We bought a single family rental property last year with a tenant already in place. Now the tenant has moved out, and we’ve completed repairs and cleaning. However there has been no interest in the property since we posted the vacancy. It is now going on three weeks and we need to get this rented up soon. What are some suggestions that might help?
When a unit stays vacant for a long period of time, it can be due to a number of reasons. You might want to review your marketing strategies. Are you advertising on multiple sites and using a variety of media to advertise the vacancy? If your advertising isn’t reaching the right market segment, no one knows about your vacancy. You should make sure the rental listing is compliant with fair housing laws by focusing on the property features and amenities. The posting could include the property address or neighborhood location; the number of bedrooms and bathrooms; monthly rent amount; security deposit fee; move-in fees; pet policy; or other information that is relevant to a prospective renter in his decision making process. You may want to hold an open house to encourage prospects to visit the property. The curb appeal of a property is critical to a positive first impression by a prospect. Make sure your property is clean and inviting both inside and out. Open house visitors could be asked to comment on what they liked or didn’t like about the property features and amenities.
Location of the rental property might be another factor in attracting rental prospects. The unit may have been acceptable to the former tenant but potential prospects may have different criteria. Property size and design layout may also be factors in renting decisions. The number of bedrooms and bathrooms can limit interest in a rental unit or exclude it from consideration. Rental policies for qualification and screening may be important to some potential tenants. Many renters have family pets and a no-pets policy for your property will limit the size of the applicant pool.
However, in general, the most common reason for a property not renting is the rent is too high. Assuming your vacancy posting was sufficiently descriptive and the property is located in a decent neighborhood, the fact that there has been no interest in your property, e.g., no calls, requests for showing, or applications is an indication that the property may be priced incorrectly. Setting a market rent or slightly below market rent could make the property more attractive to potential renters.
You should document your current policies, rents, deposits, and advertising efforts to serve as a baseline for future property management decisions. When you revise your policies and practices, be sure to document those changes, the business necessity for change and the response received from the revised advertising or policies. With time you can gain a better understanding of your local market and how it affects your business.
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Q2
What should I consider in buying income property?
A2
The right investment strategy is the key to making an informed investment decision. For those investors who want to buy and hold, buying a property that will be easy to rent may be an important factor in the buying decision.
Location is the most important factor in selecting a property to buy for income. When you invest in income property, you are actually investing in a neighborhood. To get good tenants you must own decent, safe and affordable housing in areas where people want to live. The employment opportunities, schools, transportation, and retail businesses in the local rental market are among the factors that can affect the amount of rent a tenant will be willing to pay to live in your property. That determines the price you can pay for a rental property.
Due diligence is required for an informed buying decision. Becoming too interested in a property without running the numbers and analyzing market data can result in overpaying for a property. Don’t underestimate the costs of repairs and costs of small maintenance issues when performing your cost analysis. You will need to include a cash reserve for vacancies, unexpected rental expenses, repairs, and replacements.
You should begin your opportunity search with a defined investment strategy. That in turn will guide you where to look and what to look for. Have your financing options in place so that when an opportunity arises, you will be ready to conduct due diligence, make an offer, and close in a timely manner.