As promised here is the 2nd posting of The Real Truth in PM.
This posting will focus on marketing, and more specifically the strategies followed by almost all companies, as discovered during my research/investigations.
In a city where over 40% of 2.2MM residents are actually renting, it's a little hard to wrap your head around the idea that your property is actually vacant. When you read the following message, you will probably understand it a little more. It's not that there are no renters, or even enough qualified renters, what I have found is the fact that the properties are just not being marketed correctly.
Please read on!
When marketing a property for rent, what I have found is almost all companies operate with the exact same strategies. In my experience, most company executives know that business does evolve, and you should as well if you want to maintain success. What I am seeing is the exact opposite of this, they are not evolving at all, they are relying on the same techniques of a different era, where gas prices and the economy was considerably better than now.
Their strategies are as follows:
1. Sign In Yard - BAD BAD BAD IDEA! Why? I'm glad you asked! The issue with signs in yard is the fact that gas prices in my city are hovering around $3.50-$3.60 per gallon. So if the average vehicle can hold 15 gallons of fuel, that is around $50 or so for a tank of gas. Now this may or may not seem like alot of money to most of us, but I can assure you that it might as well be 1 million dollars to most tenants. These tenants usually put $10-20 in their cars at one time, they DO NOT drive neighborhood's just looking for their next rental home. In fact, my exit polls with tenants have discovered less than 15% of tenants use this method. Those that have answered that they found the property by a sign in the yard, was only because they happen to be on the street.
The other major issue with a sign in the yard, it advertises your property as in FACT being vacant, and invites break ins!! I see this time and time again, rental houses with yard signs, having their front/back doors being kicked in. It's just a bad idea!
2. Craigslist Posting - Before someone yells at me, I strongly support CL ads, when they are done correctly! What do I mean by this? When posting rental properties on CL, you have to run that ad, no less than 3x per day, if you want it to gain momentum. The very reason we post on CL (millions of users), is the very reason it can defeat your intentions. The average ad takes 15-20 minutes to go live on CL, in a section like Apts/Housing For Rent, you will literally have 1000s of post every day. What happens to your ad is quite simple, it goes live, and within 30 minutes it is buried on Page ___! To properly use CL, you must fully understand how CL works, this means creating intelligent ads that CL will not FLAG, and a good understanding of marketing. How do you get your house to stand out among a 1000 others?
3. NON Employee Leasing Agents - This is just a terrible idea! You can bet, if your company is using this method, and many many companies, in fact, utilize this strategy almost exclusively. Here is the only problem you need to know about this. I can promise you and almost guarantee you, there will be absolutely no background checks run on those tenants.
Here is how this strategy plays out. Most independent leasing agents, will charge anywhere from $350-500 per tenant. If your property is renting in the $600-800 range, and your agreement calls for 75% or even 100% of the 1st month's rent, who is going to pay for the background check? You can bet not the leasing agent, and the company will not be happy with $100-$300 to place a tenant, this drastically cuts into their profits. So to reduce this number by another $30-100, just not going to happen. A thorough background check should cost around $30-50 per adult! And they should be pulling a background check on ALL adults!
Now for facts!
60+% of current tenants DO NOT have consistent access to the internet! They simply cannot afford it.
80+% of current tenants DO NOT and WILL NOT drive area's looking for their next home! This used to be the norm, but gas prices have changed all of that! It's time to evolve!
Over 95% of tenants literally live check to check, extra money is out of the question! Why do I bring this up? To help their bottom line, all companies I researched, charge anywhere from $20-40 for an application fee! What's wrong with this? It's really about economics, the very tenants that cannot afford to pay any extra money for an application fee, that they stand a 50% chance of being denied, will just look for those companies that DO NOT charge for applications! ME!!! What does this mean for me and my clients? I see considerably more applications per property than any other company, as they say safety in numbers! I choose from an average of 12 tenants per property, instead of 1 or 2, which odds do you like better?
There are companies that have connections with Section 8, and are allowed to market within the Housing Authority. I have no issue with Section 8, as long as you do a background check, and a very very thorough previous landlord interview. I won't post the story here, but if you all would like to see why this is important, visit my website and read the story of a Section 8 tenant!
All companies I investigated DO NOT run any checks on Section 8 tenants, this is simply foolish! It may be guaranteed rent, but IT IS NOT guaranteed good tenant, major difference.
Make sure your company is in fact evolving with the times, this economy has changed the way ALOT of us conduct business. You can bet if it's effecting our bottom line, it's killing the tenants. Your company should be savvy enough to detect this and make changes where necessary.
NO SIGNS IN YARD! They simply are not as effective, and they cause more problems than it's worth.
CL Posting - Consistency ,Consistency is the key! Learn CL, so that you can manipulate the results. For example, I use video links in my ads of the properties. Why? It creates an automatic counter for me, I can see actual results of my ads, and not have to guess on their effectiveness. This is marketing!
Independent Leasing Agents. Just a bad idea PERIOD!!
I want to thank those of you that have read my previous post, and this one! I hope this information will help all of you experience a better opportunity, in any market. These methods are tried and true, and backed up with actual data from tenants!