Why my units won't rent

Question

I currently manage units near large Universities like UF and Santa Fe area. For the past month or two getting the units rented have been very difficult. Most the units are 4 b 4b or 4 b 2 b. We rent each bedroom out and the tenants have a shared living room and kitchen area. We do have a few units that we have listed for family or groups. Most of the people interested seem to turn away once they hear it's shared but haven't had issues like this in the past. We're getting 15-25 views a week online for the units yet no one follows through or wants to do a showing. I would say we do have our prices pretty low sometimes lower then other competitors. If any one else is having these issues or any comments or help to this I'd appreciate it. Currently only about 65% our bedrooms units are occupied.

Kai Kopsch · Answer

one factor for slowing down college rentals is COVID 19

Theresa Harris · Answer

If you are marketing it as a room in a shared house, then people should know it is shared.  With covid, people may be less willing to share a space with a stranger.

Curt Smith · Answer

Hi All,  I advocate one gets educated from an expert in the particular REI type you are focusing on;  MF, self storage, SFR, or student housing...

Students prior to covid sign year (not school year) leases in July/Aug to start with first day of school.  Post Sept near zero students looking for housing.  Now with covid knocking down student populations in person on campus iit would take deep market study of each city/campus to see if there is a need or suplus of student housing AND the type.

I think you are stuck with under-renting till next July/Aug.   Try dual advertising as whole house term rental OR by the room

also, there's a reverse logic in rent amount that is oppositie what you think.  Advertising low rent = its a dump = no top candidates even click your ad = honest this is how the Guicce effect works.

I would study whats advertiised and compare amenities, locatioon (distance to campus is a KEY metric for each student rental) and rent amount.  Reprice yours to be $5 less the ave.    And consider term rental for the whole house.

In general small markets, smaller cities, specialized markets like student housing are in odd ups and surprise downs each do to specific issues in play in that market.  IE  how many other student / by the room ads are there?  Vs in July / Aug.  you don't know this ratio, but lots of doors available may meet surplus of inventory and you need to consider a plan change?   SFR?  AirBnb?

Zachary Inman · Answer

@Chris Geer

Sounds like a good approach. Most college students find housing on Zillow, Realtor, etc.

Another avenue would be to partner with an agent (or a low-fee brokerage) so it shows up on the MLS - online sites typically give agent listings priority, unfortunately.

Michael Dumler · Answer

@Chris Geer the high vacancy rate is most likely due to the fact that you are renting by the room. I would suggest changing your investment strategy and instead rent per unit. Implementing a rent per unit strategy may decrease your cash flow, but it''s better then having your properties sit vacant for months. Also to note, the timing for student housing is best in the months of July and August before the new semester kicks off. Most students heading into the Spring semester have already established their living situation. In addition, there are also numerous other variables/factors to account for when it comes to college rentals. For instance, how close are your properties to campus? Overall, I'm a big advocate for rent by the room investments, but the timing plays a big role. Hope this helps!

Chris G. · Answer

@Zachary Inman

Currently we use a third party called show mojo I make the listing on there and it sends it to major real estate sites like realtor, zillow, and a few others to be listed. I get leads from people who view the pages and send email/ call seeing if their interested. We also have the listing on our website for previous tenants or word of mouth. Outside the complexes we have signs that give our website and number. I'm going to start posting on local college rental facebook groups but that's most of our marketing for tenants.

Jerryll Noorden · Answer

Thanks man.

I hear ya. The way we address that issue is... we make the right offers so we can add that in the repair budget. Remember the after pictures look really stunning but that doesn't mean it has to be expensive. It really cost us a few extra grand to have these finishes. We just employ the right people that are skilled and some of our own elbow greese, and voila!

We just made an offer on a house ARV $250K

Offer was 80K

They accepted the offer, but SOMEONE (ahem JESS) made a few mistakes, and after the inspection we HAD to lower the offer to 40K

They accepted. That offer.. so it is all good. Now we can do what we need to to the house.

Always remember this golden rule:

NEVER sign a contract UNLESS the numbers work for YOU!

What a lot of investors do is negotiate till the seller won't budge and sign the contract at that number. That is really bad. Once the contract agrees with your numbers you can do what ever you need to to make it work. Remember the numbers do not lie.

If you have a lot of views and no interest, either the pictures are really bad, but more likely, no one is interested in the house after a closer look at the listing.

Start there and trouble shoot from that point on.

Hope that helps and sorry about the issues mate. Stay on it dude, someone WILL bite! Someone always does!

Chris G. · Answer

@Jerryll Noorden

Wow Jerryll, that before and after looks stunning. I like many of the things you mentioned, I think that is easy when you or the owner as the same goal. Most of the properties we manage are student living or cheaper living condos/ town homes. Sadly many of the owners don't want to spend lots to get the place looking good, they only want to pay when something breaks. If I was able to then yes I'd pick some of our units and make them nice and new but when their paying $450 a month per bedroom the owner doesn't see that as a good investment.

Jerryll Noorden · Answer

Besides the obvious that a lot of you have written down, allow me present a totally different point of view when it comes to rentals..

I see a lot many investors on here showing how they got a house rent ready for just $300 dollars... and they proudly show the before and after pics, and if that is you, hey ... you do you. If that is your thing, go for it.

As for me...

It is not about how cheaply you managed to put a tenant in there.

What we do is, how AMAZING we can make our rentals, while STILL have amazing cash flow.

Look at this:

Here is one of our rentals:

BEFORE

A good cleaning? Painting cabinets? Stick-on backsplash?

Now... here is what we did:

AFTER:

Now, when you look closely... its just shiplap for the bathrooms, framing in a standard island in the kitchen and accenting it with more shiplap, an extra faucet for the stove range (a pot filler is our signature move but there obviously is no wall to put one for the stove so we had to be creative)...

All and all this added maybe a few extra grand to the budget and look how different this ended up compared to what most rental investors would do... and BECAUSE we chose these finishes the market value of the house skyrocketed and we get more money back when we refinance it. Also I can ask more rent for it. Remember I don't need 300 people to beg to get this house, I just need ONE person that will take pride in where they live to take it. Having a house like this often will have the tenants take more care of it.

I get it, this depends on the area the house is in... but then again, I buy rentals where I can get my minimum numbers in.

Now the way we are able to accomplish this...  We buy houses on OUR terms.

What most investors do is try to negotiate negotiate and negotiate with the seller until the sellers doesn't budge and sign that contract. This is wrong!!

We don't negotiate. We give our sellers genuinely our best and highest offer. They want it great. They want more, I say Nope! We ONLY sign contracts when the number allows us to do what we need to do to the house.

So OP...

If you are having views AND visits, and no one wants it.. it means you are over representing the house. Your pictures do not match the true condition of the house.

If you have views, but no showings... people simply are not impressed with how the house looks like, finishes etc. etc.

I agree with Zachary. For college students, it is not usually a deterrent. Often they actually like it.

So I am thinking the condition of the house is not what they want.

Chris G. · Answer

@Theresa Harris

I agree on this I would prefer to rent to family's or group of students that would fill up the whole unit. The issue being that out of the 20 apartments only 2-3 are fully vacant and able to be listed as 4 bed 4 bath for a group, those haven't moved either.

Why my units won't rent

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