Posting a link to the property will help as we can give an honest review of the listing. Far too many times the listing sucks, fails to highlight the positives, and they shine light on the negatives.
Without actual numbers, no one here can say whether it is better to sell or keep the property. Your mortgage is $1895/month. What is the principal reduction every month? What is the appreciation in your area.
7 months and 3 inquiries is crazy. You should get more by people accidentally clicking the inquiry link than 3 in 7 months.
Thank you Greg! Wonderful suggestion, I will share the link to the property listing in the original post above.
Based on a fast google search, the property appreciation for 2024 in Acworth is 2.2% and in Kennesaw is 2.4% (the house is right on the border of Kennesaw, we even pay tax to the city of Kennesaw).
What is principle reduction every month? - I will need to look into that later and provide more detail. However, I will say that the property do have a high tax rate. Meaning, since there is a school near by, yearly school bill is about $1,700, then we have the property tax and the Kennesaw tax. Yearly total tax bill is about $3,700-$3,800 which seems high for this property.
"7 months and 3 inquiries is crazy. You should get more by people accidentally clicking the inquiry link than 3 in 7 months." - YES!!! AGREE 100%!! It seems absolutely crazy to me too! This is why I am trying to figure out what is happening from RE professionals and experts. Are we at fault as owners, are we being unreasonable, or is the PM underperforming, or is it both. Getting clarity on the problem, is the goal, so we can decide if we should hold the property or sell.
90% of the time, (in order of importance)
1. Price is too high
2. Pictures don't compare to the "comps"
3. Description is off-putting
4. Property is not advertised on FB marketplace and shared to local RE groups
Still doesn't rent? See #1
Hi Gregory,
Thank you for your comment. This is what we are trying to evaluate. As I mentioned earlier, based on other properties in the area, the price seems reasonable, plus it doesn't make sense for us to lower it even further (as it is at our mortgage).
However we are open to a feedback on the price. If other RE professionals (other than our current PM) tell us that the price is not right, then we need to look into it and reevaluate our decisions and long term strategy.
I will be updating the original post to contain the zillow listing for the property if you would like to take a look and share your suggestions and input.
It is hard to evaluate it currently, based only on 3 inquiries. If we had more data, lets say 20-100 people and all say the price is the problem, then yes, I would agree 100%.
But we even barely get any clicks on the property based on the zillow report. So not sure what to do here, when we dont get much of help from the PM either, other than "lower the price"
Have you considered trying to find another management company? I would go online and check other rentals in your area to see what other management companies are out there, and start contacting them. To me, it seems as if this company is stalling in the hopes of you wanting to sell so they can list it.
A unit should not take 7 months to rent. If it's not price or condition, then it is the marketing. Ask them where they have it advertised
Gino
Hi Gino! Thank you for your answer!
Yes, we are currently trying to figure out if we are simply unreasonable or if the PMC is doing a really bad job. Based on your and many of the other comments it seems like we would need to do exactly what you suggested - search for a new PMC.
I will be updating the original post to contain the zillow listing, if you would like to take a look and share with me your expertise.
The first step is to evaluate the marketing, the second step is to evaluate the condition of the home, the third step is to evaluate the price. With only 3 inquires it tells me that there is one or multiple LARGE issues here.
Thank you Adam!
This is what I am trying to figure out. To solve the problem, you need to identify the problem. This is why I am here. Trying to identify where the problem lies and what needs to be changed in order to resolve.
I would love to hear your input as to what you see as a professional. I will be updating the post above with link for the property listing.
Thank you and looking forward to your input
Sell the townhouse. You aren't going to be a good landlord and this has been proven already by the relationship between you and the management company. Seven months and 3 inquiries? I get 20 inquires the first day on any rental property that I list, no matter where or the condition. Something is wrong and you aren't going to fix it by being detached and switching to another company. Sell the townhouse.
Hi Jonathan, thank you for sharing your suggestion. I am sure early on in your career you`ve made mistakes and trusted the wrong people/professionals, and I bet that didn't prove you a bad real estate professional. I am here to learn, and gather suggestions from experts.
As you said, this is a huge learning experience, and as such I have a question for you.
You said:
"You aren't going to be a good landlord and this has been proven already by the relationship between you and the management company"
What would you say the relationship needs to be? What do I need to be looking for?
Do I need to micromanage? To what extend?
I have been texting/calling them weekly. Asking for reports monthly.
Either I get no reply for a week or so. Or I get "We have no activity, we need to lower the price"
Not once did I hear anything else, nor a suggestion, nor a change in strategy. Their strategy was always lower the price.
I agree with you, we overwaited. But this is where we at.
It sounds like the PM sold you a story. The best time to rent is April - August. You went through that entire season and didn't even get inquiries. That's terrible performance and demonstrates your PM lacks the necessary skills to protect your investment.
Even if you did find a renter, this home is a loser. The mortgage is $1895. If you pay 10% to the PM, you will be $190 in the hole every month. If you have a $300 plumbing bill, you are another $300 in the hole. This home is going to cost you more money every year, particularly if you have a tough turnover with a bad renter, which is highly likely given your manager's current performance.
You've already lost seven months of income ($1900 x 7 = $13,300), plus utiltilies, landscaping, and other expenses. Add to that the time and stress.
In the best-case scenario, you lose thousands every year in a market that is unlikely to see major appreciation in the next ten years. I would sell, heal, learn what a good investment looks like, and try again.
Hi Nathan, thank you for your input. I agree with you, we had different expectations and now that we saw their performance and the results we got, we can only regret we gave them so much time and so many chances.. What you said: "That's terrible performance and demonstrates your PM lacks the necessary skills to protect your investment." This alone, makes me realize how much I don`t trust them, nor I feel that they are doing their best to protect my investment/asset.
We never intended to live off of this property`s cash flow, however we were hoping to at least have someone else pay it off for us. Even if it meant that we pay a few hundred bucks a month, at the end we get a whole house. Hence why we agreed to lower the asking price to $1,895.
However, if I am to look at it as a business, then yes, you are absolutely right, and this is a really bad deal.
I absolutely understand that we have been overly patient with this whole situation, and currently trying to hear experts of what they think this property can be rented at, and what should be expected from the new PM that we will need to find.
Reading through all these comments, makes me realize how bad of a job they have been doing for us.
@Yoana Yordanova what is the address?
@Kevin Sobilo shares some great info.
From what you wrote, appears you've little understanding of exactly what your PMC is doing to market your property and their showing & application processes.
This approach may be fine if the property rents quickly and everything else goes well, but as you're finding out, it's not working when your property is just sitting.
Suggest you have an indepth conversation with your PMC to understand their process and if you agree with it.
THEIR PROCESS may have been fine a year or two ago when rentals were hot. Last 2 years Days On Market (DOM) are up over 38%, so what are they changing to ADAPT?
If they're too arrogant to change, within reason, you may need to change to another PMC.
Hi Drew, thank you for your reply. Yes, like you said I have little understanding of their strategy. I had a long conversation/interview with them at first, to which everything seemed great! They said they will be marketing the property on all platforms (social media, zillow, their website, etc). They also said they will be having a professional photographer take the photos for the listings. Which to my surprise did not happen, instead one of the managers went and took photos with his phone and listed them on Zillow. They charged us $300 for marketing, which we paid upfront. In our contract with them, it stated that we are bound to work with them for the next few months (if we break the contract there are penalties or smth like this). Hence why we have been patient with them and trusting them to do their part as professionals. However, since this has not yield any results, we need to change this.
Another push back I got from them, was when I asked them to change the main/listing photo to be the kitchen, and not the front of the house. The push back was "if we do this, now you would be competing with the apartment complexes in the area, and you don`t want that". Not sure if this is valid point, but as a woman, when I search for a house, seeing a listing with the kitchen is what makes me click on the house fast. (I know this may be a funny cliche but it is true). Plus if those apartment complexes with their huge marketing budgets may know a thing or two.
To be quite frank, even if I educate myself on their processes, what good does it do, when I have no idea what to compare it to, as you might have for example (as this is your niche of business).
Drew, I am curious to hear your suggestions, on what expectations should we have of our PMC, and what should we be looking for in their processes.
I will be adding the address of the property above in the original post, if you would like to take a look and share your suggestions.
@Yoana Yordanova, a few thoughts:
1. Rentals are about function more than form. So, your competition aren't just nice new townhomes but any 2 bedroom rentals in nice condition with similar amenities. When I search zillow I see 2 bedroom rentals in Acworth from $1300-2000. Kennesaw looks a little higher so, you may be more in the middle of the range there.
2. Your PM's process to find tenants may be geared toward time efficiency for them. Their questionnaire to pre-screen potential applicants meant to save them from wasting time showing the property to unqualified people. So, the number of inquiries will be understandably lower with that approach and intentionally so.
When managing my own properties, I take the OPPOSITE approach to save time. I schedule 2 open houses per week and ANYONE can come. No pre-screening. My time is rarely wasted since there is almost always at least 1 qualified person showing up.
Different approaches, but both should work just fine.
3. Why did you decide not to sell your townhouse when you moved?
If you lived there 2 of the previous 5 years any profits from a sale would be exempt from taxes up to $250k for a single person and $500k married filing jointly. So, it could be an opportunity to pocket TAX FREE profit.
4. Do you plan to buy more rentals? I always suggest people own at least a few rentals. When you only own 1 or 2 you never become proficient with handling them and because you only have a small number there are more ups and DOWNS!
You will barely notice when things are going well for several months, but when things then go poorly you will be able to think about nothing else! When you have several rentals the other performing rentals cover everything and you don't feel the stress from the one nonperforming rental. That allows you to stay stress free and better able to cope with that situation.
5. Have you examined your "value-proposition" for a tenant? Do you offer what they want/need? Do you allow pets? Do you include a washer/dryer (which many rentals don't)?
6. Your current asking price for rent is equal to your mortgage. So, you will be losing money. You still have to pay the PM. You may directly pay some municipal utilities as in most places those become liens if unpaid. In addition you need to budget for maintenance/repair, capital expenses, and also to cover the vacancy/turnover the next time a tenant leaves you.
So, you may want to look at what that will add up to as you make decisions because covering the mortgage is very different than "breaking even".
Kevin, thank you for sharing your thoughts! It is absolutely appreciated :)
I would like to hear more, as we are trying to come up with a new strategy and decisions. (Hence why I am posting here, and all the feedback is appreciated :) ) I will be updating the original post, as some of you came up with really good questions. Below are some structured notes to your reply:
1. We (me and my fiancé) absolutely agree with you on that, and when we did our due diligence to set expectations for the rent, we were comparing our property to exactly what you said. We lived in the same 3 mile radius for 7 years. As you will see the address of the property in the update above, the address is right on the border of Kennesaw and Acworth, and I would say it feels more in Kennesaw, than in Acworth. We even pay tax to the city of Kennesaw for this same property, even though the address is in Acworth.
2. We absolutely respect this if it was for efficiency. And originally this is what we though the process was ( as you say). But here is what they did in reality: They will get a call/request to view the property, and schedule a viewing. After the walk-through, they will see if the tenant has interest in renting, and if yes, they would sent them the questionnaire so they, and I quote, "save the tenant the $60 for application fee", in which within the questions it would be things such as, if they have pets, yearly income, cosigners, if credit score is above a certain number, etc. Their logic is, that they want to see if the tenant qualifies before they ask them to fill in the application. In my humble opinion this should be done, as you say, before the walk-through, or at the time of it. They have not yet held an open house event.
3. We lived in the house for 2 years, and as part of our long term strategy, we wanted to keep the house, rent it out (essentially have someone else pay it off for us), and keep it as an asset. The strategy was not to get rich from it, or make a business out of it. We own a different business. This seemed better option, since we were not in a rush to pull cash, and we did not have a large equity on the house either. We simply wanted to keep it and turn in into asset (long term). Perhaps for real estate pro`s this might not make sense, but to us it did, since it is not our main business.
4. Yes, eventually we want to buy more rentals (not back to back, but within the next 5-10yrs). This is also part of our long term strategy. However, we need to figure out the first one first.
5. Yes, we did a few examinations, and frankly, this is what we are trying to do again. Since, this whole thing does not make any sense so far. So we are open to suggestions and corrections, on price, and what else could be added, etc. We allow cats, and we also allow small dog breeds. We are open to considering medium and large dog breeds. The townhouse has a bathroom in each of the bedrooms, so this aspect is nice as it provides a bit more privacy. We include washer/dryer.
6. We absolutely hear you on this. Believe me when I say, renting it for exactly the mortgage was not our intend. Originally, we wanted to rent it out for $2,100, which seemed plausible (perhaps on the high end, however I could find a few comps at this price range), but this price point was including everything you listed + $100 for "if this breaks". Utilities would`ve been on tenants name, and they need to show proof of it (show us that they signed them over). The HOA and taxes was planned for in the monthly rent. When we began talking with the PM, they came back and told us that such property should be listed for $1,600/mo. Which, to us, for the area, this sounded crazy. (for example, before me moved in the house in 2021, we were renting an outdated 2bd apartment across the street for 4 yrs, apartment complex amenities were in a very bad shape (unusable), and we were paying about $1,600/mo and they were about to increase it to $1,850/$1,900. And this is right about when the "COVID" craze began to happen in Atlanta (people from other states moving in in GA and buying properties, bidding wars, etc). I am not a professional, however, to me it seems crazy to suggest to list our townhome for $1,600, after the huge inflation in the market that had happened in the last 3 years.
Additionally, and I believe this is part of our mistake, is that this PM is owned by the family of a friend of mine (at the time I though it was a great idea, since I know them and trust them). They specialize in the market in Canton, GA, which is about 30-45mins north from the townhouse. In which area, this is what you would expect to rent for ($1,600). So when we heard their suggestion, we explained that this does not make any sense to us. They agreed and listed it for what we asked (actually a bit above). To which we didn`t see any activity for a couple of weeks. Then the PM came back and told us that we should lower the price. We got the same result. And this happened a few more times, until we reached $1,895.
At that price, we had the 2 out of the 3 potential renters view the property, but both came back asking for $1,700/$1,750 rent. Which I don`t really blame, since if you look at our zillow history, the property has been on the market for so long, and the price has been lowered a few times. In their minds, they probably think there is something wrong with it, and gives them confidence to negotiate a lower price.
The PM has not given us any support on this, instead has been pushing us to agree to the $1,700.
This is where we are at right now, and thus why we decided to seek advice and suggestions from other real estate professionals. We are not confident in the PM anymore, that it is seeking middle ground for tenants and us, nor that is trying to serve in our best interest. (Especially based on a few comments from them).
I am personally trying to evaluate if I am being so incompetent on the RE market, and if truly our "value-proposition" is bad, or if the PM needs to be changed asap. If we are to change it, we want to avoid the same mistakes.
Thank you for taking the time to read through all this.
I understand how frustrating this must be. It's tough to see your property sit vacant, especially when you've invested in renovations and are pricing it competitively.
I feel you should re-evaluate your management company,If they're consistently pushing for lower rents without providing clear reasons or alternative strategies, it might be worth considering a change. A good property management company should be proactive in marketing your property, screening tenants effectively, and maximizing your rental income.
Thank you! That is exactly what I am trying to do, even though I feel we overwaited on the evaluation and that we are outside of active move-in season.
Hi everyone! Me and my fiance had to move to another state, and decided not to sell our townhouse, but instead try to rent it out. We hired a management company, to help us with this, since we have no experience and we live in another state. For the past 7 months of the property being on the market we only got 3 inquiries, 1 submitted questionnaire (which I guess is a survey before the application meant to vet renters, before they pay for application, is what I am told by management company). We've been pushed to lower the price by the management company every month, which we did. Now we are asking for $1,895/mo (which is what we pay for mortgage), for our 2 bed 2.5 bath townhouse, which is recently renovated, with fenced back yard, located in right between Kennesaw & Acworth, GA. We've been checking comparable townhouses and even apartments, and all rent for $1,850 or higher (up to $2,100) in the area. We don't know what do to anymore. Any advice and input is appreciated. Thank you!
Hello Yoana,
Sadly, I’m unfamiliar with Atlanta’s market and I can’t be of much help. But I’m always glad to see other Bulgarians in the Bigger Pockets community, so I wanted to congratulate you on your decision to turn your townhome in to a rental and give you my insight.
I’m sorry to hear that you are facing difficulties renting your place out. Seven months seems a very long time to find a tenant. How did you get your property manager? Where do they advertise the property? Have they held any open houses? If the rent is competitive, you should be at least getting more inquiries if not applications.
I’m always happy to chat if you want to share experiences!
Hi Mira, I would love to connect with you. I sent a DM :)