Rental price suggestions

[Joe T.]

Hi all,

I recently bought my first property and I have had it up for rent for 1 week listed at $1250.

The link to my property can be found here - http://www.realtor.com/realestateandhomes-detail/9...

I am thinking about dropping the price down to $1200 to be more competitive in my area. I am not willing to go below $1150 though, which is determined to be "fair market value" according to my appraisal. According to my realtor, it should have been rented out within a week, based on what he can see on the MLS for similar homes.

I have had 5 people view the home, and 3 cancel. There was supposed to be one application submitted, but it appears that it was never sent to my realtor. Does anyone have any suggestions on how I can get my property rented? How long should I be willing to wait before dropping the price? I have my first mortgage payment due on Sept 1st. 

[JD Martin]

Looks like a nice place, but I doubt anyone can tell you if you are competitive unless they are from San Antonio. Have you tried comparing to what other properties your size & in similar neighborhoods are renting for (not listing for)? How tight is the SA rental market? 

When you want/have to be rented by a deadline, you should price at or slightly below the market in order to generate the most activity. If 1150 is fair market rent, you are already $100 above that, and it sounds like the market is telling you as much. Have you listed on Craigslist? Postlets? Newspaper? Other avenues? 

[Scott Weaner]

If it has only been 1 week, I would suggest holding out a bit. A quick look at Zillow shows that you have the nicest house for rent in the neighborhood as far as I can tell.

[Joe T.]

I posted my rental on craigslist, but they told me to take it off. Apparently they were getting tons and tons of calls about trying to negotiate the rent and deposit. Since it's posted on the MLS, it's my understanding that realtor.com, zillow, trulia, and other sites pull the information from there. I will try posting directly to postlets right now however. The housing market is very competitive here, the rental market is similar as well. Some houses were being rented out within 3-4 days, and I am in a very strong area.

I did my market analysis before purchasing the home, and determined that similar homes are going for around that price in this immediate area, The problem is that there aren't really any 4 bedrooms 2.5 baths in this area, so I feel like I have something more unique. They are all 3 bed 2 bath. I just don't feel comfortable waiting very long since it is my first rental. With that being said, I do still have about 3 weeks until my first mortgage payment. 

[Mike D'Arrigo]

@Joe T. First of all, what role is your real estate agent playing in this? Are they acting as a property manager to get it leased? If so, is he actually a property manager? I'm confused why you are asking $1250 if $1150 is truly market rent. Appraisers aren't the best at determining market rent and either are MLS comps, Only a fraction of rentals are listed on the MLS. A property manager that knows the area well and has a lot of rental history there is the best person to estimate the rent. Is there something about your property that you think commands $100 over market? If 5 people have viewed it and none were interested, that tells you something. Is your agent getting any feedback on why there weren't interested? They should be getting feedback. If your realtor doesn't have property management experience, I would get yourself an experienced PM. Just because someone is an agent doesn't mean that they know how to manage a property.

[JD Martin]

Originally posted by @Joe T.:

I posted my rental on craigslist, but they told me to take it off. Apparently they were getting tons and tons of calls about trying to negotiate the rent and deposit. Since it's posted on the MLS, it's my understanding that realtor.com, zillow, trulia, and other sites pull the information from there. I will try posting directly to postlets right now however. The housing market is very competitive here, the rental market is similar as well. Some houses were being rented out within 3-4 days, and I am in a very strong area.

I did my market analysis before purchasing the home, and determined that similar homes are going for around that price in this immediate area, The problem is that there aren't really any 4 bedrooms 2.5 baths in this area, so I feel like I have something more unique. They are all 3 bed 2 bath. I just don't feel comfortable waiting very long since it is my first rental. With that being said, I do still have about 3 weeks until my first mortgage payment. 

 Is your agreement with the realtor exclusive? I would have kept the option of in-house marketing so that you hit everything simultaneously. CL is a huge lead generator, and if the real estate agency prohibits it listing to them, I would direct calls to me even if I still had to pay the agency by renting it myself. 

[Joe T.]

@Mike D'Arrigo

 When I bought the house with my agent, he offered to have his team members list the property for me. I owe them nothing. I do owe the agent who finds a tenant for me, $200 though. They are not acting as a property manager, they do background checks and screen the tenants for me, and then present me their application. I have received 3 emails from the automated showing service, their comments can be seen below.

"My client is going to talk with his wife. This home is not first on their list, but they haven't ruled it out. Thank you."

"Great House!"

"My clients really liked this house."

In a previous post I had discussed with other members the possibility of posting higher and then working my way down. As for asking $100 over market rent, I figured it was worth a shot, seeing as how I have 3 more weeks to go until my mortgage starts. 

[Geoffrey Jones]

I would definitely hold the price for a bit at $1250 if your not in a rush. Hey you never know what someone would pay depending on their scenario. Give it alt least a month. Lower rent price sometimes attracts difficult tenants. 

[Joe T.]

@JD Martin

 I just posted it on craigslist with my information on it. I will handle the tenants and feed the correct ones through to my realtor that can afford the rental. I prefer to do all of the marketing myself anyways, I feel like I am left in the dark because I have no idea how many people are contacting or not. 

I think the most important part of having my realtor / his team work with me is that they put a lockbox on the house that has a code that other realtors can use to show the property. This has allowed the home to be shown 5 times while I was at work during the week. 

[Tonya Carraway]

Which neighborhood/subdivision is it?  

[Joe T.]

@tonya

Great Northwest 

[Tonya Carraway]

I just mapped it.  NW is definitely growing but that particular neighborhood may be older and less attractive to younger families/couples.  Schools are decent so that can't be it.  I've only driven through there once or twice and thought it was a little busy, the fences weren't maintained and there may have been graffiti on a building (maybe it's a mural??).  The property is definitely worth 1250 but the neighborhood might push you back to the 1150 price point.  Definitely go with Craigslist.  There are decent people on there as well and you can do your own background screen. Just include it in the app fee.  Get there previous rental history (can investors tap into that rental history background check?).  Anyway, hope this helps.  Inbox me if you care to hear any more of my personal opinions... :)

[Joe T.]

@Tonya Carraway

Thanks Tonya,

I can agree that most of the fences are older and are in need of replacement soon. I think that mural you are talking about is on a gas station, near one of those DIY car wash stations. I thought it looked weird too and was a little bit off putting... I have listed it on craigslist and will filter out potential tenants before sending them on to the rest of the process. When my realtor called me, he made it sound like he was getting dozens of calls a day and none of them were any good...

I will keep it at this price for another week, if I still don't get any applicants, I will lower the price per everyone's suggestions. 

Thanks everyone for all your insight, I appreciate it. I am just a little uneasy since this is my first rodeo, but I think it will work out in the end. 

[Tonya Carraway]

I'm sure you will be just fine @Joe T..  I'm going tot assume you have for rent signs up as well.  Also, see if the neighborhood has a Facebook page. My neighbors advertise a lot, including rentals, on our Facebook page. Good luck!

[Mike D'Arrigo]

@Joe T. I don't know your rental market but if it's only a week, I wouldn't be worried at this point. There's a risk in marketing it above market value though. It will limit your tenant pool and the longer it sits unrented, it gets stale and people don't pay attention to it anymore. Personally, I think you're better off offering it at market rent and getting a tenant quickly. 30 days will chew up an extra $100 you are trying to get.

[David Markette]

@Joe T., as someone already posted, since you have only had the house on the market for one week, don't fret it yet.  Once you lower the price, you aren't going to raise it.  I have a 4BR house on Valley Trails, rented for $1125, so you are definitely in the ballpark.

When we are advertising properties, the first thing I do (after determining market rent for the neighborhood, using MLS), is I put a sign in the front yard, with our phone number. People who live in the area will call their friends and relatives. Don't underestimate the power of a "For Rent" sign in the front yard!

Next, I post an ad on postlets.com.  It is a free site.  Once posted there, your ad will be shared to about 50 RE sites, like Zillow, Trulia, Hotpads, etc.  I also post a copy of the created ad to Craigslist.

When the phone rings, answer it!  Be clear about your criteria for renting (felony history, minimum standard for income vs. rent amount), pet requirements.  BTW, that criteria should be in writing, handed to your applicants when they fill out an application.

The Great NW is a decent neighborhood in SA, a working class neighborhood to be sure.  Rentals are still scarce, especially now that school begins again in 2 weeks.  Do NOT be in a rush to pick someone just because they wave a couple thousand $$ in your face!  This is long-term relationship you are establishing.  Yes, you can evict tenants quicker in TX than in most states, but why take a chance with your $100K+ property?  SCREEN YOUR APPLICANTS THOROUGHLY!

Give me a call if you have any questions.

[Will Pritchett]

Joe Thrower I have a property on Old Quarry that isn't far from there. It is a little newer but only 3/2.5 with 2 car garage. Took me over a week to find acceptable tenants. My realtor will list for free if I buy through him but i decline now because I get great response rates through craigslist and Postlets. Also, put a sign in the yard that clearly states For Rent, not to be confused with For Sale. I agree that school starting soon should be good for you. Just a thought, if you can, put out a survey so those who see the property can give you feedback in case there is a detracting factor that you haven't recognized. Also, I once bought a house - at least partially - because the owner had cookies baking and it smelled just like home! Sounds silly but odors - even potpourri -matter to some people whether they know it or not. PM me if I can help at all. Good luck! -Will

[Joe T.]

So I dropped the rental price to $1195. I have gotten 15 inquiries today, and while I was showing the home to one individual, 5 more potential tenants came to view the home. 

The problem now is that not a SINGLE person has qualified. I told all of them to submit a rental application and that we would be doing a background check, but none of them said they would apply, even after telling me that they would. I find it strange that nobody has applied. I'm concerned that I have chosen a bad area, and that the people in this area simply will not be qualified by traditional renting standards. 

[Craig Stephens]

Hi @Mike D'Arrigo, thanks for the advice on renting and who to go to. 

 @JD Martin I'm also using a real estate agent, but kept it open to where I can advertise where I want. I found it interesting that when the rental is posted in MLS, there was a lot of lag time for it to get out to zillow and the other sites but Zillow took the longest to get the updates -- almost 2 weeks. (I'm in Phoenix) and so would have expected it to go faster. When you say "CL" what does that mean?

@Joe T.  I'm reading through the post from about 7 months ago when you did your first property rental, how did that work for you to be slightly over the market?  

I amn curious what you're using for qualifying someone to rent your place?   I've been running the standard should make 3 times the rental price, I run credit, background and criminal checks and after someone applies, I send out fax for prior work history and landlords.  Anything I'm missing? 

[Joe T.]

@Craig Stephens

I ended up renting it for $1150 which was the true market value. The tenants signed a 2 year lease and have been absolutely fantastic. The requirements you listed are the same that I used to verify their eligibility. I honestly would try to stick to that, but you can definitely overlook credit score. You are really more concerned with their ability and willingness to pay rent, their other liabilities aren't any of your concern. If they have the proper income and good rental history but bad credit, I would still rent to them. 

[Craig Stephens]

Thanks.  I appreciate the tip and confirmation of criteria.