Tips on getting my Rental home rented!

[Preeti Sampath]

Hey guys, 

I am new to rental property investing! We are almost ready with our rental home unit and I am looking for tenants. For some reason, I am only getting tenants that don't really meet my minimum qualifications. I have had it listed for less than 10 days. We will be able to show the home starting this weekend officially. (Master bathroom update rehab) Could you guys review my rental and tell me if there is something I can do attract tenants? The price is pretty typical in Denver. 3 Bedroom apartments are going in this area for $2400+Pet Fees+Garage Fees. We are charging $2619+$30 per pet + $35 Utility Fee for Solar Panels, Rain barrels as the home has very low utility bills. 

Thanks in advance for any ideas or tips! 

[Steve K.]

@Preeti Sampath The reason you're not getting quality applicants is most likely due to the location and the tenant base in that area. It's a bit of a tough market to fill a premium rental in because the demographics are working against you. The best strategy for that area would be lower end rentals, doing a minimum amount of upgrading to keep costs low as price is the main motivating factor for living there. Rentometer shows average rent for a 3/2 in that neighborhood at $1,995. Your house is nicer than average, but that doesn't really help you because for what you're asking someone could rent in a better location. Hopefully you will find a good tenant at your asking price, it's certainly possible as it's a nice house and demand is very high in the whole metro area, even spilling over into previously undesirable areas, however I think you're a bit overpriced for that immediate area at this time. I agree with Matt: $2,200-2,400 is what I would expect. Your listing agrees with us too as Zillow says $2,315 is the "Rent Zestimate".

We've filled 6 units in Denver this spring/summer (by listing on Zillow which of course also lists on Zillow Group sites like Hot Pads, Trulia, etc). That's all we've done and qualified tenants are applying in droves within minutes (we've had as many as 50 applicants within just a few days). If you're not having a similar response, price is too high for location. 

The listing itself looks great, no problems there: good photos and the house is very nice (maybe too nice IMO). If it was in Denver you could easily get what you're asking (or a lot more depending on the part of town) but it's pretty far out in a different rental market. Average salary there is $40k/yr. and median household income is $60k/yr., while you're asking rent is over $32k/yr. That alone tells us you've priced yourself out of the market a bit. Ideally you'd want tenants making $80-$100k/yr., but folks at that income level are more likely to be looking to rent in Denver, a more desirable suburb, or purchasing a similar home in Thornton themselves as a starter home. 

I normally wouldn't recommend renting to family and friends but if you're not getting any good applicants from your ad then marketing this to your personal network could be the best way to deliver the value proposition of why it is worth more than surrounding rentals. It will likely take some in-person saleswomanship and target-marketing to get this rented. I don't think it's impossible, as it is a nice place and the whole Denver area continues to surprise me with high rents, it's just a matter of reaching the right tenant. You might go old-school and post ads on message boards around some of the higher-paying companies in the area such as the hospital, the aerospace/tech/oil and gas company's lobbies, coffee shops near those high-paying companies, etc. Or target somebody moving in from out of state who is unfamiliar with the area. You will have high turnover this way though; the premium price point will likely continue to be a challenge for you until more yoga studios and Whole Foods pop up nearby, which does seem to be the trend. 

On the positive side, if it doesn't make sense as a rental, you're in a great market for selling. Or another strategy might be to look into a lease option. Short term rentals are not allowed in Thornton (except rooms within your primary) but you might be able to get your premium by renting as a furnished rental to traveling nurses (as long as the lease term is over 30 days as per Thornton STR regulations) or some other similar "outside the box" strategy. If you can find a way to hold on to it, I think the I-25 corridor all the way from Denver to Fort Collins will have good appreciation over the next 5-10 as the nice parts of Denver get even less affordable spilling over into surrounding areas. I think more tech companies are planning to set up shop in that zone too.

People are generally drawn to Thornton for the lower price point compared to Denver, so they are more interested in the rent amount than they are nice amenities or condition of the unit at this time but that will change slowly as it gets nicer. Good luck!