I am new to Bigger Pockets. My husband and I placed a contract on a short sale (investment property) in August expecting it to take at least 6 months, but the process moved quicker than expected and we are closing next week. House needs some work (mainly cosmetic) and we are concerned about being able to find tenants this time of the year. Have you all found this to be an issue in your rentals? Home is in Prince William County, Virginia (Washington DC suburbs)near Fort Belvoir if that helps.
If you put it on the rental market beginning of November, you should be ok, although between Thanksgiving and New Year'ss lesser people are looking to make a move.
On the side note - what bank is moving this fast?
Thanks for your reply. Seller's bank is HSBC bank. I think it helped that the realtor representing the sellers kept calling the bank every other day to move the process along.
I would begin marketing the property now. There's a lot of tire kickers that plan their moves months in advance. Have you considered section 8 renting?
I'm currently building my own procedure manual for my own procedure manual for my rental business. Below, is a rough, unpolished part of the marketing and leasing procedure. Take it for what it's worth, but hopefully it will help.
1. Determine desired / likely tenant (s8, market, student, etc)
2. If s8, list vacant home on housing authority's list, which is distributed only to section 8 eligible prospects. Consider using social serve.com's free vacancy listings. The downside is the large number of calls from low income very poor credit applicants. They will waste your time.
2b. If looking for market tenants, put a sign in the yard. On the sign, include rent, number of bedrooms, and date available. (Learned by mistake, lots of "how many brs?" Calls. Other free listing sites are out there, craigslist, etc. I have had some extremely crappy apps come in from cl...as in 5 evictions in the last 2-4 years.
2c. Mention to tenants and other landlords that you'll pay $100 for a tenant that moves in. Oddly enough, this has been really good for me in the last 12 months. People on section 8 hang out with like minded folks. CAUTION: Be careful to not let your long term, trashed the home in 3 months section 8 tenants know you have a nice unit ready for them to move in blow up. I have a trashy tenant always asking if I have one open, she wants a nice unit, now that she's wrecked hers. My safest response is that "I may have something coming up, not sure if they will renew."
3. Incoming Leads
A. Use a line other than your own. Kall8, a cheap 800 number works, google voice is good too.
4. Lead handling: Return all inquiries from desirable tenants within 48 hours.
4a. Have a script ready to prescreen and filter out the duds.
4b. Have a prearranged time set to show the home. Tell prospect the home will be open from 2-3pm for showings.
4c. Press for deposit, application fee, and/or landlord packet (section 8) if tenant seems desirable.
5. Upon receipt of partial deposit (nonrefundable holding fee) tenant shall sign:
-Lease(s) all 3 if section 8
-Holding fee form
-Agreement to pay remaining deposit
-Any other leasing incentive agreements
1. Determine likely tenant.
2. Market according to perspective tenants.
2a. Section 8 list and / or sign in yard
2b. Online resources
2c. Seek tenant or peer referrals
3a. Set up alternate phone/answering service
3b. Set up a web site with an online application
4a. Develop a script for handling incoming leads.
3. Landlord packet (if section 8)
4. LBP Pamphlet
5. LBP reciept form
6. Reservation fee form
7. Property Incentive form
8. Property inspection form
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When I've been faced with filling a vacancy during the holiday season (between Thanksgiving and New Year's), I give an incentive for the people to move in... Reduced rent for 6 months, waive the application fee, offer month-to-month, reduce the security deposit, etc.
I try to do things that really don't cost me anything, but are perceived as a benefit to the tenant. They really seem to like the month-to-month option since it gives them flexibility to stay for only a couple months. By that time, we're out of the slow rental period so I like that option too. It's a win-win.
When advertising prior to the unit being ready to move-in make sure you specify so in the ad
Thanks all of you for your replies--some really good informtion here.
I think advertising right away is a good idea, but do you think it will be problematic to show the place when it still looks like a mess--even if I inform potential tenants of the work we are doing on it? I think it will take a couple of weeks to get all the work complete.
@Ed: We tried out Section 8 on a property we own in Annapolis, and it was a terrible experience. The tenant let a leak go for several weeks and the basement ceiling collapsed. Our insurance wouldn't pay up because it had been going on for a while without being dealt with. Ended up costing us over $10,000. We vowed to only rent to people who have something to lose, because people who have nothing to lose don't care what you lose either.
@Mark: I have thrown out the idea of using an incentive to my husband, but he is pretty against it. Guess we will see what happens.
I appreciate all the replies!
Advertise, contact each prospective tenant, pre-qualify them on the phone and when the property is available call those who passed your pre-qual on the phone. Although if it's more than 2 months from an initial contact, chances are they already found a place
We are in the same general area. I would ask your agent to put the rental in the mls (gratis) with you paying the agent who brings the tenant. I would offer a bonus to the tenant's agent of a few hundred dollars AND require a 15 month lease (so it doesn't end during the winter). You would be amazed how well the bonus works and it's well worth it if the alternative is a 2 month vacancy. I would also advertise on CL and relist it every other day.
You will have an issue with many prospects due to the current condition. I might put out carpet samples and paint samples etc. and state that you will write these improvements into the lease.
We just finished a rehab on our first property. I put the for rent sign up before the rehab was done but after we removed all the nasty. some tenants may not be able to see the space for what it could/will be, but others can. You might find someone who is cool with it having less renovation done than you plan to do.
Plus, I found that I got some needed screening practice during the time when it was partially complete and there were more tire kickers than after it was complete. Even though it is pretty simple, it did take me a few prospects to really know what is appropriate screening criteria that won't exclude every one form my tenant pool. I was surprised at how many people asked about the house, but apparently didn't have any real interest for whatever reason. Its been a great experience so far and we still have yet to approve anybody after taking 4 applications. This is out of about 10 people who looked at the property and out of about 30 who have called about it and didn't schedule an appointment or did schedule and never showed up. Keep in mind that it is completely normal to get a lot of folks who will not follow through and who sill stand you up so you might consider booking everyone for the same time on the same day. Let them wait on you if they actually show up on time, which is unlikely.
You can also offer a discounted rent and sign them up for a lease period that expiers during a better time of the year and increast the rent at that time.
I'm in DC Metro too. Maryland side. I strongly suggest taking some pictures of the property now and start marketing. Let people know (in a CL ad) that the property will be ready (by whatever date) and people that express interest NOW will have the first opportunity. This gets you people that plan in advance (generally, a good thing). For single family homes, I have had success with both CL and the MLS. You could also consider hiring a property manager just to find someone and do lease up, but personally, I like to screen prospective tenants since I self manage.
There is also a listing service for the base. I know the service for Andrews but Ft Belvoir may be different. Good luck!
@Brian: Some good ideas. We might have most of the ugly out in a week or so. Coincidentally, we did get a lease signed on a place we had just started working on when a couple came by to look at another property we were trying to rent. We told them what we were going to do (and let them customize some colors for their kids bedrooms) and they signed a 2-year lease and gave us a deposit despite the fact that they didn't know what the finished product would look like. That one was pretty lucky, though.
@T and @Cheryl (and anyone else that owns property near military installations) "military by owner" is a great site to advertise on with a lot of traffic. They have three pricing options you can use ranging from about $15-$80. I have always gotten most of my inquiries from that site--and they weed out most of the "junk."
Everyone has said market now...and I agree. I had a property that I waited until is was ready and it ended up renting out in mid January (job relocation). However, with this one I'm not waiting. I put out the realtor sign and am already getting inquiries. I went ahead an paid $50 bucks for Rentals.com and I got more quality leads from that than CL. I wouldn't waste my time with newspaper print or really even online. Also, include Zillow and Trulia which are free and you get better quality. Zillow and Rentals.com have a really cool option that allows you to make a much nicer looking ad on CL plus it adds all of the photos that you include on that website whereas CL normally only allows 4 photos. I always start with the outside first so I can get it listed.
I read through all of the post and I am a rental brokerage and while all of this advice seems to be great, I disagree.
Finding a good long lasting tenant is best and all of these actions are looking for short term. Not sure exactly what area you purchased in PW County and what type of property but most people there want something where they are not moving their kids for school, etc... Rushing and putting it on the market without it being finished does two things:
1) Helps you find tenants that really have no interest in moving right away and with have a different appreciation for the property (a negative one) than if they could walk in and say I am home and love the space.
2) Makes you seem desperate to find a tenant. And all the month-to-month tactics etc...well that is not professional and you will end up with
In terms of painting which I found in your above comments. I recommend never painting anything but white, it will cost you in the long run. Let them have the option of painting and then painting it back when they move out but never, ever paint a house for a tenant any other color but white. The other thing you can do is offer to buy the paint if they do the labor both move in and move out to paint it back white when they leave.
Also, in terms of a two year lease. I say it is a no no also unless you have rented to them for at least 1 year. You don't know how they are as tenants and you also do not want to be stuck with a 24 month lease, you always have the option to do an automatic year renewal if no notice is provided versus an automatic month to month. Also, not sure what type of "lease" you are doing in VA versus a rental agreement but you should make sure you have the correct information for PW County because they are different.
I agree with the philosophy that George subscribes to. However, my bigger belief in casting as wide a net as possible trumps the reasons to not take action. The worst that will happen is what George predicts and the best that will happen is that you find a tenant who is ready to move in on day one - even if he wasn't ready to move in during the rehab, in which case the house wasn't ready anyways. In all, you screen more people which is more work. But hey, if this was easy everyone would do it.
Thanks for all of your replies and great suggestions. As an update, we closed on the house 1.5 weeks ago and advertised it immediately (MLS, Craigslist, Zillow, Hot Pads, Military by Owner, etc.), and have not had one phone call or e-mail! Not even a Craigslist scammer or a Section 8 inquiry. The price ($1900 per month) is just below what similar places have rented for in this particular neighborhood, but is high for townhouses in the zipcode (most rent for about $1600-$1700--but those are smaller properties in less desirable communities). Granted, the inside still looks unfinished, but I don't think people could be getting turned off by that since no one has set foot inside. The only thing we haven't done is put a sign out front (afraid to advertise a vacant home).
Here is one of my ads if anyone cares to comment on what I might be doing wrong: http://www.postlets.com/rtpb/6416518
At this point we are thinking of just holding off until after the Holidays and doing most of the needed work ourselves (mainly painting and new flooring--as our contractor quoted us $8000 to do the remaining work). There seems to be no use in rushing to finish something that is just going to be sitting around vacant when we could save some of the money we are losing out on by not renting right away. Is this a good or bad idea?
No interior photos :(
Not saying this is the problem and it does take time to advertise unless you have a science of doing it. Develop a system. I generally get places rented in about 15-20.
But you really need interior photos, otherwise people are thinking something is wrong and outdated, etc...
I advertised on rent.com and that was 50 dollars down the toilet.Not one call and I am priced great.
What I have had great success with on my apartments is I have a sign like the ugly yellow sign or a white sign with black marker on it.
I pay a person about 5 bucks an hour to go out and hold it for a few hours at lunch and dinner time on a close high traffic street.Also in front of a Wal-mart main road is great also.
Each time they do it I get about 5 to 7 calls a day.I have 20 units and growing so if you have one house you might need to only do it for a day or so.
I have found it extremely effective because the people are localized or work in the area and want to relocate there and get rid of the commute.
Many cities or counties have sign ordinances for being in the ground.What they many times DO NOT have is an ordinance against people holding a sign for a few hours at a busy intersection.
So this little tactic has worked well for me.I am landing a bunch of quality tenants from it.
I'd put up a sign and talk to the neighbors. That seems like the kind of place people might know co-workers looking for housing.
Awesome reply Joel,
That is great advice, there are so many laws about moving signs, etc, that just hiring someone to hold it would have great impact!
Again Tamara, you really need to have interior photos. You seem to be a bit gun shy to put them there and I totally agree with you if the property is not in the best condition for picture. So perhaps instead of doing a slide show of the neighborhood.
Simply keep one picture that shows the front of the house, another that shows the back, I did not see any and you say there are two parking spaces?
I check out your listing and that is definitely a easy rent area but again, it is more family oriented and it is going to be a challenge at this time of year with the holidays coming up and such.
Get a sign in the yard. The neighbors are familiar they will know if someone breaks in and also that is your insurance. But if you want someone at this time of the year, in that kind of neighborhood, it is going to be someone who is familiar with the area, or already in the area, etc, like someone mentioned about working around there, etc.
So in short interior photos and a yard sign will go a long way with this one!
My pm placed signs in the yard of a vacant rental of mine, and the neighbors kept stealing it. I don't think they like renters, or at least, the previous renters.
He had to place the sign inside the window.
If that is the case Phillip, I say place it in both or get a larger type sign. The larger signs are one time cost and can use the over and over, the smaller one's are generally cheap and throw aways anyway! But when driving by the yard is much more visible than is the one in the house. Please don't let one neighbor dictate how you conduct your business. I am sure you PM still does yard signs at his other listings!
Signs for rentals are very effective!
Thanks for all your replies.
I added a couple of more pictures of the interior (that look OK) and a couple more of outside. I will of course add more once it looks more "finished." I think it helped a bit--I got a couple of people interested in seeing it. I will also add the sign in the front yard and hope no one steals it--LOL. One thing we did for another property was put out a couple of "Rental Open House" signs in front of the house and on the main roads when we were working at the house and got lots of traffic. Will try that with this one as well. The community only allows one sign in the front yard, so that makes it a bit complicated.
My experience with sec8 tenants is a bit different. I think it is a bit of an overstatement to say they have nothing to lose. On the upside they are subject to inspection to maintain their benefit. To pass the inspection the place needs to be clean, no mold on the window sills etc.. In a way, renters in general have nothing to lose, regardless of screening some tenants will be vexing. Sec 8 tenants are less likely to pick up and move on, moving is too expensive and difficult for people that are on fixed incomes and have disabilities. I have found that often they consider the rented space home whereas some professionals view the rental as temporary and let things go believing that if it gets bad enough they are out of there.
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