · 22 posts · 27 votes8y
Looks like you made some nice adjustments, and you got it rented. Good for you! Not sure if you had to fire the old PM, or just give them a little wire-brushing, but those pics look very nice!
- Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes8y
I did not fire them. I made a lot of phone calls and did a lot of micromanaging, but they had it rented within about 3-4 days of me asking them to make adjustments. I told myself if by Friday I don't see results, I'll fire them, and on Friday they had it rented. :-)
- Salem, MA · Member since 2017 · 56 posts · 14 votes7y
Hello Everyone,
Thank you for starting this post. Heidi I am sorry it is so hard to rent the house.
I am in the same situation. Tenants moved out after several months after I bought the house. Moved out in December. PM company listed the rent price and lowered it 3 times within 6 weeks.
Is it true that winter is a hard time to find tenants? I asked my PM to remove the posting because the rent now is way lower than naighboring houses. I intend to put the ad again after two weeks. I also asked to change pictures. The pictures were showing the cluttered rooms.
Also, I just received a message that the tenant in another house I bought a month ago wants to move. I don’t know if it is my bad luck or someone knew the tenants will be moving. I started receiving mail asking to buy my properties.
Any thoughts or suggestions? I will appreciate any i sight. Maybe it is winter time that makes it hard to rent.
Sincerely,
Mariusz
PS
Heidi, let us know how your attempts are going
- 7yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
@Mariusz Bojarczuk Yes, in the northeast If it is a family home winter is a harder time to get someone. Families don't want to move during the school year and snow is an issue. You are now moving to March though so market it vigorously and get pictures without stuff or go back to the initial pictures you used for the last tenants with the property vacant. You can offer some incentive for renting by a certain date like $x off first months rent but you may not need that now.
- Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes7y
@Heidi Kenefick started filling vacancies in my units last year. Had a realtor list crazy high along with a million fees. Everyone in town came to see the new renovations but the REALTOR AND MOVE IN FEES were what kept anyone from renting.
Got in touch with some of the visitors down the road and got confirmation that the fees for everything were just too much.
- Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes7y
@Mariusz Bojarczuk
Sorry you find yourself in the same situation. Wintertime is likely a factor as others stated.
I did get mine rented, but it involved lowering the rent (once I realized mine was the MOST expensive house in town), and making the PM take new pictures and I wrote the description and sent it to them to post with it.
Property managers don’t really care how long it takes to rent. They get their fee regardless, while you are carrying all the costs. My suggestion is make sure they are advertising your property to your standards, don’t be passive, and given that it’s winter time offer some move in incentives.
- 7yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
@Heidi Kenefick is your PM collecting fees when the place is not yet rented? Because when I had a PM , it was no tenant , no fee.
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes7y
@Mariusz Bojarczuk. This is the number one killer of single family rentals. Vacancy. Lower the rent and also you can offer move in incentives (half off second months rent). I think it’s kind of a lame excuse to blame the weather or winter when filling vacancies.
I understand families may not move during the winter but I’ve filled vacancies in the winter and moved myself (I’m a tenant) during the winter, so it’s not like the world just stops for 3-5 months every year during the winter
- Lubbock, TX · Member since 2019 · 6 posts · 5 votes7y
From the link you provided - just at first glance, I see a price and a few pictures. Pictures literally mean everything. When I go to your link, the pictures are what I will see first ever before I come and book a viewing.
You need professional, well lit, wide-pan pictures to really show off the place. Who is your photographer? You are showing a corner of the bedroom, not the whole bedroom. Only part of the kitchen? It almost feels like you aren't serious about selling or renting it!
IF the property management company took those pictures, fire them, find another, either take your own professional pictures and send it to them to USE or make sure they utilize good ones. Its a pretty house, standard interior though. Besides that, I'd recommend thinking of your market. In Lubbock, Texas where I live... its all students and older folks. Not a ton of middle class families like in Houston, Texas. So if you are the latter - what appeals to a nice family versus some college students?
- Salem, MA · Member since 2017 · 56 posts · 14 votes7y
Thank you all for the advice! Heidi, I am so glad you found a way to start filling vacancies!
My PM has only a few pictures with cluttered spaces.
The other home has better pictures taken before the tenant moved in.
I was told the house doesn’t need painting and preparing for the tenant until the tenant accepts the lease. A vicious circle.
I am thinking of doing what Heidi did. Request complete cleanup of the place, new pictures, and my text in ads.
Once again, thank you the whole community.
Sincerely,
Mariusz
- Salem, MA · Member since 2017 · 56 posts · 14 votes7y
Originally posted by @James Harville:
From the link you provided - just at first glance, I see a price and a few pictures. Pictures literally mean everything. When I go to your link, the pictures are what I will see first ever before I come and book a viewing.
You need professional, well lit, wide-pan pictures to really show off the place. Who is your photographer? You are showing a corner of the bedroom, not the whole bedroom. Only part of the kitchen? It almost feels like you aren't serious about selling or renting it!
IF the property management company took those pictures, fire them, find another, either take your own professional pictures and send it to them to USE or make sure they utilize good ones. Its a pretty house, standard interior though. Besides that, I'd recommend thinking of your market. In Lubbock, Texas where I live... its all students and older folks. Not a ton of middle class families like in Houston, Texas. So if you are the latter - what appeals to a nice family versus some college students?
- Salem, MA · Member since 2017 · 56 posts · 14 votes7yOriginally posted by @James Harville:
From the link you provided - just at first glance, I see a price and a few pictures. Pictures literally mean everything. When I go to your link, the pictures are what I will see first ever before I come and book a viewing.
You need professional, well lit, wide-pan pictures to really show off the place. Who is your photographer? You are showing a corner of the bedroom, not the whole bedroom. Only part of the kitchen? It almost feels like you aren't serious about selling or renting it!
IF the property management company took those pictures, fire them, find another, either take your own professional pictures and send it to them to USE or make sure they utilize good ones. Its a pretty house, standard interior though. Besides that, I'd recommend thinking of your market. In Lubbock, Texas where I live... its all students and older folks. Not a ton of middle class families like in Houston, Texas. So if you are the latter - what appeals to a nice family versus some college students?
Hi James,
A short follow up. I managed to rent the places. The management company is also the company I bought the properties from. I didn’t know how it would play out if I hired someone else and then still wanted to buy a property from this company.
So I stayed with them. I paid 4000 for painting and cleaning, and they placed secrion 8 tenants there.
If I may ask, how do you make your choices as to purchasing properties? Do you research providers of properties in the area?
Mariusz
- Salem, MA · Member since 2017 · 56 posts · 14 votes7y
Originally posted by @Account Closed:
Originally posted by @Mariusz Bojarczuk:
Originally posted by @James Harville:
From the link you provided - just at first glance, I see a price and a few pictures. Pictures literally mean everything. When I go to your link, the pictures are what I will see first ever before I come and book a viewing.
You need professional, well lit, wide-pan pictures to really show off the place. Who is your photographer? You are showing a corner of the bedroom, not the whole bedroom. Only part of the kitchen? It almost feels like you aren't serious about selling or renting it!
IF the property management company took those pictures, fire them, find another, either take your own professional pictures and send it to them to USE or make sure they utilize good ones. Its a pretty house, standard interior though. Besides that, I'd recommend thinking of your market. In Lubbock, Texas where I live... its all students and older folks. Not a ton of middle class families like in Houston, Texas. So if you are the latter - what appeals to a nice family versus some college students?
Hi James,
A short follow up. I managed to rent the places. The management company is also the company I bought the properties from. I didn’t know how it would play out if I hired someone else and then still wanted to buy a property from this company.
So I stayed with them. I paid 4000 for painting and cleaning, and they placed secrion 8 tenants there.
If I may ask, how do you make your choices as to purchasing properties? Do you research providers of properties in the area?
Mariusz
$4,000 for painting and cleaning? Taj Majal? 10,000 sq feeter?
I hope you wont paint for another 10 years. Otherwise is pound foolish , or whatever they say. Section 8 kids will draw on the walls the moment they move in. Who knows what the adults will do........
Hi Kealoha,
I love your reply! Lol I was surprised as well. But then I thought that the 4000 was for two houses, and the tenants had live there for more than 5 years. I think it was about 5000 square feet and there were also some small repairs involved. I guess the preparation for new tenats could have cost that. Do you think I should always ask for receipts from contractors?
It was a streak of bad luck. Two houses that I bought lost tenants within a few months. I didn’t have enough time to build capital expenses fund for them. Now another property needs a new AC condenser unit. It is 800 dollars. I am worrying I will never make a positive cash flow. I asked for receipts for labor and the unit itself.
I trust my manager, but in your experience, would you only rely on trust or would you require some documentation about repairs?
Mariusz
- Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes7y
Originally posted by @Mariusz Bojarczuk:
Hi Kealoha,
I love your reply! Lol I was surprised as well. But then I thought that the 4000 was for two houses, and the tenants had live there for more than 5 years. I think it was about 5000 square feet and there were also some small repairs involved. I guess the preparation for new tenats could have cost that. Do you think I should always ask for receipts from contractors?
It was a streak of bad luck. Two houses that I bought lost tenants within a few months. I didn’t have enough time to build capital expenses fund for them. Now another property needs a new AC condenser unit. It is 800 dollars. I am worrying I will never make a positive cash flow. I asked for receipts for labor and the unit itself.
I trust my manager, but in your experience, would you only rely on trust or would you require some documentation about repairs?
Mariusz
Mariusz,
Why do you trust your manager?
If he is part of the same organization that sold you these "turnkey" occupied houses that immediately became vacant, immediately incurred turnover costs ($4000!!!!!) and immediately require repairs and CAPExpenditures (HVAC repair,) you should not trust your manager.
In fact, I would be very hesitant to do more business with this organization. At the very least, wait a few months. See if the current investments stabilize in regards to vacancy and extra costs.
Section 8 can be a good source of income, provided it is overseen correctly by the owner/landlord. On the other hand, Section 8 can be a nightmare if the owner/landlord/PM views it as an easy way to overcome a vacancy but doesn't perform any oversight. So far, I have seen no indication that the company you are working with is diligent enough or cares enough about YOUR BEST INTERESTS to do what it takes to utilize Section 8 properly.
Not to try to frighten you Mariusz, but if I was in your situation, I would be very afraid. Start saving for a rainy day -- I think a storm is coming. Instead of a "streak of bad luck," I think you have encountered an unscrupulous turnkey/PM operator. If that is the case, your streak of bad luck will never end until you stop doing business with them.
Question: Are these two rentals close to you or are they far away?
Good luck.
- Salem, MA · Member since 2017 · 56 posts · 14 votes7y
Originally posted by @Randy E.:
Originally posted by @Mariusz Bojarczuk:
Hi Kealoha,
I love your reply! Lol I was surprised as well. But then I thought that the 4000 was for two houses, and the tenants had live there for more than 5 years. I think it was about 5000 square feet and there were also some small repairs involved. I guess the preparation for new tenats could have cost that. Do you think I should always ask for receipts from contractors?
It was a streak of bad luck. Two houses that I bought lost tenants within a few months. I didn’t have enough time to build capital expenses fund for them. Now another property needs a new AC condenser unit. It is 800 dollars. I am worrying I will never make a positive cash flow. I asked for receipts for labor and the unit itself.
I trust my manager, but in your experience, would you only rely on trust or would you require some documentation about repairs?
Mariusz
Mariusz,
Why do you trust your manager?
If he is part of the same organization that sold you these "turnkey" occupied houses that immediately became vacant, immediately incurred turnover costs ($4000!!!!!) and immediately require repairs and CAPExpenditures (HVAC repair,) you should not trust your manager.
In fact, I would be very hesitant to do more business with this organization. At the very least, wait a few months. See if the current investments stabilize in regards to vacancy and extra costs.
Section 8 can be a good source of income, provided it is overseen correctly by the owner/landlord. On the other hand, Section 8 can be a nightmare if the owner/landlord/PM views it as an easy way to overcome a vacancy but doesn't perform any oversight. So far, I have seen no indication that the company you are working with is diligent enough or cares enough about YOUR BEST INTERESTS to do what it takes to utilize Section 8 properly.
Not to try to frighten you Mariusz, but if I was in your situation, I would be very afraid. Start saving for a rainy day -- I think a storm is coming. Instead of a "streak of bad luck," I think you have encountered an unscrupulous turnkey/PM operator. If that is the case, your streak of bad luck will never end until you stop doing business with them.
Question: Are these two rentals close to you or are they far away?
Good luck.
Thank you Randy,
I am grateful for your input. The properties are far away from me. I will take your advice and see if the income stabilizes.
I do hope it will. I think my trust is the result of the fact that when I wanted to purchase a different properties at different times, he advised against. They were not stable and might need work. He could have sold them to me but didn’t.
I have worked very hard to buy the properties and now I am worried. I will wait a few months.
I appreciate your insight.
Thank you,
Mariusz
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