Investor · New York City, NY · Member since 2015 · 5 posts · 0 votes
Hi all,
I just bought my first investment property last month, and I'm having trouble getting renters interested in the property. It's a small 2BR/2BA, about 820 square feet, just outside of Denver, CO (in Wheat Ridge, about 15 min drive from downtown Denver). I don't live in Denver, so I'm using a property manager. I checked with 4 or 5 property managers before deciding on one, and they all gave me rental estimates of 1300-1400 per month. I settled on a manager who has been marketing the property for about 3 weeks, and so far I have zero interest. I started asking 1425, then dropped to 1325, and just last week dropped it to 1250. The property manager is now telling me they don't think I can get more than 1200.
I don't want to make a rash decision and drop the rent to below market, but I also don't want to leave the property vacant. Any tips on how I can get more interest?
If you want to see the listing, please reply and I'll post the link. Thanks very much for any help or advice!
@Tyler Peters so there are really a ton of questions I have. I'll start with the obvious.
1) How is the property being marketed now? What is the PM doing to fill your unit? Are they filling other units at your price point? If the property is being marketed properly then how many calls on the property? If no calls then you are way too high. If a few calls and showings but not takers then still too high.
2) How did they support their your initial price of $1,425? My rule is to never over price a property it costs you time and money. That is, it sits on the market longer and then ultimately rents at a below market rent.
3) $1,425 is definitely strong for at 2 bd in Wheat Ridge. I don't know where it is there but it is above what I have seen. I have a few similar units (based on your brief description) and I had projected market rents to be $1,000 per month. My units have washer dryer hookups but only one offstreet parking space (so no covered parking or garages), no central AC, no private outdoor space like patio or yard.
4) I know some PMs tell prospects very high prices to entice the prospects to sign with them but having several companies all tell you the same thing is a bit unlikely. Was there a "Russian judge" that you threw out? Didn't someone give you a hint of what's really a viable rent rate?
Last thing is to jump on Craig's List and Zillow and see what you have for competition right now. That will tell you the real story. Do you find your place when searching on those sites. If not, your PM needs to be fired.
Try different property manger to compete for your business. Whoso ever get to find the tenant first and lease would get your business. I heard one podcast and remember someone mentioned this strategy...
@Tyler Peters so there are really a ton of questions I have. I'll start with the obvious.
1) How is the property being marketed now? What is the PM doing to fill your unit? Are they filling other units at your price point? If the property is being marketed properly then how many calls on the property? If no calls then you are way too high. If a few calls and showings but not takers then still too high.
2) How did they support their your initial price of $1,425? My rule is to never over price a property it costs you time and money. That is, it sits on the market longer and then ultimately rents at a below market rent.
3) $1,425 is definitely strong for at 2 bd in Wheat Ridge. I don't know where it is there but it is above what I have seen. I have a few similar units (based on your brief description) and I had projected market rents to be $1,000 per month. My units have washer dryer hookups but only one offstreet parking space (so no covered parking or garages), no central AC, no private outdoor space like patio or yard.
4) I know some PMs tell prospects very high prices to entice the prospects to sign with them but having several companies all tell you the same thing is a bit unlikely. Was there a "Russian judge" that you threw out? Didn't someone give you a hint of what's really a viable rent rate?
Last thing is to jump on Craig's List and Zillow and see what you have for competition right now. That will tell you the real story. Do you find your place when searching on those sites. If not, your PM needs to be fired.
I think you need to do some comps to see what other proeprties are renting for on Craigslist and Zillow. I would somebody call the property manager to see if the property manager is doing his job and returning calls in a timely manner. Also have them ask the property manager a few questions about the property and see if he is really trying to rent it out.
I live blocks from Wheat Ridge. My son goes to high school at WR High. I have investment properties in the area. Something doesn't smell right. You should get the rent your asking for in that area. If you're comfortable with it, message me and I'll take a drive by today, get some pics and give you my opinion on what's going on.
Bill, thanks for your detailed reply. Here are the answers to your questions:
1) The property is listed on multiple listing sites, including Zillow, Hotpads, and Craigslist. I'm not sure if they are filling other properties. There have been calls and showings, but the main feedback is that the bedrooms are too small for the price.
2) The initial price was mostly a combination of comps (there are few 2BR/2BA in the area, and none below $1400/month) and the finishings. It has a newly renovated kitchen with granite countertops, a washer/dryer, granite fireplace, and a renovated bathroom upstairs with a granite tile shower.
3) Here is the listing if you want to take a look. The current price is $1275/month.
4) I asked all the property managers for their independent opinions and didn't give them a range that I was thinking, so I think it was fair and unbiased. They were all working off of pictures, not walkthroughs, so that might have something to do with it. However, the manager I'm using still thought $1250-1500 was the right range after walking through in person. He recommended starting at $1250-1350 due to the season, and I decided to try for a little higher at 1425, so that was my fault. But I don't know why the estimate would go down to $1200 so quickly.
Thank you to everyone who replied. I have messaged a few of you directly with the link, rather than posting it publicly. I also put some answers to Bill S.'s post in my previous post, and I think that answers most of the other questions on here.
Most of you seem to be suggesting looking at comps. Here is a link to a search of 2BR/2BA in the area, and mine is one of the only listings under $1400/month (mine is currently listed for $1275, not $1250 as I had said in my initial post). That makes me think that it should be attractive.
@Tyler Peters so I looked at the link. As I looked at your listing I would say this. It's the closest of any properties to the interstate. I think it might have some road noise. That can turn folks off. The other comment I have is that the units available are for the most part in large complexes which would likely have other amenities. I didn't check the listings to see what they offered but often just the fact that it's a large complex brings some "extra" with it. At least one of the units has a garage at $1,400. It looks newer as well. The other comment is that you are looking at properties available vs the ones that have been rented. Also the distance from the units to your property would be outside of the area that I would consider for good comparables as well. You need better data. Based on what I know of the area and the data I have seen, I think your $1,200 might even be a little high.
The other feedback is pricing. Above about $1,000 price searches fall in $100 increments. So your offering at $1,250 looks like $1,300. You have to go below $1,200 to get more eyes.
I wish you well and hope you get it rented soon. Remember one month lost rent is equivalent to $100 per month of income.
The listing comes off a little heavy with this clause (copied below). I understand wanting your tenants to have insurance, but as a person shopping for a place I would likely look at that and think "this management company will be a PIA" and move on. That kind of thing would be better in the application or the lease, not the ad
REQUIRED: Proof of Renter's Insurance at Move-In. $300,000 Minimum on Limits of Liability and Properties Plus, LLC must be listed as additionally insured. Resident May Choose to Add Personal Belongings Coverage at Own Discretion and at Resident's Cost. Resident(s) Responsible for Verifying the Square Footage.
Or maybe they are reacting to the excessive use of the caps key? ;)
Thanks Jean - someone else made that point as well. I am speaking to the property manager about it because you're right, it doesn't make sense and is overly harsh. I have that insurance as the owner, so I don't know why the renter would be expected to carry it.
@Tyler Peters renters need insurance because it covers them if they damage the unit. It gives you someone with deep pockets if they set the place on fire and it burns the complex to the ground. If their insurance covers it, then you are less likely to be responsible. Your insurance likely does not cover their acts of negligence. Renters insurance is typically a good thing.
But should they need to carry $300,000 in liability? It seems like overkill. When I have rented places in the past, I've always been encouraged to carry renter's insurance to cover my personal belongings, but never been required. Regardless, I think Jean makes a good point that it should be mentioned in the contract, not the listing. It could be scaring people off.
My suggestion would be to have a friend call and schedule a showing to "shop" the property management company and leasing agent. If you look at the listing on Zillow, 85 people have saved the home so my guess is something is going wrong when prospects either try to schedule a showing (e.g. the management company is not returning calls) or at the showing.
Also, it appears your property management company has a pretty low rating and some bad reviews on Zillow (which shows up on the listing page). Unfortunately, there's not a lot you can do about that at this point, but it might be a deterrent for some.