Once you have purchased your first rental property, the next step is finding and keeping great tenants! Finding great tenants is the key to nearly headache free rental property management. In this episode, Bill explores some unique and effective techniques to help attract and maintain the perfect tenants for your rental property.
In this podcast, I will outline a few of the necessary steps to take to find, target and sign-up top notch tenants. I’ll also examine how to achieve maximum exposure for your property, including creating effective vacancy listings that will be sure to draw tenants to your property like a magnet!
Before you can create your listing, you’ll need to make sure you have the right monthly rental rate for the property. Hopefully, before you purchased the property you did a very thorough rental analysis in the initial underwriting to determine if the property was a good purchase. From that research, you should already know the idea rental rate. But, nonetheless, I will review and elaborate here.
If you’ve never rented properties out before, you’ll want to do some research to find a price point that strikes a happy balance level between what you want to rent out the property for and what the tenants are willing pay. To do this, you can do the following:
Now that you’ve settled on a listing price, you’ll want to establish the “ideal tenant” demographic criteria that you want renting your property. Now, keep in mind, who you want and who is likely to rent the properties in your area, for your type of property, at your price, make not be match. You need to be objective and carefully review past/current tenants who have rented from your property. You’ll also need to identify who is renting other properties in that area. This isn’t always easy to identify but it’s necessary if you want to get and keep the ideal tenants. Here a are a few ways to do this:
The most likely people to rent are the types that are already renting in that neighborhood, but, that’s not to say, you can’t “reposition” a property to attract a different type of tenant. This can be effective but it can also be tricky. For example, if you want to target high income white collar professionals to a property in an area that usually attracts blue collar, working class people, you may initially get them to rent from you but you may not keep them because the area does not provide the types of services and amenities they prefer. You need to realistic.
Once you have your rental rate and “ideal tenant” profile, you’ll need to target your marketing efforts.
The most common means to attract renters is through outside signage in front of your rental property and online advertising.
There are both free and paid means through which to advertise your property. Newspaper classified used to be the top years ago, and may be stronger in some areas, but today, the most popular platform is craigslist.com. Most people regularly scan craigslist. Other popular online sites are apartments.com, hotpads.com, Trulia, realtor, and Zillow.
All of these allow for you to write up/design an ad and post pictures of your property or unit. Since this is your primary marketing vehicle, you want to make sure you carefully put this together.
You will need to decide what details prospective tenants will want to see up front. For example, if you are renting out a small studio apartment near a hipster downtown area, you’d want to pander to a younger single person (probably a millennial) because they are the most likely to have a need for it. A listing for such a property should highlight local businesses or attractions that a young single person would be interested, like restaurants or hip hang-outs. Or, if instead you are renting out a single family 3 bed/ 1 bath home, you’re more likely to be getting interest from younger families in need of a safe home to raise children. In this case, you probably wouldn’t want to take the same approach as you would for the hipster downtown rental.
Instead, you would communicate how the surrounding area has highly ranked schools, a beautiful park within walking distance, or a popular shopping center. Also, make sure that you’re honest with your ad; most landlords have a special place in their heart for their properties, so it can be easy for them to emphasize only the positives while neglecting the details that aren’t so hot. An effective ad is one that not only showcases the best parts of the property, but is up front with anything that could be problematic. You don’t want to be bothered to take calls or schedule a showing only to have the tenant discover a discrepancy between the actual property and what was posted online. You’ll save yourself a lot of hassle if you write an honest listing to begin with. For example, my 22-unit is not in a war zone nor “the hood” but it is multicultural and mostly blue collar. My most effective ad refers to it as an “Urban Oasis!”
Having a title that stands out, such as “Urban Oasis,” is everything when it comes to rental listings. If your title doesn’t grab the interest of tenants, it will be quickly buried amongst the thousands of other posted listings. If you are so inclined, you can try to come up with a creative or humorous title to generate some interest, but the safest approach is to write a simple title that provides the most important information.
When prospective tenants are sifting through hundreds of listings online, they’re focus will be on ones that list the location, size, and the number of bedrooms/baths they desire – first!
Most listing sites like Craigslist or Apartments.com allow you to list the city/neighborhood separately from the listing headline, so it’s redundant to use your precious headline space to do so. On sites like these, describe where your property is in relation to what your target demographic would be interested in. Let’s return to our small downtown hipster studio apartment scenario, where you’d do well to feature a destination that would appeal to a young single. Let’s say your studio is a 5 minute walk away from a popular downtown farmers market. You could start with the following:
Spacious Studio Apartment One Block from the legendary City Market
Next, highlight the most desirable property feature or a move-in incentive that you’re offering. For example, if you just installed all new appliances, or are offering $200 off the first month’s rent, add that into the title line:
Spacious Studio apartment with brand new appliances, minutes away from the legendary City Market
Spacious Studio apartment minutes away from the legendary City Market, $200 off first month’s rent
Keep it simple and focused; it just needs to grab their initial attention so that they will continue to read the rest of the listing.
Once you’ve hooked the attention of a renter, you’ll need beautiful pictures to keep them interested. Nothing will convey the charm of a property better than a picture, so don’t skimp on this part. I recommend you use an experienced professional real estate photographer to take pictures of your property (inside and out) A skilled photographer will be able to capture your property in its best lighting; poorly lit photos will not produce results.
Be sure to photograph all common areas, bedrooms, bathrooms, the backyard or patio, building exterior or anything else you think tenants would want to see. Take pictures of the property in its “showing condition” to prevent prospective tenants from experiencing discrepancies between their expectation and reality. You’ll want to post several pictures of the property, but not so many that the renter feels as if they don’t need to visit the property.
TIP: Furnished and professionally decorated photos will outshine ALL competitors! Staged photos for the shoot, including pictures on the wall. Even though it’s not a furnished apartment. Remember these can be used for years after.
I did this with one of my studio apartments and quadrupled the online inquiries. It really works!
Write a descriptive listing, but don’t flood it with unnecessary fluff. Tenants who are spending a lot of their time searching through listings aren’t going to want to devote the time to read a novel. Start with the basic features, size, number of beds/baths, and list the amenities. Expand on what you said in the title and give more descriptive information about what is situated around the property and what they’ll have access to in terms of shops, restaurants, parks, public transportation. Answer any frequently asked questions such as: who covers utilities, whether pets are allowed, whether there is storage space, available parking, when the property is available, and the duration of the lease/agreement.
Display the best contact information on how the tenants can reach you. If you’re worried about being spammed, create a separate email address or create a google voice number to use for rental correspondence but be sure to check it. It’s incredibly frustrating for tenants to call landlords repeatedly to no-avail. You may lose dream tenants if you neglect your follow up. If you can’t take calls during business hours, list the best times for tenants to contact you right on the listing.
If responding to their calls is difficult, you may want to recruit a local realtor to take the calls and show the unit and maybe even screen the prospective tenant in exchange for the half of the first month’s rent.
Be up front with the tenants in terms of what you require for credit score, income, and background check. You’ll also want to tell them the details about the next showing you’ll be hosting as well as what they’ll need to bring. Take advantage of as many listing sites as you can, since there are many, many platforms out there. The more sites you use, the wider your reach. It doesn’t take a lot of effort to copy the listing from one platform to another. Just keep track of what sites you’re listing, and be sure to stay on top of refreshing the listing information if anything changes. You don’t want your listing to expire or be buried at the bottom of the pile because of inactivity.
Aside from the online listing approach, there are other avenues you can take advantage of to market your property.
As you may know, I featured in podcast #038 a special technique I call Stealth Tenant Marketing. With Stealth Tenant Marketing you look at your “Ideal tenant” and identify where that person would likely work in the community where your rental property is located.
For example, if a nurse fits in your criteria as an ideal tenant, you locate local hospitals and medical facilities in your area, make up flyers, with your beautiful photos or your rental property and include in a special “custom” offer for the employees of that hospital or medical office and have the flyers hand delivered to the human resources (HR) directors presenting the offer “exclusively” to their employees.
Lastly, it’s important to understand that finding tenants takes time. You may hear landlords talk about how they found a tenant days or even hours after posting the listing, but this is the exception, not the rule. Plan ahead and give yourself adequate time to find the right tenant. You don’t want to sacrifice the security of the property and your peace of mind by agreeing to rent your property to the first tenant who comes your way. Make sure they are carefully vetted and meet your high standards and criteria. With patience and diligence, you’ll soon have a line of qualified renters coming your way to visit the property.
Once you’ve gotten some folks to schedule a visit, make sure you have a knock out showing of the property, have plenty of applications on hand and that you follow-up promptly.
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