Rental Property Investor · Orlando, FL · Member since 2008 · 45 posts · 0 votes
I recently moved out of Michigan to West Virginia. Given the market in the Metro Detroit area, I have chosen to rent out a 3/2 condo that I own. I've also handed things over to a property management company given that I'm out of state.
The property has been on the market for almost two months. For those who are landlords in Michigan, what has been your experiencing renting out property? How long has it normally taken to find a tenant, particularly for condos?
I'm wondering whether I should be pressing my PM more to get things moving faster. Any thoughts?
The amount of your mortgage payment is absolutely irrelevant to setting the rent. You, or really the manager, should know what the market rents would be for a place like yours. If you're is super nice relative to others, you may be able to get a slight premium. But being unusually nice vs. your competition may not get you the premium you might expect. Rents in any specific area tend to be roughly the same for similar units. More bedrooms, more baths and extra space will make more difference than nicer finishes.
These are questions that a good management company can tell you the answers to in a matter of minutes. If the management company can't, then you need to find out why (or better, ask them why) they don't know their market.
What exactly do you mean by "pressing the PM"? Sending a guy with baseball bat to PM's primary residence?
The market is causing the property to sit vacant - might be that the property is overpriced. Or 100 other reasons
I'm no expert on Detroit but my understanding is there's absolutely no shortage of units available.
Who came up with the list price... you, or the PM company? Did you go based on what the market would bear for that property, or what you need to cover your mortgage?
What does the PM say about why its taking so long to fill? Did you evaluate the market before you left? Have you tried looking on craigslist to see what else is available in the same area?
These are questions that a good management company can tell you the answers to in a matter of minutes. If the management company can't, then you need to find out why (or better, ask them why) they don't know their market.
They did tell me that it can take up to three months, and rental prices are starting to fall. I'm just not sure that it should be taking this long, regardless of the rental market.
What exactly do you mean by "pressing the PM"? Sending a guy with baseball bat to PM's primary residence?
The market is causing the property to sit vacant - might be that the property is overpriced. Or 100 other reasons
LOL! No. I'm not Tony Soprano.
I'm just talking about constantly staying on them to make sure that they're doing their best to market the property. People tend to relax unless you stay on them sometimes.
And you're right...the property is priced higher. But it's within the range of what rentals, including condos, can go for. I just recently lowered the price, and may likely do it again to get more action.
I'm no expert on Detroit but my understanding is there's absolutely no shortage of units available.
Who came up with the list price... you, or the PM company? Did you go based on what the market would bear for that property, or what you need to cover your mortgage?
I gave them a list price range that they could use to market the property. I did some basic market research and saw that my mortgage was on the higher end. So I gave them a range up to my mortgage. I gave them the option to select anywhere within that range given their expertise and knowledge of the market.
I was told that they chose to start with the higher end of the range since the property showed so well. Given that, I thought we might have many more showings than we've had, but there's been very little.
I don't have any issues lowering the price, but I am a bit surprised that there's been little action given how well I was told the property shows.
What does the PM say about why its taking so long to fill? Did you evaluate the market before you left? Have you tried looking on craigslist to see what else is available in the same area?
What they've said is that the rental market is competitive. As a result, prices are starting to come down and I'll have to start lowering the price more or offer some deals to bring in more potential tenants.
I didn't do a thorough evaluation, not that I could have really. I was under a somewhat compressed timeframe when I was moving out, and was only I able to check out sites like zilpy, rentometer, and craiglist. There was a wide range. I even talked to the PM about what was reasonable, and I'm within that range.
So in my mind, I can go down in price and that's what it seems I will have to do. I'm just not sure that it will matter much given that market in MI. Hopefully, someone currently investing in MI can offer some local perspective.
The amount of your mortgage payment is absolutely irrelevant to setting the rent. You, or really the manager, should know what the market rents would be for a place like yours. If you're is super nice relative to others, you may be able to get a slight premium. But being unusually nice vs. your competition may not get you the premium you might expect. Rents in any specific area tend to be roughly the same for similar units. More bedrooms, more baths and extra space will make more difference than nicer finishes.
There have only been two showings in the past two months. There is no feedback that the PM received. But I haven't asked, so I'll definitely do that. I admit that I haven't been on them as I should since I'm still getting situated in the new location.
I recognize that the mortgage has nothing to do with setting the rent. I wasn't necessarily using the mortgage as a gauge to set the rent, but I wanted to see if my mortgage fell in the range for market rent. The thought was that if it did, then I would look to start at that price in order limit my monthly negative cash flow. If it did not, then I would have no choice but to go much lower in price. However since it did fall within the range, I gave the PM the option of starting there and they chose to do that.
You should have more activity than you've had. Just north of you, in south Oakland County, we get 1-2 calls a day off of signs and haven't had a vacancy longer than a couple of weeks. Livonia should be getting the same results albeit at a slightly higher price-point.
Also, rental availability is going down, prices are going up.
I know I'm coming to this late but I have 55 units here. And if it's not renting it's all about the price. Period.
If something is priced right then it will rent immediately.
Now I will add the caveat that this December and January have been the worst I've seen in six years with respect to tenant quality, such that a couple of colleagues and I actually stopped marketing our properties in the beginning of January.
We started up again last weekend and our phones have been ringing off the hook. So if you price your condo right, based on the market and not what you owe, you will have it rented in February.
i am also going to offer some insight. all my houses are in livonia and I have not been able to find a renter for my newly renovated house for 4 months. I even posted about this a few weeks ago.
With the previous 3, i was able to rent them in 1-2 months max and the phone calls would come in hourly. now, as if my ad does not even show up on craigslist - no one calls. It does show up on CL, but no one calls.
listed it with an agent, have had many showings, a few applications, but thing fell through. definitely more than 10 showings though.
my price was $1175, which is competitive for the area, now i am down by $75 and little change.
I am a little discouraged and instead of thinking of my next purchase, i am trying to plug the whole where my money is leaking out of.
Trying to eek an extra $100-$200 a month and costing yourself 2-3 month vacancy extra is a huge net loss. Price it to rent RIGHT AWAY, stop trying to save one while spending ten to get it.
joe, i agree with you. but to a point. and i base it on more than just numbers. but let's start with the numbers.
let's say i can eek an extra $150 per month. that's $1800 per year. when it costs me just $500 per month to keep the house empty, i can afford 3 months to find a good tenant. also, that extra would help me replace the carpet if i need it.
The lower the price, the sketchier the applicants. At the end of the day, i do not want people that can pay just $900 for their rent. I want to weed out the riffraff, so to speak. I know i can rent it in 3 days when i listed low, but i am trying to preserve the great condition of the house.
But yes, that's why i lowered the price and was considering lowering it even further. my agent is advising against it.
I wanted to take the time to thank everyone for the advice. My property got rented about 4 months after moving out of it.
It took close to 20 showings to get an offer. Things were pretty slow in December, but they really picked in January, and I got an offer a couple weeks into January.
I did contact my PM just about every day asking for status of where things were. In the end, I only lowered the price once. I was going to do it again in January, but when showings started to pick up dramatically, I wanted to wait and see what happened. Luckily, an offer came in and I didn't have to lower it.