Property Manager · Sacramento, CA · Member since 2015 · 161 posts · 24 votes
Apparently I advertised my rental too low because I have 80 people interested in 2 days. I advertised $1700 but I'm at least $50 low for sure, maybe $100 or even $200. How should I approach this from a legal standpoint? Can I just update my add (zillow) with the higher price? Is it ok to have a bidding war for a rental? Good problem to have, but I'm not sure of the best way to inform everyone that I'm low and need to increase, or if I even need to. Mostly legal concerns, don't want to be surprised by a "professional" tenant! Thx for your input.
Rental Property Investor · Imperial, MO · Member since 2017 · 4 posts · 10 votes
7y
Bad time of year to be getting greedy. Especially over 50 bucks/month. If you aren’t sure it’s 50 or 200 then sounds like there may be even more things that you don’t know about landlording which will then take even more of your time to figure out, which may then draw out a vacancy even more.
If you already have applicants I would honor the original rent.
Remember you can always raise rents later.
If you repost with a higher rent and then it takes forever to find a highly qualified tenant you’ll be kicking yourself. I always try to ask myself “am I being greedy?” When I look back at mistakes I can usually say that I was being greedy.
Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
7y
@Jeff Caravalho your ad might be on the money.
What are those 80 people screened going to turn into? And from there how much of those will accept your lease length, terms, etc.
I mean if you want, I don’t see a reason why you can’t delete the ad and repost with the rent you want without any consequences if no lease contract is signed yet. If anyone asks just say due to changing circumstances
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
7y
I owned rentals for nearly 40 years. As a strategy, purposely underpriced my rentals by 10% or so. Sometimes I could be off and it turned out to be more than 10%, but all and all, I came out ahead.
I could get 60 to 80 renters interested in most of my rentals at this pricing level. Some years back, I stopped doing individual showings, and I did open houses instead. Once, I had to rent a SFR on Martin Luther King Day, I was worried it's the bad time of the year, but I had several applicants interested, so it's rented in one day with over 30 people showing up. I cancelled the next open house.
At another time, a tenant moved out end of April, got the place painted, cleaned, and a open house on May 5. The placed was swamped. Had about 12 applications from qualified applicants, The best one was from a couple, the wife is a VP of the local utility, base salary of $150K, that was 20 years ago, with her husband running a business. Aimed to rent it out June 1, though under certain circumstances, tenants moving from another rental would have to give notice, so I looking at rent up as late as June 15 or July 1. I can't blame people for trying to conform to lease terms.
When I got the application from this couple, he said his landlord is selling the house, he has to give notice, he'll lease up by July 1, so his landlord would have adequate notice and he like to do that since the landlord's been very good to him. At that point, the place was jammed pack, so while I love to have him, I told him I got so many people who wants the place, and want it now, I might have to rent to someone else. He looked around, said to me, "I see what you mean, I'll talk to my landlord, I like your place". I said, "in that case, get back to me ASAP".
Got back to me that night, said his landlord agreed to let him leave right away. So he can lease up immediately since his landlord is even waving his May rent. I usually take a day or two to do credit checks, turned out OK, so I went with him. My only concern was why are they renting if they're making so much money, which them being able to pay double the rent I was charging. The credit report came back super clean.
Market rent at that time was about $2,000 - $2,100, I was charging $1,800. You could say I'm losing out $200/month. But doing it this way, I got three week of May rent and all of June. On the other hand I seen properties similar to mine advertised on line in the neighborhood for $2,200 to $2,250, slightly above at that point, and it was on the market over 60 days. I spoke to some people looking for rentals, they tell me aside from the price, those landlords don't make it rent ready like painting the place. BTW, this tenant stayed with me over 12 years, moved out to another rental, downsizing. He had a daughter and son living with them and 12 years later they moved out on the own, and the son got a PhD.
One other benefit I find in doing rentals this way is not worrying about people claiming they saw it first, we discriminated against them, or whatever. I once had so many people coming that I ask people to form a line and wait outside, or come back in an hour, and I'll extend the open house hours. One guy standing on line was a neighbor down the street trying to figure out why so many people are standing on line. And when they complain about being first, I tell them the place is so packed that it's hard to tell who is first. So when I underprice, the benefits are too numerous to enumerate.
Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
7y
@Scott Luetgenau and @Nathan Gesnerhad good comments here and even though it's been listed below market value you still have a lot of options.
You don't have to rent to anyone, you can take the most qualified candidate and have an exit plan for your tenants if you decide to rent at the current listed price.
With the California rental laws you'll want to make sure you have a tenant exit strategy so you can get market rent in the future.
Property Manager · Sacramento, CA · Member since 2015 · 161 posts · 24 votes
7y
@Deanna O. yes don't want to be that guy, LOL! Love the Win/win idea too! Also a good thought on reposting and looking sleazy, and didn't know rentometer was s bad as zestimates, etc...great post! @Brian Ploszay haven's used hoptpads yet, will check out, thx. @Scott Luetgenau@Quincy Lockett interesting thought on the longer lease, will consider, thx. @Bjorik Mutize@Michael J Callinanwhat do you think about @Deanna O. thought on reposting and looking sleazy? @Frank Chin love open house idea, definately doing that. thx for sharing experience. I just wanted to say this site is great in so many ways. Could I have gotten this kind of feedback in a college course, I think not! Thank you all for the responses. I'm going to run this conversation by my attorney just to be safe, but I think he'll enjoy it too :)
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
7y
@Frank Chin
I have used your strategy of open houses. Since I’m out of state, I have a person for the showings just Saturdays between 3-5 pm. No exceptions, I stick to the rule.
Also, my place is way nicer than the competition, so my rent a little bit higher. I had luck so far, but last time I rent for 6 month lease, I had one month vacancy. What I did this time was to dropped the rent for 8% so it was rented on the next showing.
Another strategy, I use when advertise and in the agreement for very good prospects is, if they are not ready to move due to other circumstances and I don’t want to loose him/her, I charge one month’s holding fee at the time they sign the lease. I put in writing I have the rights to keep showing the property until he/she moves in. If they rent eventually, it becomes a deposit and refundable at the end of the lease. If they flee away, then I didn’t loose that month waiting for them and likely have another tenant ready to move.
I think you should take the ad down, vet the applicants you have received already, and if you haven't found a quality tenant out of the 80, increase the rent 100 and repost. I think Matthew John had a good method there where he found a way to affordably increase the value.
@Josue Vargas I don't want to fire the tenant, but if he's not adhering to the lease he will be fired by my lawyer (figure of speech), I want to renew the lease (with same tenant) during the summer months so if it doesn't work out after that (ie. he's not adhering to the lease), I can "not" renew the lease (ie. you're fired) during a summer month not a winter one, and I'll be on the summer cycle for the new tenant (with a one year lease from then on). This is not for when the tenant breaks a lease, this is for if I decide not to renew it, and if I can choose when to do that, I choose summer.
I understand your point. Why not having a lease for 18 months instead?
Where I live, it is very common to lease on 12-14 month term, then month-to-month. Not sure what is typical the lease terms in your area. On anther note, I love to rent month-to-month after the initial lease term. It gives me flexibility not to renew if a tenant suddenly have issues such as not able to pay rent. Also, it comes with a 60-day notice from tenant if they decide not to continue with month-month, so I have time to prepare and avoid unexpected vacancy.
Rental Property Investor · Clinton, CT · Member since 2016 · 49 posts · 36 votes
7y
@Jeff Caravalho Deanna has great points. I never said that the choices we make are pretty but they are choices. I'm sure that out of all those responses there are some great renters in there. At the same time people make mistakes and there could be another 80 potentials good ones out there again if you re-listed. I wouldn't worry about being "that guy". Jut determine what's more important to you. If you keep the listing the same and find a great renter you can adjust the rent upwards to market rate on renewal while not losing money now by having it filled.
1. Ensure the inquiries are qualified. In other words, don't worry about the price until you have qualified applicants in hand.
2. If you have qualified applicants in hand, there is nothing stopping you from getting a lease for 18-24 months and increasing the price to the real market value.
3. I'm not an attorney and IDK if this would be "false advertising" or whatever, but if the tenant agrees to the longer lease term and higher price than advertised, then you're fine.
This has happened a lot in the last 12 months in OC. Every lease we've had has had 5+ qualified applicants and we've increased rents from $50-$150 over the advertised price and for 12+ month lease terms. Some tenants balked, but the one signing the lease at the end was happy to do so. It's competitive out there.