Time of Year, Property Manager, or User Error?

45 Replies

Originally posted by @Kyle Deutschmann :

@Blake Dailey hey Blake good to hear from you! its hard to say which route is best. Turnover/vacancy can certainly be a cash flow killer so youd have to compare what the total expected vacancy/turnover could cost vs. keeping the unit rented for less than its full potential to see which is most cost effective. You could also consider an 18 month lease to avoid the vacancy for a while and still end in the summer, but then of course you lock yourself into lower rent for that entire time. Hope that helps or at least gives some additional options to consider!

Blake, great question regarding turnover potential and costs. Thank you for bringing that up.

Kyle, I'll look into the data and consult with the experience landlords in my particular neighborhoods to get the best recommendation. I'm leaning towards the 6 month vs 18 month lease option. Depending on the amount increase, a tenant may in fact agree to the increase just to avoid the move in costs, hassle, etc.

 

Your asking rent is too high. Should be below those averages at this time of year.

Originally posted by @Max T. :

@Nathanael Rojas

To answer that it is probably best to look at the comps that are closing, but my guess would be maybe March. Definitely April.

 Certainly helps to know what the future holds. Thanks, Max

Originally posted by @Ian Walsh :

If it's syndicated to the major sites , the breakdown is either in the price being too high or the agent not managing lead flow correctly.

 Got it. Thanks so much, Ian!

Unfortunately, in my experience, it's really hard or impossible to make a profit when you rely on a property manager for a property far away from where you live.  I know there are lots of podcasts, etc., that say you can - but - like any business, can you really make a profit when you are relying on a manager far away from your own eyes and oversight?

I mean, really, if you owned any kind of business other than real estate, just to bring the point home, would you expect an owner of a business to do well when he/she relied on someone they barely met once or twice to make them a profit?  Especially when the contract said they could hire anyone they wanted (hello, their pals who give them a kick-back) to take care of anything as long as it was under $250?  My own daughter was royally ripped off by a property management company using that $250 amount over and over an over and over until they blew through her account.

Anytime something is too good to be true - it is.  There is no such thing as a company that makes money without your personal oversight, or at least without employees you personally know and who are accountable to you and who can't profit without making you a profit first.

Live and learn.

@Sue K. I understand the point you're trying to make but if you truly feel as though you can't trust anyone, building a big business will be THAT much harder for you.  I'm glad you made sure to state "from my experience."  You are stating absolutes from your own limited lens and neglecting to factor in the thousands of investors who've come before you and solved this.  Sorry to hear what happened to you and your daughter but is every property manager stealing from their investors?  I don't think so.  There are honest people with organizations willing to do the right thing out there.  Will they come at more of a premium knowing their worth? Probably. Factor it into your numbers and navigate accordingly. Good Luck


@Nathanael Rojas Thanks for posting question. Great discussion.

I have rented during this time of year with ease. I keep my rents lower than the average to attract a bigger tenant pool and to lower vacancy. With that being said, I think it's the price. Lowering it 50 bucks a clip is a waste of time. Lower it to $1000, you should get a decent amount of applications. If you lower it to $900, I am almost certain it will get filled before the holidays. Even if the tenant doesn't move in, he or she will probably be willing to put a non-refundable deposit down to hold it until next month @$900.

To the point about your pm, next time consider hiring someone that specializes in tenant placement only. 

Let us know how you made out.

I wish you the best.

Peace!!

@Nathanael Rojas I went through similar issues recently and talked to a number of baltimore landlords who have been struggling to get many qualified leads for their rentals.

Did you sign an exclusivity agreement with this PM? If not, reach out to another one or fire this one.

You mentioned dropping rent prices, and I noticed you only dropped it twice. It would be much better to drop the rent and get someone in there vs the expense of several months of vacancy.

I used a company called Ikos which they have mixed reviews from what I've read but I was fairly pleased with them and would probably use them on my next property.

And have you considered any voucher programs or seciton 8?

I just think you did a cheap renovation and it shows, I mean you painted over wood panel, no granite in the kitchen, old cabinets w no knobs, you didn't open up the space between the living room and the dining room, you didn't tile the bathroom shower, who knows what the vanity looks like and its a 2bd/1 bth with a house in a not great area.  With the amount of competition from other investors in Baltimore, why would they pick your place when other places look much nicer for the same amount of rent? Also, those are very bad pics for a rental.

You need to lower to 1000.  People search for properties within ranges.  Your property is probably falling in the 1000 - 1500 range.  If they can go to 1500 they are not really looking at something for 1150.  I don't recall seeing a picture of the kitchen.  Try 1000 and update your pictures.  In my opinion, section 8 in Baltimore would be good but voucher holders want all the upgrades.  Beware of the professional tenant.

Originally posted by @Sue K. :

Unfortunately, in my experience, it's really hard or impossible to make a profit when you rely on a property manager for a property far away from where you live.  I know there are lots of podcasts, etc., that say you can - but - like any business, can you really make a profit when you are relying on a manager far away from your own eyes and oversight?

I mean, really, if you owned any kind of business other than real estate, just to bring the point home, would you expect an owner of a business to do well when he/she relied on someone they barely met once or twice to make them a profit?  Especially when the contract said they could hire anyone they wanted (hello, their pals who give them a kick-back) to take care of anything as long as it was under $250?  My own daughter was royally ripped off by a property management company using that $250 amount over and over an over and over until they blew through her account.

Anytime something is too good to be true - it is.  There is no such thing as a company that makes money without your personal oversight, or at least without employees you personally know and who are accountable to you and who can't profit without making you a profit first.

Live and learn.

Thanks for offering your experience. Our goal is to have this running as a business and the PM is an integral part. We're working through different PM's to find the best one. Once we have the best one for us, then we will migrate all our properties to them.

That is unfortunate to hear about your daughter. We have plans in place to: 1. utilize contractors we know and trust 2. have thorough communication and detailed quotes, reasoning, and pictures prior to an owner expense (for maintenance purposes, for example).

We understand the PM may never care or do as much as we would do if we were landlording, and we are okay with that because now we have more time on our hands to do more cost effective things/tasks/etc.

Absolutely, live and learn. We'll make adjustments as we continue to grow

 

Originally posted by @Solomon Morris :

@Sue K. I understand the point you're trying to make but if you truly feel as though you can't trust anyone, building a big business will be THAT much harder for you.  I'm glad you made sure to state "from my experience."  You are stating absolutes from your own limited lens and neglecting to factor in the thousands of investors who've come before you and solved this.  Sorry to hear what happened to you and your daughter but is every property manager stealing from their investors?  I don't think so.  There are honest people with organizations willing to do the right thing out there.  Will they come at more of a premium knowing their worth? Probably. Factor it into your numbers and navigate accordingly. Good Luck


 Absolutely agree, Solomon. We are looking to find PM's (or any partner) that has our ethics, morals and values and align their interests with ours. Partners that succeed when we succeed. I'll gladly pay them what they're worth!

Originally posted by @Eric H. :

@Nathanael Rojas Thanks for posting question. Great discussion.

I have rented during this time of year with ease. I keep my rents lower than the average to attract a bigger tenant pool and to lower vacancy. With that being said, I think it's the price. Lowering it 50 bucks a clip is a waste of time. Lower it to $1000, you should get a decent amount of applications. If you lower it to $900, I am almost certain it will get filled before the holidays. Even if the tenant doesn't move in, he or she will probably be willing to put a non-refundable deposit down to hold it until next month @$900.

To the point about your pm, next time consider hiring someone that specializes in tenant placement only. 

Let us know how you made out.

I wish you the best.

Peace!!

 It's great to hear you have rented during this time of year. I'm seeing the repetition in responses regarding the rent price. Keywords: "bigger tenant pool" & "lower vacancy"

Thanks for the feedback and response, Eric. I'll be sure to post the aftermath! 

Originally posted by @Tyler Dalton :

@Nathanael Rojas I went through similar issues recently and talked to a number of baltimore landlords who have been struggling to get many qualified leads for their rentals.

Did you sign an exclusivity agreement with this PM? If not, reach out to another one or fire this one.

You mentioned dropping rent prices, and I noticed you only dropped it twice. It would be much better to drop the rent and get someone in there vs the expense of several months of vacancy.

I used a company called Ikos which they have mixed reviews from what I've read but I was fairly pleased with them and would probably use them on my next property.

And have you considered any voucher programs or seciton 8?

 I reread the PM agreement. We are able to cancel at any time without penalty. What's interesting and what's allowed this to get to such a long vacancy is that we've had a good amount of showings. Admittedly, I may not thoroughly understand or be able to define "good amount" of showings. That's why it reached a point where we said, "it seems like he's working hard, let's give him another week".

Our plan, per several of the responses, is to reach out to the next PM. We're looking for the experience, knowledge and communication competency to be able to have a conversation with us to say, "the rent needs to be lower during this time of year". Throughout this time, it was myself reaching out to lower the rent.

Thanks for the recommendation, I'll be sure to look into them.

Yes, we are open and the listing states it is open to Section 8

Originally posted by @Ian Barnes :

I just think you did a cheap renovation and it shows, I mean you painted over wood panel, no granite in the kitchen, old cabinets w no knobs, you didn't open up the space between the living room and the dining room, you didn't tile the bathroom shower, who knows what the vanity looks like and its a 2bd/1 bth with a house in a not great area.  With the amount of competition from other investors in Baltimore, why would they pick your place when other places look much nicer for the same amount of rent? Also, those are very bad pics for a rental.

Ian, You bring up valid points. I thank you for the candidness. Our original idea with the rehab was to lower the cost of the renovation to include tenant proof materials. I definitely see what you mean when you compare it to Baltimore. Our intent was to compare it to the local comps within the area. To your point, when someone has all of Baltimore to select, why select this particular house, in this particular neighborhood, with these particular finishes. 

Lowering the price is definitely what we'll do and we'll be sure to update the pictures.

Truly appreciate the feedback, Ian

Originally posted by @Shadonna N. :

You need to lower to 1000.  People search for properties within ranges.  Your property is probably falling in the 1000 - 1500 range.  If they can go to 1500 they are not really looking at something for 1150.  I don't recall seeing a picture of the kitchen.  Try 1000 and update your pictures.  In my opinion, section 8 in Baltimore would be good but voucher holders want all the upgrades.  Beware of the professional tenant.

The sad truth of the, "Professional Tenant".

Thanks so much for the response, Shadonna. I'll do exactly that and follow your recommendations

 

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