Should you offer a deal to find new tenants?

Written by Holly Welles on . Posted in edited, For Landlords, Income Ideas, Maintenance & Renovations, Move-in/Move-out, paid, Rent & Expenses, Rental Advertising, Step 5 - List, Advertise & Show

incentivesWhen your property can’t seem to keep reliable tenants, you might start to consider ways of sweetening the deal, such as offering incentives.

Your property may be great, but that doesn’t mean you’re immune to bouts of bad luck with tenants, increased competition, and environmental nuisances like neighborhood construction projects. When the cards are stacked against you, a discount can help speed up the tenant search and reduce the negative financial effects of vacancies.

The benefit of filling your space may very well be worth the added expense, but make sure you first do a cost-benefit analysis by making sure adding an incentive won’t make your total expenses greater than your total income.

Here are seven practical tips and techniques.

1. Reduce your fees

Review your contract to see if you can be flexible with some of your listed fees. Tenants who review your agreement are likelier to sign on the dotted line if they don’t have to factor an excessive amount of additional costs into their budget. For instance, if you charge for amenities such as laundry or parking, the cost of waiving those fees may be negligible compared to the benefit of winning over a reliable tenant.

If you can manage without the extra income, waive the application fee for background and credit checks. Note that if you use Cozy, applicants are automatically charged for this, but you might apply this charge toward first month’s rent as a way to waive the application fee.

Remember that you’re trying to attract tenants. Applicants have a greater justification for renting with you if they feel like they’re getting a deal they couldn’t find elsewhere. The loss in fee collection is minimal compared to the vacuum of an unoccupied apartment draining your resources.

Of course, make sure that you trust the potential tenant and your screening process before going down this route.

Related: Should I raise the rent on a good tenant?

2. Offer discounted rates

Discounted rates are clearly attractive to potential tenants, but this solution requires some careful math on your end.

Evaluate your expenses and the rates offered by your competition. Compare the costs of offering a monthly reduction against those of an extended vacancy, making sure that your property is still profitable with the deal you offer. Do you have the room to lower your rates if it means signing a tenant more quickly?

You could also offer discounts in return for more convenience. If a tenant can pay rent each month through automatic electronic payments rather than physical checks, for example, you can offer a rent reduction for making your financial life a little easier.

3. Consider a longer or shorter lease

Another way you may discount rates is to offer an extended lease for a lower monthly rate. The longer renters stay with you, the more your risk of extended vacancies is reduced.

The point of an extended lease is to keep your renters making regular contributions to your business. Keep an eye on your local market and any proposed tax changes to assess the risk of settling into a longer-term agreement. While you’ll receive less money for your unit, it may prove more consistent and reliable down the road.

On the other hand, some tenants may not be sure if they’ll be sticking around for a full year. If you need to fill a vacancy now, offering a shorter lease that allows for tenant flexibility may prove beneficial. This is especially true if you’re trying to find a tenant in an off-season. If the shorter lease ends in the summer, for example, you’ll have an easier time finding a more long-term renter.

4. Create more flexible terms

Renting an apartment is an enormous commitment, and a strict lease can turn otherwise excited applicants away. If you relax the terms of your agreement, applicants might feel more secure in deciding to sign with you. And there are small, inexpensive changes you can make to your contract to improve its appeal.

Offer a deal to find new tenants who may be perfectly great renters but crave flexibility that other landlords lack. Pet-friendly apartments are enticing to animal lovers searching for a place that accepts their furry friend. Permission to decorate the property may win some prospective tenants over. Others will find an early lease termination clause appealing, giving them a degree of freedom unavailable from your competitors.

Related: Pet deposits, pet fees and pet rent – what’s the difference?

5. Offer upgrades

If you can’t swing a rate reduction, property upgrades can be a powerful incentive for new tenants. Replacing an old oven with a newer model, painting the walls a more modern color, or increasing storage might win over tenants looking for a fresher living space. Property upgrades create value for you, too, since they will make your rental more attractive for years to come.

Be careful not to overspend on a project that will eat away at your profits. After all, you’re still responsible for all maintenance costs down the line. You don’t need to offer lavish upgrades to appeal to new tenants when simple improvements can make an impact. Something as simple as installing more shelving can please a renter without extending your regular budget for new projects.

Related: 7 Affordable Upgrades for Your Rental Properties

6. Put together a gift basket

For those new tenants who have recently signed a lease, welcoming them to your building with a gift basket can be a great first step toward building a friendship. Renters who feel a closer connection with their landlord are more likely to renew their contract once it expires.

It doesn’t have to cost a lot to look like a nice gesture. Gift cards to local restaurants or the movie theatre, food, or a bottle of wine are all possible options when stocking your gift basket. An edible arrangement can make a good impression on your tenants.

7. Provide a free first month

At first glance, it seems like a ridiculous ask of any landlord. Who in their right mind would sacrifice an entire month’s rent? But consider the money lost on an already vacant unit that’s accruing nothing but dust, and a month of waived rent is well worth the income that will begin to flow in afterward.

Related: 3 reasons you might not want to collect a security deposit

When does offering a deal become a gimmick?

Some potential renters are wary of deals, seeing them as “gimmicks” that a landlord uses to attract the naive and gullible. After all, if the landlord has to offer a deal to find new tenants who will stick around, they might think the property suffers from an issue not explicitly advertised.

This is particularly relevant to No. 5 above. Densely crowded urban areas with high rent prices often have apartments that advertise a free month’s rent in exchange for signing a lease. While this isn’t misleading, these concessions can lead tenants to enter an agreement they’re unable to manage.

As a landlord, you need to fill your rentals. The fortunate news is that there are many ways to accomplish this task. As long as you do it with respect and fairness to everyone involved, you’re well on your way toward managing a happy, busy property.

How to attract long-term tenants

Written by Holly Welles on . Posted in edited, For Landlords, Landlord Tips, long-term rental, Maintenance & Renovations, Move-in/Move-out, paid, renters rights, Step 5 - List, Advertise & Show

Fresh out of college with the intention to move from my hometown to a new city, I was searching for an apartment. And when I finally found the listing of my dreams—okay, a listing I could afford—I first had to make sure the landlord was someone I trusted to respect my living situation as much as I respected their property.

For a young renter, meeting with a new landlord can be intimidating. I was nervous about apartment hunting on my own, but even more nervous about failing to see eye-to-eye with my potential landlord.

Fortunately, from our first meeting, my landlord made it clear that my interests were as important as his business. I live in a small building with my landlord residing on the first floor, which makes a healthy rental relationship crucial. Happily, my landlord has a great attitude that has attracted and kept multiple long-term tenants.

I’ve renewed my lease since that first year and have every intention of doing so until my living needs change. How did my landlord inspire this, and how can you take his lead? From moving in to living in harmony, here’s how you can inspire long-term rental relationships with tenants.

1. Consider a compromise

The day I signed my lease, the landlord was showing the listing to two other potential tenants. I had lined up a few viewings and was hesitant to jump on signing without finding out my options. Rather than pressure me to grab the listing while I could, my landlord granted me a grace period—he would not lease the space that day without hearing from me first.

I appreciated that this potential landlord was willing to work with me. His gesture showed me that he valued me as a potential tenant and was understanding of my situation.

If you want to make a good first impression on your tenants, laying the foundation to build a long-term relationship, making even a small gesture can do the trick. A flexible policy can go a long way.

2. Offer a warm welcome

When I moved in, my landlord provided me with a list of his favorite community hotspots and a few restaurant recommendations. His friendliness alleviated all my earlier anxieties about living in a new space, and he established himself as a go-to contact for questions about our neighborhood.

If you want to start off on the right foot, a small welcome gift or some cultivated advice can go a long way. It doesn’t have to cost a lot, but a welcome package is a kind gesture that shows you care. Besides free advice, here are some inexpensive items you might want to include:

  • Coffee beans
  • Baked goods
  • Cleaning supplies
  • Map of the area
  • Coupon or gift card for a local favorite
  • Your contact info on a notecard

Note that if you provide consumables, make sure your tenant is aware of the ingredients.

Welcoming your tenant opens a line of communication early on, encouraging your tenant to call you in case something happens. A welcome package is a perfect first step.

Related: Provide Bathroom Essentials on Move-In Day

3. Maintain the “little” things

Neglect can drive a wedge in your rental relationships, particularly if the tenant believes you don’t care for their comfort. Landlords should respond to maintenance requests as soon as possible, and this can include more than apartment maintenance.

Parking was an issue during my first week of moving in because I struggled to perfectly maneuver into my tight space. When I mentioned it to my landlord, he guided me into the spot. He even sent me an appreciative text once when he noticed I had parallel parked like a pro. He took time out of his day for this small act, and I felt appreciative.

Related: Be an ethical landlord

4. Make the area safe

With today’s technology, installing security measures in your complex is simpler than ever.

Browse through the broad selection of modern tech and determine which cameras and locks are most suitable for your building. If you make the adjustments to your property, brief your tenants on new procedures and protocol. You can send out an email or place notes on the doors, but make sure to keep them informed.

My landlord has never compromised in this area. Between a security camera by my parking space and his diligence in maintaining my exterior locks, I feel secure living alone as a young woman. His respect for my security contributes to my decision to renew my lease each year.

Related: Should Landlords (or Tenants) Install an Alarm System?

5. Show respect for privacy

I never have to worry about surprise inspections. That’s not a healthy way to approach the landlord-tenant dynamic, not to mention that the practice is illegal in most jurisdictions. Though you own the property, you should show some tact when navigating a renter’s space.

If you’re planning to enter a tenant’s unit for whatever reason other than an emergency, let them know in advance. Schedule a date and time that won’t inconvenience them, and try your best not to break from it. They should feel happy to see you, not horrified at the prospect you might appear at any given moment for an impromptu check.

In this area, like many others, your relationship rests on your ability to communicate. Maintain a regular back-and-forth where you discuss these things. Tenants deserve privacy, so it’s essential you give them their personal space.

Related: Can a Landlord Enter the Property Whenever They Want?

Building long-term rental relationships

My concerns about navigating my new rental relationship were swept away by the respect my landlord has shown for both the apartment I leased and my living situation. None of his actions take much time or money, but they add up. Not only am I more likely to continue this long-term rental relationship, but I’m also encouraged to do everything I can to make my landlord’s life easier as well.

Your tenants can share my positivity. Start with a small gesture, and go from there.

13 creative marketing strategies for independent landlords

Written by Joe Fairless on . Posted in For Landlords, free, Rental Advertising, Step 5 - List, Advertise & Show

Marketing your rentalsAs an independent landlord who self-manages a portfolio of rental properties, you probably don’t outsource the job of filling vacancies to a property management company.

Unlike a property management company, you are the manager AND the owner. This means you control the marketing strategies and are directly impacted by their success or failure.

The best marketing strategies are designed to find the highest quality tenants—people who pay rent on time, treat the unit and property as if it were their own home, and are courteous to the neighbors—in the fastest possible time.

Finding high-quality tenants makes your life easier as a landlord and puts more money in your pocket. You’ll have more qualified leads, less turnover (and lower turnover costs), fewer evictions, and less late rental payments. Finding these tenants faster reduces your vacancy loss. By filling vacancies yourself, you eliminate the lease-up fees, new lease fees, and ongoing fees charged by a property management company.

How can you find the highest-quality tenant in the shortest period of time?

Now the question is how to find the highest-quality tenant in the shortest period of time without spending all your time marketing your vacant units?

As a result of building a portfolio of over $400 million in apartment communities, I have identified 13 creative marketing strategies to attract high-quality tenants:

1. Advertise on the internet 

Eighty-seven percent of renters search for their homes on the internet, so an online presence for your rental properties is a must. Start by creating a website (or at least a Facebook page). Then post your listing, and market the listing on social media sites like Facebook, Twitter, and Pinterest. Next, all of your “for rent” units should be listed on popular online rental listing services like Cozy, Apartments.com, Craigslist, Realtor.com, Trulia, and ApartmentFinder.com. Make sure your listings include a clear and accurate description of the unit and property and highlight major selling points. It’s also a good idea to invest a few hundred dollars into having professional pictures taken.

Related: How to write attractive property listings in 8 steps

2. Hire locators

A locator is a rental agency that specializes in helping prospective tenants find their ideal home based on their needs. These are great sources for finding high-quality residents. The fastest way to find the locators in your market is on Google. The standard commission is 50 percent of a month’s rent, which is less costly than a property manager’s fees. If you decide to hire a locator, make sure you provide them with weekly updates on your current availabilities.

3. Partner with a real estate agent

You can partner with your real estate agent agent to advertise your rentals on the MLS. Realtors usually charge 50 percent of a month’s rent as a commission. This is a great way to build rapport with your real estate agent and ideally become their go-to investor for their pocket listings and off-market opportunities.

4. Use corporate outreach

Most major corporations have someone whose sole responsibility is to place employees who are relocating to the area into new rentals. Contact the human resources department of the major employers in your market. Ask for the contact information of their relocation specialist.

5. Target local businesses

Create a list of local businesses, employers, schools, bus stops, train stations, etc. to target your marketing efforts based on your renter demographic. Then, to generate leads, print out and drop off fliers, business cards, price sheets, floor plans, and site maps to these targets. Always ask for permission first.

6. Negotiate discounts with target businesses

Another approach is to negotiate discounts at local eateries, salons, fitness centers, etc. for your tenants, and then leverage those discounts when marketing your rental listing. The local business gets more customers, and your tenants get access to local businesses at discounted prices, so it is a win-win.

7. Build a referral program

Fifty-seven percent of renters search for a home through referrals from family and friends. To capitalize on this, incentivize your tenants to provide referrals. One approach is to offer cash to any tenant who provides a referral. A fee of $300 paid 30 days after the execution of the new lease is standard. To advertise the referral program, deliver notes to your tenants’ doors, and send out friendly emails with the details of the referral program on a monthly or bimonthly basis.

8. Provide a free gift to target business employees

Similar to the referral program, send a small gift such as a gift card, gift basket, bottle of wine, toolkit, etc. to the current tenants who are employed at the businesses on your target list. Thank them for their residency, and ask them to refer your rental properties to their colleagues at work.

9. Hold tenant appreciation parties

To promote resident satisfaction and retention, host tenant appreciation parties a few times throughout the year. Examples are to provide a small to-go breakfast; host a wine night; host a timely or holiday-themed event, like a Valentine’s Day card-making party; holiday gift wrapping session; back-to-school barbecue; or a Halloween costume contest. Be creative!

10. Encourage online reviews

The online rating of your properties will likely be the first thing a prospective tenant looks at during their rental search. Organic reviews are great, but you should also be proactive to increase your number of reviews. One strategy is to ask a resident for a review after fulfilling a minor maintenance request (probably not a good idea if it was a large maintenance issue) in a timely fashion. Or have a laptop station set up at your tenant appreciation parties and ask them to write a review before they leave.

11. Contact exiting tenants

Call all tenants who have previously notified you that they plan on leaving at the end of their lease to figure out why they are leaving. See what you can do to convince them to stay (assuming they are a high-quality tenant). Maybe they want to move to a different unit or want a minor upgrade, like an accent wall or new curtains. Also, explain to them the costs associated with moving out (new security deposit, hiring a moving company or U-Haul, cleaning costs, new furniture, etc.). This conversation should take place at least 60 to 90 days prior to the end of their lease.

12. Follow-up with old leads

Reach out to leads you received that are older than 90 days to see if they or someone they know is still searching for a rental.

13. Offer good customer service

Provide stellar, good old-fashioned customer service to prospective tenants. Be responsive and timely with requests and questions. It doesn’t matter if you’re a marketing wizard and get hundreds of leads if you don’t pick up the phone or respond to emails quickly, politely answering questions, and getting possible tenants one step closer to viewing the property and signing the lease.

Summary

All 13 of these strategies have been proven to attract the highest quality residents in the shortest amount of time without the help (and costs) of a property management company.

Some of these strategies are free and just require some sweat equity on your part. Others require an upfront investment and/or result in a short-term reduction in income. So it’s important that you create a marketing strategy and set a marketing budget before closing on a deal. That way, you can account for the costs in your underwriting.

4 reasons you should not use a real estate agent to rent a house

Written by Laura Agadoni on . Posted in edited, For Renters, Move-in/Move-out, paid, Rent & Expenses, Rental Advertising, Step 5 - List, Advertise & Show

Don't work with an agentCall me crazy, but I get a little annoyed when real estate agents call me about a rental listing.

Why?

Here’s a typical conversation:

Me: Hello.

Agent: Hello, this is John. I’m a real estate agent with AAA Real Estate. Is the home for rent at 123 Main Street still available?

Me: Yes it is.

Agent: Well, it’s not in the MLS.

Me: A silent pause

Agent: Anyway, my client requested to see it. And I want to show it now.

Me: I’m having an open house Saturday at 3 p.m., and your client is welcome to come.

Agent: No, that doesn’t work. My client wants to see it sooner. When can I show it?

Me: You can’t show it at all. Tenants are currently living there, and I’ve made arrangements to have an open house Saturday at 3. Please invite your client to come then.

Agent: Do you pay an agent commission?

Me: No.

Agent: Thank you. Goodbye.

And I never hear from this agent or their client again.

Here are four reasons why you shouldn’t use an agent when you want to rent a home:

1. Real estate agents use only the MLS

If you ask a real estate agent to find you a rental property, they will most likely look only on the Multiple Listing Service (MLS), which only agents can access.

In fact, I asked an agent the other day how he finds rental properties for clients. He said he finds them through the MLS.

Here’s the problem of looking only at the MLS for rental properties: Since only agents can list properties through the MLS, real estate agents are missing all the properties landlords like me advertise. And if your real estate agent is missing out on properties listed by non-agents, you are too.

You are better off, when looking for a rental property, to look online.

You’ll probably find lots of rental homes by looking at various real estate sites on your own, more than what your real estate agent will find by using only the MLS. Of course, you can always find properties and send them to your agent, but then why not just contact the person on the listing yourself?

Related: The Only 3 Websites You Need to List a Rental Property

2. Agents expect to be paid

Real estate agents mainly work with clients who are buying and selling homes. In those cases, the seller typically pays the real estate agent by giving the agent a percentage of the home’s selling price.

So the expectations for most real estate agents who are helping a client trying to rent is that the landlord will pay the agent for finding a tenant, typically one month’s rent (similar to getting a cut of a home’s sale).

But in a rental market where most applicants find rental properties without an agent, landlords have no reason to pay an agent. In other words, if I have five applicants for a property, four who represent themselves and one who comes with an agent who expects me to pay them a month’s rent, guess who I’m not renting to?

If you use an agent in a market where most people are finding properties on their own, you will likely be taking yourself out of the running to land a rental property.

3. Agents don’t really want to work with you

I’ve always suspected that statement to be true, and now I have a couple of stories to back this up. I think this probably represents what many agents think.

A real estate agent called me the other day on behalf of her client, and when I told her I don’t pay an agent commission, she let me know that she doesn’t know what to tell renters who call her for help. She wants to help them find a home, but if the landlord won’t pay her commission, she is not interested in working for free.

Another agent told me that he usually doesn’t work with clients looking to rent but that he will sometimes do so to help a friend out.

Since it’s not the norm for homebuyers to pay an agent (home sellers typically do), renters and agents expect the landlord or property owner to pay the agent just as home sellers (owners) do. But while most home sellers use and pay real estate agents, most small-time property owners do not use agents to get their property rented, so they have no interest in paying your agent.

If you really want to use a real estate agent to help you find a rental home, you might want to consider paying your agent yourself.

4. Agents often do more harm than good

Landlords who know their business find out what market rents are for similar rentals in their area. (I use the Cozy rent estimate tool in addition to keeping up with rent prices in my area.)

But when a real estate agent comes along, they are usually loaded for bear and ready to negotiate rent price—it’s just part of their job, like offering less than asking price for a home to buy. Although that’s standard practice for the home buying process, it’s not typical for landlords like me who plan to rent the property for the price listed.

Just as I don’t pay agents a commission, I am not interested in taking less than my advertised rate for my rental properties. If you’re paying an agent for their great negotiating skills, your money is largely being wasted when it comes to renting versus buying a property.

When real estate agents are helpful

There’s a place for real estate agents and rental properties. In big cities like San Francisco or New York where it’s difficult to find housing, you might benefit from using an agent. Or if you are relocating and know nothing about the area, you might need help from an agent who can show you around. Other than that, you are typically better off to cut out the middleman and find a rental house yourself.

Rental properties: how to turn a negative into a positive

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, paid, Step 5 - List, Advertise & Show

Permission to subletWhen I bought my first rental property, it was on the fourth floor of a walk-up. Imagine hauling groceries to that unit. It wasn’t fun, but my legs looked great. I saved $100 a month because the gym was no longer necessary. See how reframing changes your perspective?

While I jest, the sentiment has value. Reframing a negative into a positive can work for most issues you find in real estate investments. When there’s a negative about your unit or property, highlight something that would alleviate the need for what your property is lacking. Let’s look at four common negative situations and reframe them into selling points.

Related: How to use cap rate to make your investment property decisions

1. No laundry in building

When you live in an apartment building, laundry is an event. I remember saving up my laundry until I was on my last sock before I would finally think about doing laundry when I lived in an apartment (nothing has changed). I would put it in a wheeled laundry basket and walk it down the block to the Laundromat.

When I became a landlord, one of my buildings didn’t have any on-site laundry. This was an issue for potential renters. Time and time again, I would have prospective renters say that the laundry was a deal breaker for them, so I got creative.

Solution: I spoke with a local fluff-and-fold service that picks up laundry, cleans it, folds it, and drops it back off. I negotiated a special rate for tenants. What was once a deal breaker became a sale maker. The fluff-and-fold deal became a selling point, and I rented the unit the same day I updated my ad to include this feature.

2. Landlord is selling

I recently put one of my leased units on the market. The tenants still had six months left on their lease, so I had plenty working against the potential sale. One, the buyer would either need to be willing to wait to move in or want to be a landlord. Two, the tenants are living their lives in this unit. Showings would be an issue. It could be messy. It was definitely intrusive.

What could I do?

Solution: I spoke with a Realtor friend of mine and asked for advice. He specialized in buying and selling investment properties, so this wasn’t his first rodeo. He suggested offering a monthly discount as an incentive to keep the unit clean. Other options were offering a “bonus” when the unit sold, giving the tenants the option to end the lease early, and/or providing a weekly cleaning service. We chose to offer a “bonus,” when the sale closed. The unit is now under contract, and the tenant is still happy.

Related: How to stage a rental for showing

3. No assigned parking

In two of my real estate investments, I had the issue of no assigned parking. Street parking was the only parking available. At least, on the surface. I found that local parking lots had rental spaces available.

Solution: To turn this negative into a positive, I worked with local parking lot managers to secure monthly parking options. From here, you have a few options. You can secure the parking spaces yourself and roll the cost into the rent, or pass along the information to the tenant or prospective tenant to manage themselves.

If street parking is truly your only option, you can add other incentives to ease the burden by including the cost of a residential parking sticker (if needed) or a stipend for public transportation within the monthly rent.

4. No outdoor space

Outdoor space is an amenity that is important to today’s renters, and I didn’t have it. There was no place to put a barbecue or have drinks on a balcony.

Solution: I focused on what I did have: access to a great park. My unit did not have a terrace, and it never would. What it did have was a big park right behind the building that had barbecues, a playground, and hangout areas for the pups in the neighborhood. In fact, it was where I met all of my local friends and neighbors. I highlighted that outdoor space.

If you’re hard-pressed to find an outdoor space to highlight at your property, go a different direction. Provide a beach pass or a dog park pass in your move-in welcome package.

Related: The perfect tenant move-in package

No property is perfect, but any property can seem perfect to someone.

Being a landlord provides you with many opportunities to think of creative ways to make your tenant’s life better. Instead of thinking of yourself as a landlord, think of yourself as a tenant experience manager. You have the potential to make your tenant’s life better by finding innovative ways to solve problems. What problems can you solve for your tenants?

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