Reducing rent to place a tenant?
Member since 2019 · 144 posts · 46 votes
Reducing rent to place a tenant?
Most Popular Reply
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y@michele Velaquez, you bought a place because you anticipated just $50 cashflow?
How do you define "cash-flow"? Are you including budgeting 10-15% total for capital expenses, vacancy, and maintenance? If you are defining cash-flow as just meeting your hard costs like mortgage, taxes, insurance, PM, etc then that isn't good at all.
Are there any changes you can make to get the rent you planned? Adding a washer/dryer instead of just hookups. Allowing pets with additional pet rent and pet deposit. There are lots of possibilities.
70 Replies
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Michele Velazquez if you post on FBN Marketplace, you should set up a Google Alert for your property to catch the likely copying of your ad.
Logical Property Management4.9446 Reviews - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
If up or down ,50- 100 a month makes or brecks it, it was never a good deal . YES lower it.
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Bob S.:
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
If up or down ,50- 100 a month makes or brecks it, it was never a good deal . YES lower it.
Not sure you read the post. It started off at $1295. It's at $1225 and going down $25 a week. At some point that is going to be too low
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Michael Smythe:
@Michele Velazquez if you post on FBN Marketplace, you should set up a Google Alert for your property to catch the likely copying of your ad.
Yikes. Ok I can do that, thank you.
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Michael Smythe:
@Michele Velazquez if you post on FBN Marketplace, you should set up a Google Alert for your property to catch the likely copying of your ad.
Where would they copy it too? What would they do with it?
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Michele Velazquez:
Quote from @Bob S.:
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
If up or down ,50- 100 a month makes or brecks it, it was never a good deal . YES lower it.
Not sure you read the post. It started off at $1295. It's at $1225 and going down $25 a week. At some point that is going to be too low
Well sorry to say, YOU need to know the numbers, NOT anyone else. I am NOT attacking you. As I have posted 100x RE is all about numbers, and you better know them. Now if this is going to be 200 less ok now its having a negative impact.
Good luck to you
try marketing it yourself see what happens,
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Bob S.:
Quote from @Michele Velazquez:
Quote from @Bob S.:
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
If up or down ,50- 100 a month makes or brecks it, it was never a good deal . YES lower it.
Not sure you read the post. It started off at $1295. It's at $1225 and going down $25 a week. At some point that is going to be too low
Well sorry to say, YOU need to know the numbers, NOT anyone else. I am NOT attacking you. As I have posted 100x RE is all about numbers, and you better know them. Now if this is going to be 200 less ok now its having a negative impact.
Good luck to you
try marketing it yourself see what happens,
I do know them though. I was just asking for seasoned investors opinion on how low is too low to drop rent. I am new and I have owned these properties for a few months. There really isn't any hellp in saying I did a bad deal lol
- 2yJosh YoungPro MemberRental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
@Michele Velazquez there is no such thing as too low, at some point you will be low enough on the rent to attract a quality applicant. You are better off shooting a little low on pricing at the beginning and raising rent on the renewal or turnover when you have more time to find a tenant so your vacancy isn't affected. Maximizing the rental rate in year one shouldn't be your goal, your goal should be quickly filling the vacancy with a quality applicant, real estate investing is a long game.
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Josh Young:
@Michele Velazquez there is no such thing as too low, at some point you will be low enough on the rent to attract a quality applicant. You are better off shooting a little low on pricing at the beginning and raising rent on the renewal or turnover when you have more time to find a tenant so your vacancy isn't affected. Maximizing the rental rate in year one shouldn't be your goal, your goal should be quickly filling the vacancy with a quality applicant, real estate investing is a long game.
Thank you. This is exactly the advice i was looking for. This makes perfect sense!
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes2y
Quote from @Michele Velazquez:
Quote from @Josh Young:
@Michele Velazquez there is no such thing as too low, at some point you will be low enough on the rent to attract a quality applicant. You are better off shooting a little low on pricing at the beginning and raising rent on the renewal or turnover when you have more time to find a tenant so your vacancy isn't affected. Maximizing the rental rate in year one shouldn't be your goal, your goal should be quickly filling the vacancy with a quality applicant, real estate investing is a long game.
Thank you. This is exactly the advice i was looking for. This makes perfect sense!
You're not "dumb" for buying with where $50 is a significant difference in cash or not. If that's the best you could find, especially in today's market, then it is what it is. You're not likely to have the same challenges 5, 10, 20 years from now. As the previous poster commented, when you first buy, it's not always possible to cash flow a ton or at all.
I still say review your agreement with this property manager and fire them if you noticed comps are renting for what they can't get, and didn't sit as long as yours is.
- Member since 2022 · 79 posts · 72 votes2y
I self manage four 6-unit buildings. I use Buildium Property Management software but prefer to pay for Zillow premium listings. Usually, the reason to avoid checking Zillow Group in the software (your software looks like Buildium) is that you can't have duplicate listings. Zillow Group will redistribute the listing to its member sites. Perhaps, your management company has a commercial account and prefers to list directly through the website.
I typically work 18-hour days when I have a listing. It's non-stop because I give every prospective my time and attention. My units rent within 24 to 72 hours of listing. My listings get about 60-100 leads. I usually remove the listing and stop showings and accepting applications at the seven day mark. My last listing received 6 applications. Based on the number of leads, your unit seems to be reasonably priced. A better gauge of that is how many leads you receive in the first 3-7 days. I think the distribution is important here. For example, if your unit received 80% of its leads in the first two weeks, you had a good listing that needed attention and an extra push. I know I get my best leads in the first 48 hours - people who are actively searching on a daily basis. I need to be hyper responsive during this time. Listings get cold. There will be 20 leads on Day 1; 3 on Day 7. This is also when prospectives form their first impression.
Responsiveness is where I think your manager is dropping the ball. I am not sure how to access your listing. Some units rent themselves. That's not the case with my Class C buildings. My 1962 builds look tired. I inherited some deferred maintenance and it shows (I don't do virtual tours; meticulous google phone photography only). There also isn't a manager on site. Demonstrating that I am responsive, accessible, hands-on, and hard working is critical. Future residents need to trust they will receive excellent service after move-in. A manager who can't be bothered to attend showings communicates the opposite message...I'm inaccessible and apathetic.
This just happened. My buildings are tract buildings on a street with only tract buildings, and all units are 1B/1B. I had a vacancy in July. Rented on the 1st day of showings at $1850. Building next door has a vacancy in August. The manager finally rented it two weeks ago at $1600. That unit is worth $1800-$1850. The manager just didn't do the work. It's a pretty unit.
I am not equipped to comment on numbers. I think you need to get your unit rented asap. I think you need a hands-on manager. There may be opportunities to get creative here - a trustworthy resident manager CAN be a wonderful option. Obviously, you need to review your existing contract, and start thinking of an exit strategy from this manager and hiring strategy for the next one. Alternatively, you might be able to renegotiate the contract to exclude leasing services and hire an outside agent. In the future, you might want to get some software and head a team from California - all you need is good boots...If you are in this for the long haul, it may be worth your time.
Your blind spot, as an out of state investor, is management. I think reaching out to similar investors and asking about their oversight techniques and management approaches would be helpful. I advise taking the time to visit the property and hire the next manager in person. It's important to know what's going on in your buildings. Are maintenance requests handled in a timely manner? Are your residents comfortable using the software? Is there an alternative reporting method?
I wish you the best. A good manager can make all the difference in the world. - Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @Michele Velazquez:
Quote from @Bob S.:
Quote from @Michele Velazquez:
Quote from @Bob S.:
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
If up or down ,50- 100 a month makes or brecks it, it was never a good deal . YES lower it.
Not sure you read the post. It started off at $1295. It's at $1225 and going down $25 a week. At some point that is going to be too low
Well sorry to say, YOU need to know the numbers, NOT anyone else. I am NOT attacking you. As I have posted 100x RE is all about numbers, and you better know them. Now if this is going to be 200 less ok now its having a negative impact.
Good luck to you
try marketing it yourself see what happens,
I do know them though. I was just asking for seasoned investors opinion on how low is too low to drop rent. I am new and I have owned these properties for a few months. There really isn't any hellp in saying I did a bad deal lol
Thoughts:
1. Should or shouldn't buy is a moot point since you own them, so I agree that discussion is more or less a waste of time unless you're open to selling. Let's assume not.2. It would be helpful knowing the entire state of each quadplex - how much did you pay for each quadplex (total, not per door), and how many and for how much are each of the other units rented?
3. Have you rented out any of the other units since you purchased the properties? When? How long did it take to rent them? For how much? With this manager or on your own or with another manager?
4. *In general* it is better to have a good tenant in place paying less than absolute market than no tenant, or a bad tenant paying a little more, in that order (you never want a bad tenant). With that in mind, it's a better strategy to start a little lower on the market end especially in the slow months, and Oct-Feb are going to be slow months in Atlanta (pretty close to my market).
5. Before I would just drop the rent by $25 per week, which is just a carpet bombing strategy, I would research similar units and locations and see how much they are listed for, how long they've been on the market, and how they present compared to my own unit.
6. If you decide to lower the rent (which it sounds like you probably should/will have to), I like to start all over rather than my listing look like I've become desperate and it shows rent has been dropped by $200, $300 or whatever you've dropped it. It reeks of desperation. I'd pull the ads, rework the pictures, description and price, and relist altogether.
7. Your PM is lazy and IMO probably should be canned. If I am using a local PM they sure as hell better show my units in person. That's part of what they are being paid to do - how are they going to get any kind of impression of the potential tenant if they never meet them? I know several PMs in my area who use the "self-tour" method and their properties consistently rent for less than my properties and spend more time vacant than my properties. A good PM should be getting you more, not less, money than doing it yourself.
Skyline Properties - Investor · Atlanta, GA · Member since 2020 · 294 posts · 142 votes2y
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
Message me, I have noticed an especially lousy PM who manages quite a few rentals in Conyers. No photos or bad photos, no description or lousy description. They would lower prices rather than post photos or better photos or even add a description. They did not answer when I called on 2 occasions and took 3 days to return my text message. If they are your PM...
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Alison Brenner:
I self manage four 6-unit buildings. I use Buildium Property Management software but prefer to pay for Zillow premium listings. Usually, the reason to avoid checking Zillow Group in the software (your software looks like Buildium) is that you can't have duplicate listings. Zillow Group will redistribute the listing to its member sites. Perhaps, your management company has a commercial account and prefers to list directly through the website.
I typically work 18-hour days when I have a listing. It's non-stop because I give every prospective my time and attention. My units rent within 24 to 72 hours of listing. My listings get about 60-100 leads. I usually remove the listing and stop showings and accepting applications at the seven day mark. My last listing received 6 applications. Based on the number of leads, your unit seems to be reasonably priced. A better gauge of that is how many leads you receive in the first 3-7 days. I think the distribution is important here. For example, if your unit received 80% of its leads in the first two weeks, you had a good listing that needed attention and an extra push. I know I get my best leads in the first 48 hours - people who are actively searching on a daily basis. I need to be hyper responsive during this time. Listings get cold. There will be 20 leads on Day 1; 3 on Day 7. This is also when prospectives form their first impression.
Responsiveness is where I think your manager is dropping the ball. I am not sure how to access your listing. Some units rent themselves. That's not the case with my Class C buildings. My 1962 builds look tired. I inherited some deferred maintenance and it shows (I don't do virtual tours; meticulous google phone photography only). There also isn't a manager on site. Demonstrating that I am responsive, accessible, hands-on, and hard working is critical. Future residents need to trust they will receive excellent service after move-in. A manager who can't be bothered to attend showings communicates the opposite message...I'm inaccessible and apathetic.
This just happened. My buildings are tract buildings on a street with only tract buildings, and all units are 1B/1B. I had a vacancy in July. Rented on the 1st day of showings at $1850. Building next door has a vacancy in August. The manager finally rented it two weeks ago at $1600. That unit is worth $1800-$1850. The manager just didn't do the work. It's a pretty unit.
I am not equipped to comment on numbers. I think you need to get your unit rented asap. I think you need a hands-on manager. There may be opportunities to get creative here - a trustworthy resident manager CAN be a wonderful option. Obviously, you need to review your existing contract, and start thinking of an exit strategy from this manager and hiring strategy for the next one. Alternatively, you might be able to renegotiate the contract to exclude leasing services and hire an outside agent. In the future, you might want to get some software and head a team from California - all you need is good boots...If you are in this for the long haul, it may be worth your time.
Your blind spot, as an out of state investor, is management. I think reaching out to similar investors and asking about their oversight techniques and management approaches would be helpful. I advise taking the time to visit the property and hire the next manager in person. It's important to know what's going on in your buildings. Are maintenance requests handled in a timely manner? Are your residents comfortable using the software? Is there an alternative reporting method?
I wish you the best. A good manager can make all the difference in the world.I completely agree with you and I love your advice. Thank you so much for such a thoughtful response with great ideas. Also, I wish I could hire you, you are GOALS. What city are you investing in?
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Adah N.:
Quote from @Michele Velazquez:
I am relatively new to investing. I have 2 quadplexes in Atlanta being managed by a PM since I am in California. I bought these units because the PM said the rent in the area was $1250 and they believe I could get between $1250-$1275 a month per unit. So I bought these units assuming these numbers as that would make me cashflow. However, the unit has been on the market for one month and now they are saying to lower the rent $25 every week. My question is, how low do I go? Do I go down past $1200 where I won't cash flow every month but it's better than no tenant? I would love to hear feedback from the seasoned investors. Thank you.
Message me, I have noticed an especially lousy PM who manages quite a few rentals in Conyers. No photos or bad photos, no description or lousy description. They would lower prices rather than post photos or better photos or even add a description. They did not answer when I called on 2 occasions and took 3 days to return my text message. If they are your PM...
I messaged
- Member since 2019 · 144 posts · 46 votes2y
Quote from @Alison Brenner:
I self manage four 6-unit buildings. I use Buildium Property Management software but prefer to pay for Zillow premium listings. Usually, the reason to avoid checking Zillow Group in the software (your software looks like Buildium) is that you can't have duplicate listings. Zillow Group will redistribute the listing to its member sites. Perhaps, your management company has a commercial account and prefers to list directly through the website.
I typically work 18-hour days when I have a listing. It's non-stop because I give every prospective my time and attention. My units rent within 24 to 72 hours of listing. My listings get about 60-100 leads. I usually remove the listing and stop showings and accepting applications at the seven day mark. My last listing received 6 applications. Based on the number of leads, your unit seems to be reasonably priced. A better gauge of that is how many leads you receive in the first 3-7 days. I think the distribution is important here. For example, if your unit received 80% of its leads in the first two weeks, you had a good listing that needed attention and an extra push. I know I get my best leads in the first 48 hours - people who are actively searching on a daily basis. I need to be hyper responsive during this time. Listings get cold. There will be 20 leads on Day 1; 3 on Day 7. This is also when prospectives form their first impression.
Responsiveness is where I think your manager is dropping the ball. I am not sure how to access your listing. Some units rent themselves. That's not the case with my Class C buildings. My 1962 builds look tired. I inherited some deferred maintenance and it shows (I don't do virtual tours; meticulous google phone photography only). There also isn't a manager on site. Demonstrating that I am responsive, accessible, hands-on, and hard working is critical. Future residents need to trust they will receive excellent service after move-in. A manager who can't be bothered to attend showings communicates the opposite message...I'm inaccessible and apathetic.
This just happened. My buildings are tract buildings on a street with only tract buildings, and all units are 1B/1B. I had a vacancy in July. Rented on the 1st day of showings at $1850. Building next door has a vacancy in August. The manager finally rented it two weeks ago at $1600. That unit is worth $1800-$1850. The manager just didn't do the work. It's a pretty unit.
I am not equipped to comment on numbers. I think you need to get your unit rented asap. I think you need a hands-on manager. There may be opportunities to get creative here - a trustworthy resident manager CAN be a wonderful option. Obviously, you need to review your existing contract, and start thinking of an exit strategy from this manager and hiring strategy for the next one. Alternatively, you might be able to renegotiate the contract to exclude leasing services and hire an outside agent. In the future, you might want to get some software and head a team from California - all you need is good boots...If you are in this for the long haul, it may be worth your time.
Your blind spot, as an out of state investor, is management. I think reaching out to similar investors and asking about their oversight techniques and management approaches would be helpful. I advise taking the time to visit the property and hire the next manager in person. It's important to know what's going on in your buildings. Are maintenance requests handled in a timely manner? Are your residents comfortable using the software? Is there an alternative reporting method?
I wish you the best. A good manager can make all the difference in the world.Can I email you or DM you?
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votesLogical Property Management4.9446 Reviews
- Member since 2018 · 4 posts · 0 votes2y
Michele,
I live north of Atlanta, I am also a Realtor. If you would like, I could go see it and give feedback, boots on the ground. I have two properties that I rent currently. Let me know.
Vicky
- Member since 2022 · 79 posts · 72 votes2yI am in Anaheim - about a mile from Disneyland. It's an interesting neighborhood. Long history of gang activity and crime. Gentrification is in full swing.
Thank you for your kind words. You will figure out the ingredients to your secret sauce. There's just a steep learning curve.
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