All Forum Posts by: Joe Splitrock

I think there is an important point made here. Connecting the dots is so important. When I show the house, I make small talk and ask lots of questions. I look for holes in the story. People try to cover up bad things even though they may seem really nice.

@Mike F. I think you are agreeing with me. Price is relative to perceived value. That being said, I think it is a mistake to believe that lack of interest is only due to price. It goes back to the three P's of marketing. Product, Price and Promotion. 

Applying this concept to a home, the product is the house and the perceived value. The price is rent cost. Promotion is how you are advertising and promoting the home. That includes how many rental agents are promoting it, where you are advertising it, quality of photos, marketing description, how you are handling phone calls, how you handle showings, etc. I have seen homes listed on Craigslist with one blurry photo and two sentences. If their phone is not ringing, is price really the problem? I had a house on Craigslist and got a call one week after listing it. The lady told me she was looking every day and just saw it for the first time. She ended up renting the home. People cannot get interested if they don't know about it. 

Price needs to match the perceived value, but assuming it does, then promotion becomes the factor. Promotion can increase the perceived value and generates interest. If nobody is looking, lowering your price will have no effect without promotion. Promotion will find the potential renters and it is value/price that close the deal. If they look at three places and yours is nicer and cheaper, they will rent from you. 

Great advice @Joe DiGirolamo! I didn't think about the agent portion, but that makes sense. Unfortunately, I have an agent that I am signed up with. Plus I have done several deals with him and he is a good guy. My fear in flipping from an agent is not being loyal. We are in a small market and I feel loyalty as part of my reputation is important. 

For me having two past references is a requirement unless they previously owned their home. Having a good job doesn't mean you pay your rent on time, but of course having a job is important. My properties are higher dollar value in my market, so it wouldn't be your first rental. You have to keep that in mind. For example, if you are in college rentals, I wouldn't expect much rental history.

Doing proper verification is important. The first thing I do with a reference phone number is I do a search to see if it comes back to a property management company. That is the best case situation. If it is an apartment building, I search the property and find their phone number from their website. If you suspect the phone number is a friend, you can also ask questions to try to trick the person. You can change the details of the reference. For example if they told you they paid $595, then ask the reference to verify they paid $795. If it is legitimate, they will say no. If it is a friend, they are likely to agree. You can also call the number and ask if they have any units for rent. They would not be prepared for that question if they are not a landlord. You may also be able to look up the property address in tax records and get the owner name. This may sound like a lot of work, but I have caught so many people giving false reference numbers that I always verify.

Remember that the best reference is not their current landlord, but the one before that. The current landlord could have an agenda. They may like the tenant and not want them to leave, therefore you may get a negative view of a good tenant. On the flip side they may make a troubled tenant sound good, so they can get them out fast. The previous landlord has nothing to lose and will be happy to tell the truth.

If I get references and they are were regularly late with rent, I will deny them. If they owe a previous landlord money for rent or damage, I will deny them.

I have caught several people giving a friend as a reference which is immediate denial. I don't rent to people who lie. I will work with someone honest. 

My first reaction was to make sure you tell them the truth. I assume the source is the county tax/owner records. If they want to know why they were specifically sent the letter, you just explain your reason, that you are looking to invest in the area and their home is appealing. 

I get letters from property management companies all the time. I don't call them because I am not interested. My point is that if you are getting a call, it is either that they want off your list or they are interested in hearing more about your offer. Assume they are interested until the conversation turns otherwise. Be honest and genuine. Good luck!

Interesting feedback that several people feel it is all about price. I do agree that you should consider price relative to time of the year. Places rent for much more in the summer. If you lower the price far enough, you will definitely get it rented. There can be the opposite problem if you go too low, it can create the perception there is something wrong. Lower price may just attract more unqualified people. One option may be to offer a lower rate with a 6 month lease. At the end of 6 months, increase rent $50 or $75 and request a 12 month lease. You may be worried that your tenant will leave after 6 months, but in the summer you will be able to charge higher rents if they do leave. Your tenant will also have to pay higher rents to find a new place so they will be more likely to stay. 

You also have to decide what the value of your product (house) is to the market. Like any market there are high end and low end options. Some people have lower quality houses and just price is their value. Some have higher quality houses and target a different market. In the example @Daren H. gave about the Nintendo 3DS versus 2DS, that was two different products. One is positioned as a higher end solution and one as a lower end solution. If your house is a "3DS" then you should not rent it at a "2DS" price. Someone else has a "2DS" house that is a better fit. My point is that Nintendo doesn't lower the price of their 3DS to get customers, they offer a lower end product for people who cannot afford the 3DS. 

@Jay Thoms that is good advice to look for a local broker who has more than one source for insurance. I am in a similar situation with a local agent and he saved me over 20% from the big company I was with. When I left my old agent he seemed mad. I asked if he could match the rate or justify why I should pay more to stay with him. He was a 30 year experienced agent and all I got was dead silence. Basically they were just over priced.

Interesting view on cash. I have always happily accepted cash, because I see no risk. I do see the point about theft, but in my case I am in safe areas. 

One thing I recommend if you do accept cash is count the money when you are standing in front of them. I have had situations where I was shorted and even a situation where the tenant gave me an extra $50. Then I also give a receipt. The receipt is to protect both of you. 

We have been considering working with an online rent payment service. My wife listens to Dave Ramsey and just heard a caller who told him that his tenant had given the online payment service a bank account number for the Salvation Army. It was something like 6 months before the Salvation Army noticed and now they have to give the money back. I am really wondering why the online payment service wouldn't be responsible. It is kind of scary. I am sure there is more to the story.

As far as ACH and checks, most people don't realize that someone can come back later and dispute only to have the money leave your account. Cash cannot be taken once in your account. I think cashiers checks and money orders are pretty secure too.

It does sound like you need to get rid of your property management company. I like @Phil Earley suggestion of calmly talking to them. They have to be expecting it since they don't seem very interested in managing your property. 

The sooner you can sit down with your tenant and get this under control the better. The management company is saying your tenant has not paid, but what if it is your management company that is the true problem? I wouldn't take any steps to get rid of your tenant until you hear their side of the story. 

@Jenny Keffer I don't know you at all, but I am confident you could do a better job managing the property yourself. The difference is you care. Good luck.