Please forgive me if this question has been asked before, I couldn’t seem to find it when I searched. Here’s the deal:
I currently have two properties that I have rehabbed and that are available for rent. One of them has been on the market since early December; the other went up for rent the first week in January. Both of these properties are located in an area with an extreme amount of investor activity, so competition is pretty tough. I’m asking right at fair market rent for the area (which already puts me in a slightly neg cashflow situation). I’m wondering if anyone can offer some creative ideas to market these properties that I haven’t thought of. I’ve done most of the standard…i.e. signs in the yards, signs on the streets in the area, newspaper ads, section 8 website, tenant placement company. I’m currently pondering on the idea of putting fliers in everyone in the neighborhood’s mailbox offering $200 for a referral. Does anyone have any creative ideas to get these things rented in a hurry, other than lowering the rent even more? ANY advice is greatly appreciated…the mortgage payments are killin’ me.
What’s it like for realtors in your area? Around here you typically have to pay the realtor a 1/2 months rent and he’s supposed to get another 1/2 from the tenant but most tenants don’t want to pay so some agents just take the 1/2 months.
You can also use Craiglist.org. I see a bunch of listings for alpharetta. Use pictures in your listing and repost them often but remember to delete the old ones.
The winter is really the worst time to have an empty unit, rents just seem to take a 10-20% hit over the warmer months. September is usually a good time around here so I just structure my leases to expire in September. If you’re not sure of them, just do a 6 month lease and if you think they’ll be good, you can do 1 1/2 years.
I believe that you are VERY fortunate not to have rented these properties yet. IF you think you are being killed by the mortgage payments, you haven’t seen anything yet. What happens when you have to evict someone and not only have to spend months evicting them (rent free), but also have the legal fees, a trashed property, etc? Unfortunately, you’ve committed the cardinal sin of rentals - failing to have sufficient cash flow! Without proper cash flow, you WILL personally find out why 80% of new businesses fail. Combine this error with the fact that the housing market is at the top and will certainly decline. The average decline after a RE boom is 20% and lasts up to 12 years. This is not gloom and doom talk - it is historically accurate. Check it out for yourself.
This is why I said that you are fortunate to NOT have rented these properties (at a loss). You have one more chance to rethink your strategy and sell these things while you can still make money (hopefully).
Good Luck,
Mike
PS, if you don’t want to sell, then lowering the price will get your properties rented. Rents are soft (decreasing) in many areas including mine. I believe this will improve after the bust in non-boom areas.
Unfortunately, I’m in a market of extremely inflated comps (due to investors selling to other investors with some sort of kickback involved, solely to drive up the comps) so the chance of me actually selling these properties for what they appraised for is slim. I was told by several investors at my local REIA that it’s standard procedure in this area to set aside some of the cash from the refi to carry the neg. cashflow for a year or two. I do have the funds to do so, but having to make the full mortgage payments is eating it up quickly.
I am a new investor (can you tell?!!) and realize that I have made some mistakes with these two properties. I’m chalking it up to a learning experience, but in the meantime, I still need to get them rented quickly. Any ideas are still appreciated…
I’m not sure where your properties are located but if they are near a military base you could check with their housing group and maybe place an ad with them there. Also, check your local community college bulletin board…that might be another place where you can post an ad for your place.
Provide value added services to differentiate yourself from the
competition. You can cleverly tack on the costs to your pricing
structure.
Maid service for weekly cleanup.
Yard maintenance
some others that come to mind are
free cable or satellite subscription
free internet connection
free daily newspaper.
From an advertisement standpoint,
offer 1months rent as commission to the agents that bring
in qualified renters. Of course, plug in a minimum 1 year
lease requirement. And have a strong contract to protect
your interests.
Craigslist, yahoo lists and you can also list on the mls for a
couple hunderd $.
The best way to turn a negative cash flow situation into a positive is to offer your tenants something other than just the use and occupancy of the home.
Why not offer them the benefits of homeownership including mortgage interest writeoff, the property tax writeoff, and a share of future appreciation in trade for their taking full responsibility for maintenance and repairs and HIGHER RENT? Use a triple net lease with a land trust to accomplish this.
Then make a nice flyer and walk around the neighborhood announcing your Pick Your Neighbor program. Offer to pay $250 to anyone that recommends a friend, associate, cousin, mistress, etc., that they would like as their neighbor. It works every time.
You won’t need a real estate agent or a property manager if you follow this plan.
