Help.. Struggling to rent first investment property

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Help.. Struggling to rent first investment property

Katherine T.
Real estate investor · Alabaster, AL · Member since 2014 · 94 posts · 15 votes

Hello BP, 

I bought my first property in Pelham, Alabama September 2015. I am still holdiing it and now I am getting quiet discouraged and almost doubtful of investing via rentals. The property is marketed in Craiglist, multiple MLS, signs on the property/ neighborhood etc. At first, I gave the lack of tenant to the slow winter season. Things are picking up now, more traffic but no serious takers. I have since dropped property from $1050 to $925. This is the fair market value to like homes in the location. The property is in good condition. Its a 3b,1.5 b in a section B neighborhood. I have considered section 8 and I just called our local county to enquire of requirementts. I have put plans was to move to property 2 on hold until I fill this one. Is winter a generally slow period and if so should one avoid buying investment rentals at this time? Any suggestions/ tips/comments will be greatly appreciated.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y

@Katherine T.  very common issue I see with landlords especially new ones they don't realize how vacancy can affect the investment.. they try to rent for top dollar does not rent.

its better to drastically lower rent to get it full than to have 4 or 5 months of vacancy.. you just lost  5X 900  4500 dollars... if you would have started at 900 you might have rented it right away and be 4500 dollars to the good.

what we like to do is offer FREE First months rent... just get nice deposit and have rent come in 2nd months.. again ONE free month to not have a vacancy is  12/ 900 = 75 a month discount first year  75 X 12 = 900  compare that to the 4500 you have already lost and will never recapture...

you will learn these things over time its just costly.. to go through the learning curve.. also the risk of theft and vandalism is real.. when you have vacant units.

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  • Gisela Pallares
    Rental Property Investor · Snohomish, WA · Member since 2015 · 8 posts · 0 votes
    10y

    Try creating a Zillow account this will also give you the option to add in Postlets and I believe Trulia. All markets are different of course but I have found that working for me. As well as making sure you have as many pictures as possible with very good lighting. People want to feel like they are inside the property when looking at homes so its important that you market well online. I did this myself and within 3 days I had over 20 calls and out of state renters looking to move. Of course not all areas are the same but how well you market online is important. As well as spring is coming so many people start looking closer to spring and summer that may be why you might no be seeing much traction. Hope this helps!

    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    For small to medium size towns, I have the greatest success using Facebook.  Join the (Insert Town or County) Buy, Sell or Trade Group and let the neighbors drive traffic to the property.  This is by far my most successful tool in smaller communities

    Additionally, it looks like as of today, Postlets has finally shifted over to Zillow. I have no idea what the effect will be or if the porting of data to other sites will be restricted in any way

    1Reply
  • Account Closed
    Rental Property Investor · Bayonne NJ · Member since 2015 · 18 posts · 2 votes
    10y

    I would suggest using postlets.com, its a free service and markets to all active tenants looking for apartments. I would also sugest investing in high quailty photos and give a detailed description of the area so people have a better understanding of your rental. Picture yourself looking at your post, would you move in there and why ?  hope this helps 

    0Reply
  • Charles Sistrunk
    Real Estate Agent · Woodbridge, VA · Member since 2015 · 4 posts · 3 votes
    10y
    Originally posted by @Jay Hinrichs:

    @Katherine T.  very common issue I see with landlords especially new ones they don't realize how vacancy can affect the investment.. they try to rent for top dollar does not rent.

    its better to drastically lower rent to get it full than to have 4 or 5 months of vacancy.. you just lost  5X 900  4500 dollars... if you would have started at 900 you might have rented it right away and be 4500 dollars to the good.

    what we like to do is offer FREE First months rent... just get nice deposit and have rent come in 2nd months.. again ONE free month to not have a vacancy is  12/ 900 = 75 a month discount first year  75 X 12 = 900  compare that to the 4500 you have already lost and will never recapture...

    you will learn these things over time its just costly.. to go through the learning curve.. also the risk of theft and vandalism is real.. when you have vacant units.

     Great advice!!! I have my first rental and it's been vacant for two months now with no tenant. I was using the time of year as an excuse but after reading this, it's time to get serious and get a tenant.

    0Reply
  • Rod HanksBusiness Member
    Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
    10y
    Originally posted by @Katherine T.:

    Hello BP, 

    I bought my first property in Pelham, Alabama September 2015. I am still holdiing it and now I am getting quiet discouraged and almost doubtful of investing via rentals. The property is marketed in Craiglist, multiple MLS, signs on the property/ neighborhood etc. At first, I gave the lack of tenant to the slow winter season. Things are picking up now, more traffic but no serious takers. I have since dropped property from $1050 to $925. This is the fair market value to like homes in the location. The property is in good condition. Its a 3b,1.5 b in a section B neighborhood. I have considered section 8 and I just called our local county to enquire of requirementts. I have put plans was to move to property 2 on hold until I fill this one. Is winter a generally slow period and if so should one avoid buying investment rentals at this time? Any suggestions/ tips/comments will be greatly appreciated.

     You have a lot of great ideas in this thread!!! Usually price is the problem. Take flyers to your local Section 8 office, put up directional signs in the neighborhood, put an ad in the local penny saver newspaper, talk to the neighbors. Don't stop until it's rented!

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  • Katherine T.
    OP
    Real estate investor · Alabaster, AL · Member since 2014 · 94 posts · 15 votes
    10y

    Thank you very much everyone for the enormous  responses.  I will certainly reconsider and make adjustments.  VERY INSIGHTFUL commments that I could use.  Most importantly your feedbacks let me know that others out there are doing it and have experienced similar/other challenges, overcome them and keep striving.  Thank you Brandon Turner and Josh Dokin for facilitating this invaluable website.

    Regards to all!

    2Reply
  • Clayton MobleyPro Member
    Birmingham, AL · Member since 2014 · 875 posts · 947 votes
    10y

    Hey @Katherine T.!

    You have gotten loads of advice. I thought I would chime in to give you a little more of a local perspective. We currently rent and own several properties in that area. Here are a few ideas/comments:

    • That is a great area to rent property. In our experience sometimes it takes a little longer to find a tenant in Pelham because there are definitely more owner occupants in that area verses tenants. Don't let this discourage you because the lack of local tenants should be made up for in the potential capital appreciation you could get in that market. 
    • @ $925 I believe you are closer to the average price for a 3/1.5 in that area. Without seeing your property it's hard to say because you have some more excellent features that make it worth more, but most of our 3/1.5s in that area go for around $850-$975 depending on other features. 
    • I second the Postlets people on here. This is a great service. If you don't want to do that, make sure it's posted to Zillow and Trulia because Birmingham folks use these a lot. Also make sure you are refreshing your Craigslist post everyday. This is by far one of the most used platforms for our area. 
    • The MLS isn't very effective in our market for finding tenants. There just aren't a lot of realtors using this system for leasing unfortunately, so don't be discouraged by the lack of traffic from this venue. In addition, most property managers use their own sites and leasing teams.
    • As far as rental demand goes in our market, we've seen an 67% increase in call volume in January verses December, so hopefully you are getting some traffic. For us December slowed down quite a bit, but it has picked back up in January. This will be different for different area property managers though. 

    All and all, keep your head up! We buy as many properties as we can for turnkey investment in Pelham. It is a great area, and I expect you to find someone soon. Let us know if we can be of service.

    Clayton

    1Reply
  • Robert L.
    Investor · Jacksonville, FL · Member since 2008 · 70 posts · 37 votes
    10y

    I used to look for my own tenants and advertise on craigslist and other places.  Since I was doing this part-time it was a struggle.  The people I got weren't the best, etc.  When I started using a good property management company for tenant placement only, who are in the business and they get leads from many houses, it has worked out for me very well.  I've paid them the first month's rent as their fee, but the people they have found for me have been fabulous.  That's how I'm doing it and it's well worth it for me so far.  I do the rest of the property management afterwards, but the tenant screening and search is the most important thing.

    2Reply
  • David Panzera
    Real Estate Broker · Columbus, OH · Member since 2015 · 205 posts · 62 votes
    10y

    One tip that we can offer simply with regard to your Craigslist ad is to delete and repost your ads to refresh them or they'll fall so far behind that no one will see them. 

    3Reply
  • Katherine T.
    OP
    Real estate investor · Alabaster, AL · Member since 2014 · 94 posts · 15 votes
    10y
    Originally posted by @Clayton Mobley:

    Hey @Katherine T.!

    You have gotten loads of advice. I thought I would chime in to give you a little more of a local perspective. We currently rent and own several properties in that area. Here are a few ideas/comments:

    • That is a great area to rent property. In our experience sometimes it takes a little longer to find a tenant in Pelham because there are definitely more owner occupants in that area verses tenants. Don't let this discourage you because the lack of local tenants should be made up for in the potential capital appreciation you could get in that market. 
    • @ $925 I believe you are closer to the average price for a 3/1.5 in that area. Without seeing your property it's hard to say because you have some more excellent features that make it worth more, but most of our 3/1.5s in that area go for around $850-$975 depending on other features. 
    • I second the Postlets people on here. This is a great service. If you don't want to do that, make sure it's posted to Zillow and Trulia because Birmingham folks use these a lot. Also make sure you are refreshing your Craigslist post everyday. This is by far one of the most used platforms for our area. 
    • The MLS isn't very effective in our market for finding tenants. There just aren't a lot of realtors using this system for leasing unfortunately, so don't be discouraged by the lack of traffic from this venue. In addition, most property managers use their own sites and leasing teams.
    • As far as rental demand goes in our market, we've seen an 67% increase in call volume in January verses December, so hopefully you are getting some traffic. For us December slowed down quite a bit, but it has picked back up in January. This will be different for different area property managers though. 

    All and all, keep your head up! We buy as many properties as we can for turnkey investment in Pelham. It is a great area, and I expect you to find someone soon. Let us know if we can be of service.

    Clayton

     Thanks for your response and encouraging words! I appreciate the feedback. I will keep your company in mind for future endeavors. Ps - Do u know own any reputable property management companies in the Pelham area? If not occupied I may consider that option.

    Thanks!

    Katherine.

    0Reply
  • Melissa Gittens
    Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
    10y

    @Katherine T. it is typically difficult to fill rentals during the winter time. I usually rent from May to June on rentals which typically go in line with public schools system. It would be easier to fill the rental in the summer time than it is during the winter. Best of luck

    0Reply
  • Nick Goudreau
    Property Manager · Birmingham, AL · Member since 2015 · 3 posts · 0 votes
    10y

    @Katherine T. As lots of folks have mentioned, Postlets, which is now Zillow's Rental Manager, is a great resource for getting your house out on the market. If you're having trouble finding a fair market value, I'd be more than happy to help you figure out what that might be.

    0Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    @David Panzera made a good point.  I didn't even think about that, I just do it on auto pilot, but I always make 2 craigslist ads 24 hours apart.  That way I am renewing one of the ads every single day.  In my market, after 24 hours the property will be 2 pages down.

    0Reply
  • Clayton MobleyPro Member
    Birmingham, AL · Member since 2014 · 875 posts · 947 votes
    10y

    @Katherine T. Yes, I would recommend a couple that I believe have several properties in that area. Try Alabama Rental Managers or Rudulph Real Estate... These are both good property management companies who use legit leasing agents to show properties. Tell them that Clayton M. gave you the referral, so I can get some street cred :) 

    Our property management company is Alabama Rental Property, but unfortunately we don't manage any property that doesn't either belong to us or one of our investors. We'll keep you in mind if we ever change our model though. 

    Best of luck to you!

    0Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    I can't recommend using a property manager, though.  I think they are like AT&T, no one uses them unless they have to and your never happy about it.  The only people I know that are positive about using PMs are PMs.  Even the people I know that do use them are never happy.  Best case scenario, it's a shrug of their shoulders...

    0Reply
  • David Panzera
    Real Estate Broker · Columbus, OH · Member since 2015 · 205 posts · 62 votes
    10y

    @Jacob Sampson, that's a great idea to have two posts you update every other day on Craigslist. Might have to try it!

    0Reply
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