Struggling to Find Tenants
Hello,
A few months ago, I purchased an eight-unit, two-story apartment building in a more blue collar part of Lubbock that has seen a number of tenants either vacate or get evicted, thus we are down to less than half occupancy.
For any local experts or those on Texas multi-family real estate, got any advice for an out-of-stater on how to get these units occupied quickly?
My property manager is moving at a snail's pace so just getting one unit rent-ready feels like pulling teeth but given that at least two are move-in ready, I would like to get them occupied asap.
I also have one vacancy in a similar area of Killeen in central Texas so any advice there is helpful.
Thanks in advance for any and all insight!
Best,
Tash
Sorry to hear you are having trouble. Based on my experience in that market, extended vacancy is almost always linked to bad management. Demand for quality rentals has always been steady and consistent, leading to low vacancy rates. Do you have an option to bring a new company in?
Quote from @Tashfeen Islam:
You need a professional Property Manager. Things do slow down around Christmas, but I'm still actively showing properties and renting them in December and I'm in a town of 10,000.
Remember: cheaper doesn't mean you'll make more money.
Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
@Stuart Chinworth Thanks for the feedback and I understand. The PM I hired made me feel like they’d handled properties like mine previously and they were eager to earn my business but of course, initial discussions and actual results are two different things. Nonetheless, I’ve had a talk with the manager and principal (her supervisor) recently about getting this property to full strength asap. As for bringing in a new PM, it didn’t state in our agreement that I can drop them at any time but the PM and I have discussed previously how to proceed if one or both parties feel this partnership isn’t working. Having everything in writing would be ideal but since it was my first venture into this market, I wanted to give the partnership at least a fair shake and one year felt more reasonable than being locked in for two.
@Nathan Gesner I appreciate the thoroughness in your feedback. You made some great points that I hadn’t previously taken into account but the ones that really caught my attention were no. 2, 3, and 6. The one-year agreement we currently have, which is shorter than the other PM’s I spoke to offered, seemed short enough in my eyes but we never ironed out a separation policy which is where I dropped the ball. As for the fees they charge, they lowered their monthly rate from 10% to 9% as I had given them so much business from the start so they’re not the least expensive option in town but based on their positive online reviews, I felt like maybe they justified their pricing. However, talking to other owner clients of theirs and any other PM’s I consider in the future is definitely something I’ll add to my checklist moving forward. I’ll be in touch in case any other questions pop up.
I had a few vacancies with what appeared to be a similar issue. The PM advertised at church and used signs. Took about 30-60 days to fill. I allowed it to play out so they can experience it. I recently had a few vacancies. I intervened and listed them on Zillow. The property manager takes care of the showing and interviews and in person applications. I get to scan through all the applicants and see live communication between applicants and PM on Zillow.
Per unit, I get about 50 to 100 inquiries within the first 72 hours. Out of those, about 20 applications per unit. Of those, about 4 qualified on paper. I try to pick the top 2 and see who makes the Security Deposit first. This is the second round of this in the last 6 months. Tenant chosen within 2 weeks tops
Zillow is a great tool. It gives me more confidence to be a bit more aggressive and clear out undesirable inherited tenants.
Have you asked your PM their rehab/marketing strategy?
@Sam Yin I’m glad to hear that you were able to right the ship with your properties. My PM has a website that lists their vacancies and frankly, I’ve pointed out to the principal how poorly the listings look and their descriptions are not even decent. She has promised she’d work on them but I’m still waiting on my listings to be updated. As for Zillow, I’ll bring it up to her as I didn’t see anything there.
Are your listings primarily in California or do you also have some in North Texas, as I believe the marketing strategies would differ between the two?
Quote from @Tashfeen Islam:
@Sam Yin I’m glad to hear that you were able to right the ship with your properties. My PM has a website that lists their vacancies and frankly, I’ve pointed out to the principal how poorly the listings look and their descriptions are not even decent. She has promised she’d work on them but I’m still waiting on my listings to be updated. As for Zillow, I’ll bring it up to her as I didn’t see anything there.
Are your listings primarily in California or do you also have some in North Texas, as I believe the marketing strategies would differ between the two?
Zillow is nationwide. It also advertises on a few other platforms for you automatically. I just put on the description to contact the PM. I use about 10 photos. I follow their listing format suggestions. Its very straightforward.
The tenants put in their app through Zillow. You get their credit check, criminal history, and eviction history. Best of all, it totally FREE. It takes about 5 to 10 mins and I do it all through my cell phone.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Use Colonial in Killeen.
The only answer here is hire new mgmt. This should not be your concern at all - they should be doing their job.
#2 Managing Your Property Contributor
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#2 Managing Your Property Contributor
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There are really only two main reasons a property doesn't rent out:
1) Not enough exposure to the right target audience
2) The audience doesn't like the price-value relationship
To drill down on what the problem is:
How many views are you getting?
---Not enough is a sign that the property is not getting enough exposure, has a bad initial view or is priced way to high
How many inquiries are you getting?
---If a decent amount of people are viewing it, but not inquiring for more info or a showing, then they are not liking what they see when they view the ad. Either price is too high for what it is, or has bad pics or bad description or not enough showing availability.
How many showings are being scheduled?
---Not enough is another sign that price is too high for what it is or has bad pics or bad description or not enough showing availability.
What percentage of showings actually happen?
---If too many showings are cancelled, curb appeal may be an issue or may be part of the market and more confirmation is needed.
Lots of showings but few applications?
---Usually a sign that price-value is perceived to be out of line. Need to lower price or improve the product.
Some more ideas:
1) Is it on the MLS so other agents can show it?
2) Are they offering self-showings?
3) Have you reviewed the ad type and pics on your phone (how most prospects will look at) to verify acceptable?
4) What MoveIn Specials do they suggest?
5) What Along with 3-D Tour, what about a floorplan?
Ask your PMC a LOT of questions about what they are doing and try to brainstorm fixes.
@Tashfeen Islam real estate is local. It's hard for us to pass judgement on a property manager with a partial picture. But it does sound like their make-ready process needs to improve.
Some neighborhoods just rent easily. Some we have to work like crazy to just get someone to view the property in person. The lower income properties seem to take the most energy.
As for Zillow, many property managers have chosen not to pay for posting properties there.
As for leasing they may or may not be working hard enough. Feel free to ask them their process. For example my office post EVERYWHERE. We use professional photos. Youtube, Facebook (boosting the posts), Facebook marketplace, Zillow etc. I have a full time asistants that their entire job is, on-line chatting, texting, calling and emailing every tenant lead received. We also have automatic messaging to prospects after a showing. Our goal is to do everything short of harrassing people to view and apply for our homes.
@Sam Yin Yes, I’m a frequent user of Zillow. What I meant was in terms of your listings, are they all based in/around Los Angeles or do you also advertise listings in less densely populated parts of Texas?
The reason I ask is because I’ve noticed different marketing strategies work with the different demographics in varying regions so something that might work in a big urban city may not also in a small rural town.
I did notify my PM to get us listed on Zillow nonetheless but maybe they need to implement a unique strategy while we’re at it to be most effective.
@Drew Sygit Thanks for the thorough feedback. I've been exploring different methods to get some units occupied but with an incompetent PM, its an additional hurdle I am trying to clear.
As for your questions, my responses are as follows.
1) Is it on the MLS so other agents can show it? I'm still waiting for them to confirm but have mentioned to them the helpfulness of MLS and sites such as Zillow, Redfin, etc. a number of times.
2) Are they offering self-showings? No as they have the keys at their office so a prospective applicant would need to coordinate with them to access the units. Per my PM, this part of Lubbock has seen more break-in's as of late thus someone being there to lock up upon exit is important and they don't want to rely on prospects to do so.
3) Have you reviewed the ad type and pics on your phone (how most prospects will look at) to verify acceptable? I did and I told them to add more details to the description (initially just had a one sentence description) and use pics all from one unit, instead of picking some from multiple units, so prospective applicants don't feel they are being bait-and-switched.
4) What MoveIn Specials do they suggest? $50.00 off first month's rent for qualified applicants who sign a lease.
5) What Along with 3-D Tour, what about a floorplan? They are not a tech savvy PM so their site does not offer 3D tours. As for floorplan, they simply state how many bedrooms, bathrooms, and square feet the unit is.
Simply put, I am doing a lot more hand holding with this PM than I typically do with my other PM's which is frustrating but I am giving it a few more weeks to see if they can make any progress before I discuss any early termination of our agreement with the principal.
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@Tashfeen Islam how did you find this PMC and how did you screen them? See below:
Even if someone give you a referral, what meets their expectations, may not meet yours.
In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.
It's often a case of not doing enough research, as they don't know what they don't know!
Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!
So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.
EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!
This also leads owners to ASSUME simpler is better when it comes to management contracts.
The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!
We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.
We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:
We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.
EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!
P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊
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Hey Tash!
If you are still having any issues, I would love to connect with you and help in anyway that I can being located here in Lubbock! Don't hesitate to reach out!
