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Updated over 6 years ago, 09/05/2018
When should I start getting nervous? Cant find a good tenant!!
Hi everyone,
I have a property in NC that i closed on June 15th. https://www.zillow.com/homes/105D-Brookshire-lane-...
I have a property manager taking care of trying to get a renter. the problem is she is constantly getting stood up by prospective tenants, or people just don't follow up after they contact her. Ive listed it on social media and other sites. I trust she is doing her best.
Any one have any other ideas? Is this the norm? Flaky people or am i freaking out too early? Does it normally take this long (I live in CA so I have a very skewed view of RE, ill admit that).
I did my due diligence on this area, I've been there several times, i know the area is growing, and the schools are good (Troutman school district not Statesville).
So what am I doing wrong? Any help would be appreciated. Thank you.
It shouldn't take 10 weeks to find a tenant. Either the property is overpriced or your PM is dropping the ball somewhere.
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#5 General Landlording & Rental Properties Contributor
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Your price is too high
Thank you...I can drop the price a bit more but more than $200 I will be in Negative CF. Can I just sell it at this point and break even...? Is the fact that I have a tax write off at all in my favor?
Originally posted by @Allyson Edwards:
Thank you...I can drop the price a bit more but more than $200 I will be in Negative CF. Can I just sell it at this point and break even...? Is the fact that I have a tax write off at all in my favor?
Just a quick glance at your zip code, I found a nicer townhouse bigger than yours for considerably less... $1,450/mo. I think you are way overpriced which is why future tenants are turning around and probably found something better for the same price point or cheaper. Now I do not know of the market your property is in, but a $200+ difference is pretty big.
@Account Closed I am asking the forum for HELP not looking for condescending remarks.
That is the whole point of the BPs forum ... is it not???
@Allyson Edwards don’t let anyone get you down (even me!)
Most/all of us don’t know your market nor the details, so it’s only ideas/suggestions. It’s possible there are other reasons other than price too. Have you talked to your PM about it? They should have a lot more experience too!
Good luck! :)
I'm in South Carolina. $1700 is really high rent in this part of the country. Most of the rental pool would not qualify assuming you require 3X rent.
I did a quick google search. The median income of Statesville is only about $35k and median rent for the area is only $710. Your tenant pool is quite small. Just like trying to sell a high end home, it takes longer as most people can't afford it.
I would check the price. I noticed property managers in my area tend to try to push the price and then do price drops trying to get the most rent possible which equates to more money for them, but less for you when you figure in the opportunity cost of having a tenant soon at a lower rent. If your PM is not being responsive, I would change managers ASAP.
Originally posted by @Allyson Edwards:
@Account Closed I am asking the forum for HELP not looking for condescending remarks.
That is the whole point of the BPs forum ... is it not???
It's honestly really hard to tell you the right answer since we don't know your financial situation and the market. Just basing off of what you provided and doing a quick google search on the surrounding area, it is really easy to tell that your property is way overpriced for the zip code especially a townhouse.
My recommendation is to sell it if you can (keeping a negative cash flow isn't good at all), fire your PM (they should have known that price is way too much), get a realtor that knows the market will and won't give you bs and put them under contract.
I am new to real estate like you but have been investing in other venues for a while and one of the things I learned is that finding the right people to take care of your own stuff better than you can is hard to find. Easiest way to do it is if you think you found someone you like, draw up your own contract with your own terms (make sure its legal). If the person is trustworthy, and terms are fair, they would not hesitate to sign it.
It literally took me 4 months to find my realtor, PM, General Contractor, and lender. I put the realtor, PM, and GC under contract even though I think of them as a family friend. This is prior to even looking for deals.
@Mike McCarthy nah, no offense taken by your well thought out reply, in fact i appreciate your reply and suggestions. As well as the other intelligent responses i received from @Ryan Murdock, @Account Closed
Im thinking I may try a lease to own option instead. I have been in touch with my PM all week. She was and still is part of my team, She was also my RE agent and has many years under belt.
We actually had someone inquire to pay the whole year up front (that could be sketchy i guess) and I even lowered the monthly rent. But they no showed to the appointment.
I was told by multiple seasoned people in the biz that it could rent for 1700 to 1800/mo because the schools are Troutman district and there are multiple businesses headquartered there, like Lowes and Auto Zone. There is a lot of construction in the area and that is making it a bit congested, the home is also a brand new build and its possible people prefer more mature areas like tree lined streets etc. So may be that its not so appealing to the eye.
I know this is not easy, i know this is not a get rich quick RE endeavor, i don't even care about getting rich. I just want to do something I like that gives me the freedom from a 9 to 5 everyday BS.
Thank you ...
Originally posted by @Allyson Edwards:
@Mike McCarthy nah, no offense taken by your well thought out reply, in fact i appreciate your reply and suggestions. As well as the other intelligent responses i received from @Ryan Murdock, @Account Closed, and @Dennis M.
Im thinking I may try a lease to own option instead. I have been in touch with my PM all week. She was and still is part of my team, She was also my RE agent and has many years under belt.
We actually had someone inquire to pay the whole year up front (that could be sketchy i guess) and I even lowered the monthly rent. But they no showed to the appointment.
I was told by multiple seasoned people in the biz that it could rent for 1700 to 1800/mo because the schools are Troutman district and there are multiple businesses headquartered there, like Lowes and Auto Zone. There is a lot of construction in the area and that is making it a bit congested, the home is also a brand new build and its possible people prefer more mature areas like tree lined streets etc. So may be that its not so appealing to the eye.
I know this is not easy, i know this is not a get rich quick RE endeavor, i don't even care about getting rich. I just want to do something I like that gives me the freedom from a 9 to 5 everyday BS.
Thank you ...
Just wanna give you heads up since you provided a new information. If that area is still under construction and are building new houses, you may not be able to sell it for the price you paid. There would be new inventories coming in making it harder to sell. Remember more supply = less value for a property.
The only time I would invest in an area like that is if I was able to jump in on a high cash flowing property or can eat the negative cash flow a for a few years. It is a lot easier to invest in a neighborhood that is already established and the city is just renovating or companies are coming in buying up other commercial properties. If it was a middle of no-where or rural area and the the city is expanding, its practically a gamble on when the price would be right since there market will be providing newer and normally better houses. As an investor, I wouldn't want to gamble and see if the old homes would jump up in price nor would I jump in on a new construction since they are normally overpriced.
I don't know the area, but I do know investing and property management, getting real numbers would help us give better info to you.
If you aren't getting much traffic or filled out applications for the place your rent is to high period. Buying new build usually means paying full retail, many times that means your stuck having to get high rents, not an ideal situation.
As a quick check use rentometer and craigs list to check rents in that area, at least it can give you a ball park value if you choose like properties that are close by.
If your PM is also an agent make sure they understand the difference between a good value as an agent for buying and a good deal for an investor ( their PM hat ). It's possible the agent side was doing most of the thinking in this deal.
Not saying that happened, but your PM/Agent should be able to explain the reasons why they recommended this deal for financial reasons only as an investor. If those make sense OK.
Bottom line if your rent price is set correctly for the area, you'd have plenty of possible renters, either your PM is dropping the ball or other places at that rent are offering more, like fully furnished, pool access, work out area, say something that adds value that you may not have.
Is there an HOA fee, if yes is that included in rent or additional?
I'm not sure what criteria you are using, I use cash flow as the number one factor in if a deal works, I also pick slightly below average rent, and not bottom line price of purchase as an initial indicator on if I would by.
If you are only would make $200 on a &1700 per month rent that's cutting things close.
hope this helps.
SO you are still at it? I am on vacation so to speak. Someone wanted me to help him rent one near Google proposed campus for 15,000 employees. I buck passed to another realtor. She is having a good time and already drop the price of rent. If not rented it may be up for sale.
To sell a home here takes about 1 week, a rental it took almost 2 months.
I think that the smart move would be to do a lease option on this house. At least you can cash flow and have a stable person in the house. I agree that you are probably going to lose your tail if you sell it with houses still being built. But there is always the chance that someone wants to move ASAP and doesnt want to wait for a new build. But time isnt on your side because of all the expenses that you are incurring monthly. While $1,700 a month might not seem to be alot for us. It doesnt look like this area can support that high of rent. Even if you did find someone to rent it in this area you'll find that your property will be a stepping stone before they buy their own house. In this case you can have a revolving door of new tenants every year with expenses and vacancies in between. Best of luck!
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Originally posted by @Steve K.:
Thank you yes...that was part of the problem with the "rentometers" and such...new construction and forecasting. I'm in the process of turning this in to a lease to own or corporate rentals at this point. I have about 12k in equity as it stands now. It's on the border of Troutman, NC (which commands better rents) but obviously it's probably still too high as others have pointed out.
Also I use rentometer to check my rental rates, I can usually push the rents up by 50-75/mo since I have nice finishes. Not many comps in your area but my search for a 3 bedroom house returned a median of 930/mo. So your price just could be too high for a rental. Maybe lease to own for 3-5 years could be good. I've never done lease to own since I own MFs. But I know folks are successful with it and you still get the tax benefits since you still own it, plus you don't pay a realtor fee when you sell.
Im just wondering the logic of buying a high end townhome new construction in a small town in NC for a rental investment? There has to be a story in there...
I get stood up frequently, so I just try to schedule multiple showings within a time frame. Be super patient, and you'll find the right tenant. The right tenant can make the investment. Especially if they stay 5+ years.
I used to live in Goleta, by the way. Technically Isla Vista (UCSB).
If you don't want to lower your price, add some things to your unit to make it more attractive (appliances, furnishings, yard maintenance, etc).
Originally posted by @Allyson Edwards:
Hi everyone,
I have a property in NC that i closed on June 15th. https://www.zillow.com/homes/105D-Brookshire-lane-...
I have a property manager taking care of trying to get a renter. the problem is she is constantly getting stood up by prospective tenants, or people just don't follow up after they contact her. Ive listed it on social media and other sites. I trust she is doing her best.
Any one have any other ideas? Is this the norm? Flaky people or am i freaking out too early? Does it normally take this long (I live in CA so I have a very skewed view of RE, ill admit that).
I did my due diligence on this area, I've been there several times, i know the area is growing, and the schools are good (Troutman school district not Statesville).
So what am I doing wrong? Any help would be appreciated. Thank you.
My first guess is it is overpriced. As mentioned already, that's a HIGH rent price for the overall area.
I know you're not looking for Monday Morning Quarterbacking, but why did you choose Statesville? I drive by the exits to Statesville several times a year on the way to other cities, but have only stopped in the area four or five times over 20 years. There's not much there, and it's always struck me as economically depressed, and as a city definitely not on the uptake. I'm just curious why an OOS investor would choose to buy a $180,000 condo in such a small out-of-the-way town. Not criticizing, just curious.
Oh, and to answer the question in your thread title: You should be nervous. If you can sell and come close to breaking even, I would do so immediately.
@Allyson Edwards I had a rental sit on the market for 2.5 months before it was rented even though rentals in my area usually are gone in a week or two. However I knew going in it was over priced because I wanted to test the market to see what I could get for it. After two price reductions I finally got it rented, but it is still rented for about 20% above comps in the market. Basically I knew I could get above market rents, I just didn't know how much so I started like 35% higher than the comps (which is waaay overpriced) and factored in price reductions every 3 weeks or so if it wasn't rented.
My situation might be a little different than yours though, because I knew my property had unique features that people would pay up for, for example in additional to newly gut remodel with new everything, prime location and enclosed garage (most comps are further away and have no garage). And the mortgage and expenses are low so I could afford to have it sit on the market if necessary while I played with the price a little.
I don't know your market so I can't say what you should do but price is one of the biggest factors of why a place rents quickly vs why it sits. There's nothing wrong with your place that I can see, but you'll only be able to rent it for what someone is willing to pay. Your best option might be to keep reducing the price until it's finally rented so at least you'll know what you can get. If you are losing money though, you might have to consider whether this is really something you want to keep long term?
This thread is a great example of why I prefer to invest in my current city rather than OOS.
There is always unique factors that affect every market that OOS buyers just won't be privy too; sure, an agent can be a wealth of knowledge (ours is), but there is still something said for knowing the area well.
I find some of the posts from OOS folks on Huntsville interesting, because it shows how little they truly know the market here. Everyone assumes that houses in 35801 are fabulous due to various websites and experts on the area - there are some parts of 35801 you absolutely have to stay away from, and some parts that the rent changes by $200 to 300/month by simply moving one street over. But that knowledge can't be gleamed from simply reading about the city or rentometer; if your agent works mostly in suburb properties, they may not know these nuances as well. You just can't replace first hand knowledge of the location you are investing in.
How much commission are you wanting to pay your PM for managing your property? Is their commission included in your rent amount? If so, could you put up with managing the property yourself in order to save that percentage? This might allow you to lower your rent some to become more competitive. Also, when dealing with renters, most don't care if you have fancy yards, nice appliances, etc in my opinion, cheaper rent wins out almost every time. Unless you have an amazing benefit of why they should pay you more, you're going to get skipped over for the lower rent properties. Try reevaluating why someone would pay more for your place, and really advertise those features to justify you asking a bit more, and find a way to get your pricing to a more competitive level.