PART ONEATTRACTING TENANTS As any good gardener knows, choosing the best seeds or seedlings and eliminating the rest is a must. Many successful landlords have come to view their positions in the same light. If bad seeds can be avoided, the chances of reaping the reward for one's labor dramatically improves. Unfortunately, there is no place where landlords can go to choose their tenants. They must attract them. The more potential tenants a landlord can attract, the better.
Lacking the ability to attract more than one or two inquirers, landlords are forced to choose tenants that are not of the best quality. Consequently, rent payments can be slow in coming, units may be left filthy or damaged, and in many cases, neighbors begin complaining about the lack of pest control.
Since the nationwide vacancy rate has reached eight percent, and will probably remain that way for years to come, attracting good tenants is a difficult matter. This surplus housing makes it important to understand the habits of potential renters.
The key to attracting many prospective tenants is in understanding (1) how tenants find housing (2) what tenants want in housing, and (3) why tenants choose housing.
HOW TENANTS FIND HOUSING
The best plan for attracting prospective tenants will bear little fruit if you don't understand how they find housing. According to several sources and samplings conducted around the country, tenants found their present housing by:1. Driving-by.......................................56%
2. A friend's recommendation......22%
3. Checking the newspapers........15%
4. Other means....................................7%
Although the percentages may vary, depending on the location and size of your property, they are a good indicator in understanding the methods of attracting tenants.
1. Driving by:
We live in a very mobile society; consequently, one study showed that over 60% of apartments and homes are rented by tenants "driving-by." The lowest study cited 52%. Almost every tenant we talked to over the years has said that when they were planning to move, they drove around in the area in which they hoped to live, looking for vacant housing. If they saw a property that looked rentable, they would stop and inquire about it. It is important to understand if potential tenants driving by are unaware of your available rental, you have just lost the biggest majority of your prospects.
Owners of larger multiplexes with 15 or more units are very aware of these drive-by renters. This is one of the main reasons they employ part or full time resident landlords and always seem to have the vacancy sign out. But, almost 65% of rental units in the United States are in buildings of less than fifteen units. An astronomical 29% are single rental family homes. Duplexes make up another 10%. Learning to take advantage of this drive-by traffic is the most overlooked asset in renting homes or small multiplexes.
For fourteen years we landlorded over eighteen small properties that were blocks away from any heavily-trafficked roadways. Yet, by using a "sign" to take advantage of drive-by traffic, we had no difficulty renting our units.
Many landlords, on the other hand, refuse to put up signs. Their rentals sit vacant longer than necessary. Worse, it limits their chances in finding good tenants because they are forced to choose from a scanty number of inquirers. These landlords have many personal reasons for not designating a vacant rental. The reasons they normally cite fall into three categories:
First: They believe they must rent to the first person that has the money and is willing to take the rental. Wrong. As Part Two will explain in depth, there is no such thing as first-come first-served. If you consider any prospect unacceptable, other than for a few federal and local laws (that will be explained later), you have the right to let your rental sit empty until you find a tenant you believe is responsible and suitable.
Second: They believe that if the present tenants are still residing in the unit, they might say bad things about the property and/or the land-lord. There is no evidence to support this belief since most vacating tenants do not move for negative reasons. Since 56% of all properties are rented to drive-bys, what is said between present tenants and potential tenants does more good than harm.
Third: Another major reason landlords do not put up signs is fear of vandalism. Landlords will even install window coverings or close the existing ones, making a vacant rental look occupied. Unfortunately, drive-by renters will believe the place is occupied also. Our experience taught us that unless the property is vacant for a long period of time, vandalism is rare it most areas.
Regardless of the arguments against putting a sign on your rental, if at all possible it should be done. Landlords cannot afford to lose 56% of their prospects. Purchase or make a large sign with "Available Soon" in bold lettering. Place it where it can easily be seen by anyone traveling by.
"For rent" or "vacancy" signs are not recommended. To some mis-informed tenants it gives the impression of a rental standing empty and anyone with the money will receive the keys. We recommend "Available Soon" because it gives the correct impression: The inquirer must negotiate with the landlord for the right to occupy the property. If there are any vandals in the neighborhood, an "Available Soon" sign also gives the impression that someone may be living there.
Underneath "Available Soon," list any information necessary for potential tenants to contact you. Always list your phone number. You should also add the number of bedrooms and the price. This extra information does not need to be readable from the road, but it should be big enough so that a drive-by would know that additional information can be obtained without talking to anyone. Most inquirers do not want face-to-face meetings until they know something about the rental. Nevertheless, if the rental is still occupied (or is a smaller multiplex that does not have a resident landlord) try to have the present tenant show the unit to any drive-bys that ask. As an added convenience, for those without pens or paper, have pieces of paper tacked to your sign with the information. Don't forget your phone number.
If your rental is not on a heavily-traveled road, you can increase traffic volume by posting cardboard directional signs. Use works like "home to rent." Be sure your "Available Soon" sign is easily seen from the approaching direction. Attaching pieces of ribbon or balloons to the signs increases volume, especially on Sundays between noon and dusk, when most people looking for a vacant home do their driving around.
It is essential to have the exterior of the property looking presentable. First impressions are important to the best tenants. Realtors have known for years that almost six out of ten of their homes are sold before the buyer ever enters the building. The same is true of renters.
The positive results of posting a rental will outweigh the negative in almost all cases. Remember, 56% of all tenants find their housing by driving around. The next time you have a soon-to-be vacated or vacant rental, let those drive-bys know.
Next to driving around, recommendations are the largest means of renting your vacancies. A 17% rate was the minimum attributed to recommendations in one survey. In another, where tenants were asked to give more than one response to how they found their present housing, over 80% stated that a recommendation played a part. On the average, owners and operators of single unit rentals to large complexes attribute 22% of renters directly to recommendations.
People recommend a rental if they know it is vacant or will soon be available. We have found a large portion of recommendations come from strangers who live within the neighborhood. They tell their friends or acquaintances.
If the unit being vacated is part of a multiplex, let the other tenants know. If the property is a single house where you are on speaking terms with the people at neighboring properties, let them know. The largest portion of recommendations will come from these people. They can find good tenants for you. A "sign" on a vacant or soon to be vacated rental can increase recommendations dramatically.
A smaller portion of recommendations will come from your acquaintances who are aware that you have, or will soon have, a vacant unit. Make it a top priority in your conversation with others.
3. Newspaper Advertisements:
Newspaper advertisements attract less tenants than most landlords believe. Although the Newspaper Advertising Bureau (NAB) points out that 74% of renters looking for a new rental scan the newspapers, most studies are fairly consistent and put actual apartments or homes being rented because of newspaper advertising at 15%.
Since 74% ofrenters check the newspapers while looking for housing, one may wonder why the number of people renting dwellings advertised in the newspapers is so low. The main reason is a large majority of landlords refuse to list the exact location of the rental in their ads.
Tenants looking for housing suspect the landlord will try to make an appointment with them. But, they prefer to see the neighborhood and the rental building prior to having a face-to-face meeting with the landlord. Consequently, when they see an ad without the exact location, and since most newspapers list rentals under approximate locations, tenants drive around the area hoping to find it. They normally can't without the address. They continue searching until they see a property with an "Available Soon" sign, then make contact with that landlord. We know this to be a fact since many of our renters were looking for other places they couldn't find.
The most common reasons landlords cite for not giving the exact address are varied; but, thieves do not check the paper looking for empty houses to break into, and vandals do not read advertisements before descending on properties with rocks and burning torches. The average renter looking for a new dwelling is not going to cause you untold troubles if you give the location. They are not going to torment the present tenant and they are not going to step all over the flowers while peering in the windows. The overwhelming majority of renters just want to drive-by and see the place before they start talking to anyone about renting it. Like home buyers, potential tenants want to see the house before entering into negotiations.
Another major reason for the low number of tenants renting due to newspaper ads is the size and content of the ad. Years ago we were fortunate to be present at a meeting of a rental association where the main speaker was the head of the Advertising Department for a large city newspaper. He made an astonishing statement which everyone asked him to repeat:
If you run an ad for seven days, 90% of the people looking for
The speaker went on to explain that a large ad can even be self-defeating. Potential tenants are looking for a bargain or a dream house that isn't part of the normal rental business. A small ad can contribute to this illusion and even draw more potential tenants. Large eye-catching ads, he went on to say, discourage many potential tenants and cause them to believe that the place is too "high class or expensive" for them.
In addition to the small ad and the exact location, you should also include the number of bedrooms in your advertisement. If you do not list the number of bedrooms you will be bothered with inquires that would never work out. Good tenant families with children will not want a one bedroom unit, and single people do not want the added cost of a three bedroom home.
You should also list the cost. Some landlords balk at including cost, but most professionals agree for everyone who calls to inquire about the cost, just as many will not call, assuming the place is too expensive for them. Listing the cost will also decrease the number of unnecessary calls.
Your advertisement should also include your phone number and any-thing exceptional about the inside of the rental. In most cases nothing else is necessary. A good ad looks something like this:
321 Palm Ave. 2 Bdrm,
If Palm Avenue is small or not well known, put "near" a well known landmark (women follow directions better that way). If you don't have carpet or washer/dryer hookups, mention something else unique about the place such as parking, basement, air conditioning, refrigerator, range, fireplace, or drapes. It creates interest. "New" also looks good. Anything from new kitchen to even new paint. It shows you take care of the place.
Forget about dining rooms since they have little drawing power today because of changing lifestyles. Also, square footage means little unless there are extremely large rooms. The layout of the rental is far more important to most people. Unfurnished and furnished units are listed separately so there is no need to waste space on this.
Such things as "near bus" or "near shopping" have little bearing since 90% of US households have at least one vehicle, and the remainder will gladly walk a few blocks if they like your rental. For that small percentage of prospects who aren't willing, or are incapable of walking, they usually cluster within communities which provide the services they seek.
Start the ad running on Wednesday, to coincide with department store sales, and have it run through Sunday since tenants have come to expect housing ads during these times.
One word of caution. If you use the small ad and your rental property has more than three or four units, tenants may feel tricked if they drive by. Inserting "play area" or "laundries" in your ad will alert them that the property is a larger type. Don't be afraid to mention these things. Although most tenants would prefer a single unit rental, or one with less than three or four units, most are not adverse to living in a multiplex if everything else appeals to them. About one-fourth of all tenants prefer a multiplex since they are not responsible for maintenance and/or have a sense of community.
The remaining 7% of homes and apartments are rented through various means.
Government Housing Programs: Some landlords become part of the City, County, State or Federal housing programs. If you have a vacant rental and make contact with any of these agencies, a local Housing Authority will send you potential tenants bearing a Certificate of Family Participation to choose from. If you choose one of these families, the Housing Authority will mail you the largest share of the tenant's rent every month and even will offer protection against a tenant that leaves owing money or who damages your rental. Families using these programs are selected on the basis of priorities established by the local Housing Authority. To qualify, the family's gross income, in most cases, can not exceed 50 to 80% (depending on the scarcity of housing) of the median income within a locality.
Many landlords are suspicious of these types of government aid and have never given it a serious thought. Others who use the programs are very pleased with them (especially the landlords who have learned to screen tenants as will be explained later). To learn more, get in touch with any local government housing office or phone your local HUD (Housing and Urban Development) Regional Office. Inquire about the "Section 8" program. These government offices will gladly supply you with all the information.
Real Estate Services: Two types of real estate services are available: the professional, and the free public and private sectors. Although their services account for a small percentage of apartments rented, their popularity is growing and should not be overlooked.
The services provided by the professionals vary widely. The most popular are the Real Estate Brokers and Apartment Referral Agencies. Once contacted, many will just send potential tenants your way, and it is up to you to choose the one you want. Other professionals will take care of everything from finding prospects, checking their references, showing the unit, and having a new tenant sign all necessary papers. Fees vary from a half month's rent to three month's rent. Depending on your area, they charge you, the tenant, or both.
When dealing with professional real estate people, be careful what agreements you sign. Some require you give them a certain amount of time to rent the unit. If you rent the unit before they find you a tenant, you may have to pay a charge.
Some agencies are very reputable while others actually find their available rentals in the newspapers; then, they put prospects in contact with you whether you request it or not. Because of many tenant and landlord complaints, many areas have laws governing their services.
Private sector: The other types of real estate services are large hospitals, schools, colleges, military bases, corporations, and utility companies who assist their people in finding suitable housing. If such an institution is near you, call and ask for the Housing Director to find if they supply the service.
We owned a triplex in a Northeastern city. We contacted the local electric company's Housing Director. She asked the appropriate questions about the location, condition and layout of our units. Once assured our available units were not substandard, our name and the location were placed on their list of available housing until the unit was rented. In the future when we had an available unit, we only had to call to have our name put on their list of available housing. When the unit rented, sometimes by their people, we called again to have the unit removed. This form of advertising is very helpful and costs nothing.
Phone Book: Unless the name of your properties are on the mind of a large portion of renters, it is doubtful a phone book listing accounts for any of your renters. However, since large multiplexes rely heavily on phone book advertising, and many landlords of smaller properties have varying views about this form of advertising, we have given it a place to explain some little known facts.
If you obtain a business phone, your name will automatically be listed in the yellow pages. For an extra charge you can have your name appear in bold lettering. If you desire a large advertisement, you will pay dearly.
Except for large multiplexes, phone book advertising is responsible for a very small portion of units rented and does not normally offer a good return for your money. The only true value of an ad in the phone book is making one's telephone number available to the public. That is one of the reasons for those large signs in front of larger housing cornplexes around the country. For small property owners it has little value unless one has many properties under a common name or has a business phone as a means of separating personal calls.
If one views all the other categories, he or she will realize that the phone, not the phone book listing, is the first means by which nine out of ten contacts are made with potential tenants. This very important phenomenon will be discussed in Chapter Three.
More: Another method of advertising in some localities is the apartment guides which are normally cheaper than newspaper ads. They are used primarily by larger multiplexes which run the same ad for months, but in some areas they contain pages for smaller properties. The guides are distributed to local stores and supermarkets, and are usually free to potential tenants.
Some landlords tack up "For Rent" notes of available units on bulletin boards in shopping centers, schools, and other public places. Others tack up business cards, hoping potential tenants will contact them.
Small local "Want Ad Papers" have wide appeal in some areas. These papers normally carry only classified ads for all types of items. They are becoming increasingly popular for rental housing. They are far less expensive than regular newspapers.
If there are any new or innovative ideas for advertising in your area, don't be afraid to try them if the cost is right. Attracting tenants is one of the most important aspect in keeping one's property, profitable.
1. From single houses to large multiplexes, the largest group of renters found their
housing by driving-by. Many recommendations are made by people who drive-by and tell their
friends about the rental. If at all possible, your available units should be designated as
such. If you object, try to determine if your objections are justly founded.
WHAT TENANTS WANT IN HOUSING
There are many conflicting opinions among landlords about what tenants want in housing. The reason is that the owners of small rental properties are exposed to the teachings and writings of a growing professional rental industry.
Before 1960, residential rental property was ignored by almost everyone except individual landlords. With the spread of homeowners into the suburbs, businessmen soon realized that renters would also enjoy the benefits of moving out of the inner cities. Because of relatively inexpensive land, large rental complexes were constructed.
With a new industry of professional property management companies competing with one another, it became important to understand what their tenants wanted in housing. Consequently, numerous articles and books were written containing chapters on what attracts a tenant to one type of housing versus another.
However, there are only around 70,000 large complexes, with 50 or more units in the US today. There are almost 10 million single rental houses. Despite this, almost all the information concerning the management of rental housing is written for those 70,000 properties.
Furthermore, the majority of these writings were written by past and present operators of large property management companies. Since most of these writers employ managers or resident managers to look after their large estates, their writings overlook some basic facts in order to make it appear that all aspects of renting property are within the manager's control. For example, one study claimed that the cost of the rental, including utilities, was a "relatively minor consideration in a prospect's final decision in selecting a rental." Nothing could be further from the truth. In our years of dealing with tenants, we have never met such a "prospect." In fact, many tenants settle for less than what they had originally expected to stay within their price range. Consequently, most of these writings are of little help to any property owner, or resident landlord, trying to attract a tenant.
By questioning and checking the records of 502 of our tenants, and combining the results with past records (along with two reliable nationwide studies) we found a different set of tenant priorities. Before potential tenants show an interest in renting, they consider the following:
Although these factors may vary, depending on the income and psychological make-up of the tenant, they make up a general profile of the overwhelming majority of potential renters.
The location of a property is the first concern of all potential tenants. For various social and economic reasons, people prefer to live in certain areas.
Unlike home buyers who are also concerned with the political climate, growth patterns, tax structure, zoning laws, and fire department (we never had a renter ask about these); the average desirable renter is more concerned with schools, shopping, hospitals, churches, police protection, access to major highways, and where the rental is in relation to their job and acquaintances.
Once the prospects decide on an approximate location, they normally drive around the area looking over the neighborhoods.
A neighborhood can be anything from a few houses at the end of a cul-de-sac to ten square blocks separated by major roadways, railroad lines, or natural boundaries. Prospects look at the age and especially the condition of the housing, and the general physical appearance of the public facilities.
They look carefully at the people within the neighborhood. What is the average age, is it predominantly family or singles, do they appear friendly, and most important, what is the dominant social class. Renters, like all people, do not want to live around people they do not feel comfortable with. If the people in the neighborhood are not socially acceptable to the potential tenants, they will try another neighborhood.
(2) Curb Appeal:
Once tenants locate a neighborhood they feel comfortable with, the property must have a certain "curb appeal." One of the most important factors is the properties surrounding the rental. Do the neighboring buildings look dilapidated? Do the neighbors take care of their outside areas? Are there old junk cars jacked-up in the driveways? Are the houses maintained? Are wild-looking motorcycles parked in the yards? And, if any people are about, what do they look like?
Because of an untidy or unorthodox neighboring property, one rental may stay unrented for months, while a comparable rental, five houses down the street, may have no problem renting. Only when tenants are satisfied with the neighboring properties will they give your property a second look.
Another important factor is whether the property is a single family unit or a multiplex with two or more units. Although one in four tenants are unconcerned with the size of the property, and another 10% actually prefer a large multiplex, most prefer a single unit home or a building with less than four units.
Once tenants are happy with the size of the property, they look over the general condition of the property. If the property seems acceptable to them, some will make a decision at this point to rent the place (if you accept them).
The more discerning, who usually make the better tenants, will normally stop to look the place over more carefully if their first impressions were positive. They look at parking, yard, structure design, windows, porches, view, and the general condition of many other items. If your property is in decent condition for its surroundings, the need to spend large sums of money is not necessary; but, the building should be adequately maintained. First impressions are lasting impressions.
If your property is a single unit or a multiplex with separated yards, the grounds needn't be meticulously maintained since most tenants start out with the idea that they will make it look better themselves. If your property has more than one unit without divided yards, the condition of the grounds becomes more important. Things like weeds, grass, shrubs, and walkways should be well-maintained. Litter must be cleaned up. Remember you are trying to attract the best tenants. Don't, however, spend a fortune on landscaping. We have found that manicured lawns do not increase inquires. With "top of the line" priced housing this aspect may help somewhat. One study claims that manicured landscaping will increase inquires by about 5%.
If the tenants are comfortable with what they see, most will make a decision to rent. But, the interior must meet their needs, the price must be right, and there must be no negative surprises.(3) Number of Bedrooms:
Renters don't want to pay a higher price for more bedrooms than they need. Renters with children can't live with one bedroom. Although we have known tenants to rent a place with more bedrooms than they need, it is normally rare. On the other hand, stable tenants will not move into a place that does not have enough bedrooms, no matter what the price.
Once the tenants are aware of the location and have a general feel of the size of the rental, the next question is price. If the cost is within their budget, only then will they want to see the interior. If the cost is beyond their reach, they will reevaluate their expectations and begin their search again with lower expectations, even returning to neighborhoods they drove hurriedly through.
Neighbors, the people living next door or within the same building, are a prime concern to three out of four prospects. In many instances this consideration can be rated above price. The neighbors may keep their properties looking good. They may be of the same social and economic class. But, the potential tenant is also concerned with their day-to-day habits.
We have learned through showing rentals that the better prospects will subtly ask about the neighbors. What are their life styles? Are they sensible? Are they noisy? Are they sociable? Do they stay up late? Are they single, married, old or young? Do they argue? Do they have large marauding man-eating dogs, or worse, teenage children? It is surprising how many tenants will turn down a rental because there are teenagers next door, even when they have teenagers.
If one listens carefully, the prospects are asking whether the neighbors will make their lives difficult. For example, better tenants do not like partying or swinging singles (married or not) living near them. Ironically, they may even associate with similar people in their work or leisure time, but they don't want them living next door.
(6) Interior of Rental:
Many landlords believe if they can get a prospect into their rental, the person will see how "beautiful" it is and rent the place immediately -- unfortunately, this is not the case. If your property has not fulfilled at least four of the five preceding items, the interior of the rental will never rent the property. On the other hand, if tenants show up to view the rental, you can be fairly certain they are pleased with most of the preceding items. Your chances of renting the unit are very good, if the interior is reasonably taken care of.
Some of the things to consider are the general condition of the walls, flooring, windows, and especially the bathroom and kitchen. Like home buyers, an attractive kitchen and/or bath can be a big plus and the reason a renter decides to rent.
The layout of the rental is also extremely important. Some people want everything on one floor because they have small children or are elderly. Some like the arrangement of two floors. The rooms must be designed in a way that their furnishings will fit. Also, does the layout and design appeal to their particular needs and preferences? What some people find appealing others find appalling.
The most important feature, and one that is entirely within your control, is the cleanliness of the unit. The better prospects are never comfortable with a dirty rental. The unit must be clean during the showing. If your property is a duplex or larger, any common halls or stairways must not only be clean, but smell clean. Potential renters give little heed to how nice the place will be when it is completed.
If there are comparable properties available in the vicinity, the interior becomes extremely important. Tenants will shop around looking for that special something that convinces them to choose one rental over another.
Unit Equipment: Although landlords like to show off the garbage disposal or the dishwasher, we personally have never rented a property solely because they had these appliances. In fact garbage disposals are nothing but problems and should be eliminated when troubles develop. A dishwasher may be the deciding factor if a similar rental has one, but there are few seasoned renters who will make their final decision based on this item alone.
On the other hand, washer and dryer hook-ups have been the deciding factor for many tenants. We have had tenants turn down rentals for no other reason than to obtain this feature at a neighboring property. It is an inconvenience good renters will not live with. The first priority when renovating any property should be a washer and dryer hook-up if they don't exist.
Stoves and Refrigerators: Whoever started the practice of furnishing stoves and refrigerators created more problems for future landlords than imaginable. Tenants with their own stoves and refrigerators are normally the more stable tenants. Never furnish these items unless absolutely necessary. Nonetheless, if comparable properties in your vicinity furnish them, then you must.
Second Bath: Not as important as most landlords believe. For the average two bedroom rental we can find no proof a second bath will rent it quicker, unless there is a similarly priced rental in the area with two baths. We have found one-and-a-half baths are more than sufficient for renting three and, in some areas, four bedroom rentals. A second bath, nonetheless, is an asset in three or more bedrooms rentals, especially if the family has older children.
Air Conditioning: In some sections of the country air conditioning is almost required,in other areas it adds little. Check your competition.
Carpet: There is no doubt that carpeting adds immense appeal to a rental; but, if your existing linoleum, tile or wood floors are adequate, keep them. Most tenants are not known for taking good care of someone else's carpet. In the long run you are better off without it.
As for items such as fireplaces, cable TV, and a host of others, one must judge the cost in relation to their competition. Don't furnish anything unless absolutely necessary.
Parking and Garage: It is important to note most people would prefer a parking place rather than a lawn. The closer the parking is to the tenant's front door, the better. People love their vehicles and like to get to them quickly. Most males place a very high value on this category. Whenever possible, provide it.
Laundry Rooms: If any of your properties have less than four units, it normally does not pay to provide a washer and dryer with the intention of making money, unless all the families have children. However, it can be one of the deciding factors in a tenant's final decision to rent one unit over another.
Furnished: A small portion of renters look for furnished housing. Furnished rentals normally draw short stay tenants and over the long run it does not pay unless you enjoy going to auctions and flea markets on weekends looking for good prices to replace damaged furniture. Unless you have a unique situation, it is not recommended. We tried furnishing one of our rentals, and at the time managed a building with ten, one bedroom, furnished apartments. With the exception of elderly people, the furnished apartments normally attracted unstable tenants.
Storage: We find it amusing that the low and upper income tenants never seem to need any storage, while the middle classes never seem to have enough. If your rentals are moderately-priced and storage is lacking, a storage shed can be a very good investment. Better yet, if conditions allow, give permission for the tenants to obtain their own.
Handicap Equipped: Not always financially feasible; however, if approached by a prospect willing to install their own, and if you are assured the equipment will leave no major damages after the tenant vacates, why not. We tried it and would do it again if the situation arose. Although door ramps and ceiling-to-floor assist poles can be removed with little or no damage, items like grab bars in a bath are normally left behind. If installed properly and in the normal fashion, grab bars do not distract from the appearance of a rental.
Recreation Amenities: Although primarily the concern of landlords of larger multiplexes, many landlords with small multiplexes have felt they should provide some form of recreational facilities to attract tenants. We have found a low percentage of people choose a rental because of recreational activities. In the late 1970's this category was sometimes listed before the apartment condition. With the climbing median age (now around thirty) its importance has diminished drastically.
We know one owner who had an eight unit multiplex with a swimming pool. He had so much trouble with uninvited guests and the swinging single crowd using the pool, he filled it with dirt and created a rock garden. The swinging singles have moved, tenant complaints have fallen 80%, and the place is quiet. He has no vacancies and the more stable tenants are extremely pleased. The savings in utilities, services, and insurance coverage increased his profit.
We learned through previous experiences that the only people who normally used these facilities and the like, were young free-wheelers. They created more problems than the recreational amenities justified. Pools and other recreational gimmickry should be avoided whenever possible.
If your property has more than three or four units and allows children, a sturdy swing set is a justifiable expense. It is surprising how many tenants with small children will be attracted because of this small benefit. In addition, you will not have to contend with tenants cluttering up the grounds with their own swing sets or the like. Just make sure the equipment is kept in proper condition.
The priorities of most renters looking for housing are location, appeal, number of bedrooms, price, and who they will have for neighbors. If the interior is adequate and the tenant can find a parking place within a reasonable distance, you will have little trouble renting your property.
WHY TENANTS CHOOSE HOUSING
They Can't Have Everything:
There are always rentals in every neighborhood that never seem to go empty. If they do, there is someone moving in before the last tenant is out. Yet, when your comparable rental goes empty, it seems to take forever to find a new tenant. Why tenants choose one dwelling over another may have little to do with the property.
With the nationwide vacancy rate hovering at eight percent, one would think a person looking for a vacant house or apartment would have little trouble finding one. This may be true for the less desirable tenants, but it is normally not the case for better tenants. Good renters, like home buyers, pick a dwelling believing they will be there for many years. They are discerning in what they want, and finding a place to live is quite a task. This stems from, not only their preferences and financial situation, but by the fact that their search is complicated by the limitations set by landlords.
These limitations usually have to do with the number to occupy the rental, length of lease, single versus married, unmarried living together, roommates, employment, age, and other factors. Many of these restrictions are determined by the circumstances surrounding the rental, while others are based on the landlord's social and moral beliefs. However, there are landlords who impose limitations on income, children, pets, and even waterbeds without understanding some important facts about these items.
Income: Although the median family income in 1999 was around $35,000, the median renter family income was only around $20,000 (about 55% of the average homeowner's income). This gap has existed for decades and is not likely to change. In addition, since people in higher in-come brackets normally buy their own homes, they account for only 8% of the permanent renting households.
Tenants with children: Around 35% of all renting households have one or more children under eighteen years of age. There is also an additional 10% that have "children" over 18 years of age.
Pets: About 30% of all renters have some sort of pet, inducting caged or tanked animals.
Waterbeds: Around 7% of households have one or more waterbeds. In some southern areas, 15% of beds sold today are waterbeds. (Because of their improved material and safety liner, they are no longer the problem they were. Also, there are very few structures that cannot support the weight.)
If landlords set income limitations at a minimum of $20,000 yearly, and have a no children, no pets, and no waterbed policy, they could eliminate all but one in ten of the renting households in their area. With these limitations alone, plus the tenant's preferences, it is no wonder that many good tenants have trouble finding acceptable housing.
As tenants start their search for new housing, they are filled with high expectations and confidence. Younger or first time renters believe finding a place will take a day or two. Seasoned renters, knowing that the task is not easy, forget they have become more discerning. By the end of the first week, most prospective tenants have viewed five rentals, only to find the place was not to their liking, or they were not acceptable to the landlord. As their search continues, they become very disillusioned and frustrated. Many give up viewing rentals completely and depend entirely on the telephone. They will refuse to make or show up for appointments until they are sure the place is acceptable to them, and they are acceptable to the landlord. As the prospective tenants' search continues, non-fulfillment becomes a day-to-day drudgery and many continue calling only because of the pressure of their situation or spouses. Many make their calls with such distaste they will hang up for the slightest negative reason. Unknowingly, many landlords contribute to the caller's plight.
Over 90% of all tenants make their first contact with the landlord over the telephone. Even if you live in or near the building, a large portion of the drive-bys will obtain your phone number and call. They want as much information as possible before a face-to-face meeting. Not only do they want to avoid an unnecessary appointment or rejection, they do not like dealing with strangers.
Strangers, in the past, have sold many of these people overpriced cleaning and cosmetic products, vacuums that did everything but vacuum, insurance policies that almost sent them to the poor house, and encyclopedias that were obsolete before their child was old enough to read. They have found a conversation can be ended much more quickly over the telephone.
When the phone rings and a potential tenants are on the line, they are there for one thing--information. You must provide it quickly and accurately without any adverse comments or actions on your part. At times, the adverse aspects may occur before you answer the phone.
If you advertise in the paper or have your phone number on your "Available Soon" sign, there must be someone there to answer the phone from 9am to 9pm. If not, you must provide the hours tenants should call or they will give up after calling two or three times believing the rental is taken. If you list hours, there must always be someone there to answer the phone during that time, or most prospects will give up after one call. Have you ever phoned a business that you expected to be open and no one answered? Then you can understand the tenant's reaction. He or she will call someone else.
If your phone is used by house members, especially children and adolescents, you must instruct them about proper phone use. Yelling, loud stereos, and background noises must be kept at a minimum. If a potential tenant called you and you heard someone yelling in the back-ground, confusion, and stereos blasting, would you really want to show your rental to such people? If you were the inquiring tenant, would you want to rent from such people? Although this may not drive away the less desirable tenants, it surely will the better renters. Just as you gauge the person on the other end of the line, they will be gauging you. The phone must always be answered in a businesslike manner. To avoid problems with the phone, especially if you have more than four or five units, consider getting another to use for incoming business calls. Put it off in a quiet part of the house. Instruct anyone answering to act businesslike. Telephone impressions are very important.
If circumstances make it impossible for you to list hours, or for someone to be around during the day to answer the phone, purchase a telephone answering machine. They are inexpensive and serve better to answer potential tenant calls than children or no one at all. But understand that 7O% of the people will not "talk" to a machine. Your message must be geared to give information about the rental, and the time the tenant can contact you. Messages that assure callers how sorry you are for not being home, or how much you would love to talk to them, may impress the adolescent, but such messages do little in helping rent property. Don't waste the caller's time or s/he will hang up before your recorded voice finishes the first sentence. For the few people who will talk to a machine, have a phrase near the end of the message similar to the following: "If you care to leave your name and phone number we will contact you.
However you make contact with a prospect on the phone, the majority will normally sound responsible. You must take it for granted that they are and avoid any adverse comments that will discourage the caller. Many professionals suggest that you take on a friendly attitude and get the person's name as quickly as possible. We have found that the better, and more intelligent, tenants sense the phony friendliness and dislike the intrusiveness. Unless you are very good at it, a friendly approach could have an adverse effect. The better potential tenants want information, not a friend. Just listen to the caller's questions and answer in a businesslike but easygoing manner.
If the telephone is used wisely, you can triple your serious contacts with prospective tenants.
There are two distinct groups of callers: Drive-bys who have seen the rental, and the others who have not. When people call they normally say that they have seen your sign, heard from a friend, or seen your advertisement and ask if the place is still available. If your answer is affirmative, various questions will follow depending on where they acquired their information. To avoid any misunderstandings in the future, however, let the caller know that you will be considering all possible callers. Do not make it appear, however, that there are any other serious prospects. The caller may become discouraged and not show up for an appointment.
If the caller is a drive-by you will be in a very strong position. Your rental has fulfilled the first two requirements (location and appeal) and possibly more, depending on what they may have learned from your sign, neighbors, or by looking the place over.
If through circumstances they have seen the interior of the rental, you have a likely tenant. They would not be calling if they did not find the rental acceptable. On the other hand, most drive-bys haven't seen the inside and may not know the price.
Some landlords refuse to give the price before they show the unit. We have found this self-defeating and a waste of time. For one thing, many callers have been drawn to other places in the past only to find that the price was too high for them. If you refuse to give the price, the tenant will expect the worst. People do not want to admit something is too expensive for them. To spare themselves the embarrassment, many tenants will not come to look at a unit even after making an appointment. Give them the price immediately. If the place is out of their price range, why try to attract a tenant who may have troubles making the rent payments?
After you give the price (and the caller doesn't seem to be in a hurry to say good-by) tell him or her about the interior. Stress the new carpet, or linoleum, the fresh paint or paper, the large closets, or anything that could be an attribute to the caller. There are always features which sound wonderful over the phone.
If you have reached this point with a drive-by, you can almost be sure he will want to see the inside. Remember, drive-bys rent almost 60% of the rentals in this country. It is easy to make an appointment with them and it is unlikely they will fail to show up.
Callers who have not seen the property are a completely different matter.
When they call, answer the caller's questions in the same businesslike and easygoing manner. Give them all the facts about the place that may be of interest to them or of importance to their situation. Don't oversell the place. A home is one thing people want to see for themselves before they consider whether they want it or not. Location, neighborhood, and appearance of the property must be satisfied. Trying to sell a rental before the tenant has seen it is like trying to sell shoes over the phone. The place has to "fit" before anything can be accomplished.
Some professionals recommend as soon as you get the caller's name you should ask: "When would you like to see the place?"
Note the word, "when." Some professionals claim this high pressure approach "assumes" the callers have already decided to see the place and are forced into a position where they can't say no. The professionals are right on only one point, the callers don't say, no. They make appointments and never show up.
If the caller wants to know where the rental is located, tell him. Landlords who refuse unless the caller makes an appointment, are creating senseless appointments for themselves. While the landlord is making plans to keep the appointment, the callers are already in their car driving over to check out the place. If they don't like what they see, they just keep going. This is the reason the ones who keep their appointments are normally waiting (when you arrive fifteen minutes early). If they didn't like what they saw, they would have kept going. Few people want to put themselves into the position of saying no.
To save yourself unnecessary appointments, give callers the exact location and let them drive by the rental; then, tell them to call you back if they are still interested. Better yet, as mentioned earlier, have the exact location in your advertisement. For every person that considers a property an undesirable location, there is always another who will consider it an ideal location. Also, by giving the address in your ad, tenants who might not call will drive by. If they like what they see, they will call. Remember, most prospects will not answer any advertisement until they have seen the rental first.
When a tenant calls after seeing the property, you know you have a very serious prospect. Now, you only have to assure them that the neighbors are good people and the interior is what they want. At this point, however, you must also start to gauge if the caller is acceptable to you.
Usually the big questions about income, children, pets, etc. will be covered rather quickly and specific questions will follow. Some tenants are looking for particular things, as mentioned in the last chapter, and you must tell them whether your rental has them or not.
If a caller should ask for something your rental lacks, answer with a positive response. For example, if the caller asks if your rental has wall-to-wall carpeting, and it doesn't, explain wall-to-wall carpet is too hard to keep clean, or that many tenants prefer their own area rugs which match their furniture, If they ask if you furnish the drapes and you don't, tell them you let tenants furnish their own so they can create their own decor.
If they ask what appliances are furnished and your rental lacks a refrigerator, you could mention an inexpensive place to acquire one. You can also say you would have to increase the rent if you had to furnish the refrigerator. No matter what they ask, try to have a reasonable positive response. You stand a good chance of keeping the callers on the phone by causing them to see benefits they never knew were benefits.
As your conversation progresses, you should also be trying to determine whether you would want them as tenants. Do they sound responsible? Are they old enough? Do they seem to understand commitments? Squeeze your questions between theirs: When would they be ready to move in, can they afford it, how many in the household, how long will they be staying, or any other limitations you may have. The more you screen the person on the telephone, the less time you will waste showing the inside to callers who are not acceptable. You do not want to show the inside to a lot of people, just a few well screened ones.
If your rental is a fast mover, tell the caller what time and day you are showing the rental. If the place is a slow mover, don't try to force them to your time. More appointments are broken when they are set to your time instead of the prospect's time. When you have agreed upon a day and time, now is the time to ask for the caller's name if names weren't exchanged during the conversation.
For additional callers, have them meet you at the rental around the time that you scheduled the first caller. If someone cannot make it, and sounds like ideal tenants, make a separate appointment if possible. You will now have two time schedules for any additional callers. There are times when you will perceive a very good prospect on the phone. If you have the time, try to arrange a separate appointment with them.
Some landlords like to schedule all the callers at once so as to create a feeling of competition among the prospects. There is only one problem with this--it works too well. We have stood in the background during this type of salesmanship and heard the meeker tenants tell their spouses that they wouldn't stand a chance among "all these people." They would leave while the landlord was showing the rental to the more forceful. Meek tenants normally make the best tenants.
Even though some renters have made up their mind to rent before they enter the unit, the importance of showing the rental's features to others cannot be underestimated, especially if there are comparable vacant properties in the area. Sometimes just pointing out the positive features about your rental may be the added touch needed to convince the undecided prospect to choose it. Unless you have someone who is very adept at it, you should do the showing yourself. After all, you have all the answers and this is the best time to gauge the prospect. Unless your units "rent themselves," you must take the showing seriously and practice some honest salesmanship.
When you meet the caller at the rental and the formalities of introduction are over, start by pointing out the features of the exterior. Remember, the exterior is what first appealed to them. Now is the time to reinforce their good judgment. Point out any plus features like a yard if any, if fenced, where the mail boxes are, where children can play, outside faucets, parking, landscaping, view and anything about the structure people may find appealing.
If your perception is keen, you may notice some prospects casting glances at neighboring units or properties. You should not start by telling them how wonderful the neighbors are unless they are the best. Show them the rental first and let the subject of neighbors come up on its own.
If the present tenant is still living in the rental, they would have been informed of your coming. You can only hope that the place is in perfect order. Most sellers of real estate insist an occupied unit has a far better selling effect than an unoccupied one. This is not necessarily true with renters because they are more concerned about damages, cleanliness, and the overall condition an occupied unit hides. Therefore, since you have little control over how the place will look if the present tenant is living there, and some of your prospects may not view the rental the first time till the present tenant is out, we will assume (for narrative purposes) that the place is vacant.
When showing a rental there are a few things that will increase its appeal.
As you enter the unit, make sure that it isn't too cold or too hot (which is one of the main reasons an occupied dwelling is much more appealing than a vacant one). Walking into a unit that feels comfortable is very important.
It is also essential that the place smell nice. Musty and stale odors can drive away potential tenants. Although there are many deodorants on the market to cover up foul smells, there is a better way--clean the place. Clean the place as though you were going to move into it yourself. Nothing adds more to a rental's appeal then cleanliness. Even though few people are ideal housekeepers, there isn't anything like a dirty rental to turn them off. A clean place also assures the prospect the last tenant wasn't some slob who may have left hidden bugs, or worse, a disease behind.
Cleaning also makes even the oldest rental look newer. When you are done cleaning, go back into the unit with a spray bottle of glass cleaner with paper towels and shine everything, no matter how old, especially the kitchen and bath. It usually takes less than ten minutes and can add tremendous appeal. Another great asset of a clean rental is during move out time there are far less arguments about the money you withhold from a person's security deposit. "As is" apartments are the second biggest reason for complaints to Attorney General offices concerning landlord/tenant relations.
Before showing any rental to a prospective tenant, whenever possible, it should be clean or in the last stages of clean-up. In 1980, we made the mistake of showing a rental before it was finished. Although the place was in good condition, the carpet had been left dirty. The prospect rented the unit, but she never stopped bothering us for new carpet, even though it was thoroughly cleaned before she moved in. When she moved out over two years later we had the carpet cleaned before showing the rental. The new tenant remarked about the "nice" carpet. First impressions are very long lasting. If at all possible, never show a vacant rental until it is ready for occupancy, or until all major projects have been taken care of. Potential tenants find little comfort in your assurances.
There are many other items which will increase a rental's appeal: If the rooms do not have large windows or the natural light is blocked by landscaping or nearby buildings, have 75 or 100 watt bulbs installed. Brighten the rooms. Brightness, like cleanliness, will make the rooms more appealing.
Have those small items like faulty light switches, dripping faucets, sticky doors or windows, and drawers that want to fall out when they are pulled, repaired. Not only do these items add appeal to the unit but will save you future maintenance problems.
For items that can save you time and money in the future and also add appeal, consider the following: Never use a flat paint on any painted surface except the ceilings. Flat paint can pick up hand prints by someone just leaning against the wall and usually needs to be repainted or touched up every year. A good semi-gloss or low-luster paint not only lasts four times as long but is very easy to touch up and adds a brightness to the rooms that appeals to all prospects. Even after three to four years, with children present, the paint can be touched up. Only a nit-picking gripper with the eye of a hawk would notice. Also, any present tenant requesting repainting can be told to wash down the walls.
Carpeting is another major concern. There are some simple procedures to take which will make it look better and extend its life for many years. Although advertisers and professional carpet cleaners rave about their cleaning solutions and the wonders they will do to get and keep carpets clean, we have found that these solutions fail to live up to their claims and do not warrant the expense. In addition, since most professionals do not go over the carpet a second time, their cleaning solutions are left in the carpet and act as a cleaner for the bottom of dirty shoes, Within a few months the carpet looks worse than it did before it was shampooed.
To do the job yourself, dab or spray a household dishwashing detergent on unsightly spots or dirty areas and rub out any stain with a damp cloth or scrub brush; then, shampoo the carpet with plain hot or warm water. Not only will the carpet look better and stay cleaner longer, you will add years to its life. Some landlords spray the heavy traveled areas with a protective carpet guard. We do not feel it is worth the cost. If there are any small stains which cannot be removed from the carpet, dabbing them with a matching liquid shoe polish or marker pen, will usually conceal the stain and save you an unnecessary expense.
For the landlords who furnish refrigerators, there are also some precautions to take to prevent future problems. Many people believe if the refrigerator is shut down for any length of time, there will be problems with it. Unless you are going to store the refrigerator in a damp place for a long period of time there is no need for worry. The moment a unit becomes vacant, shut the refrigerator off and prop the door open, the longer the better. Tenants, like homeowners, defrost a refrigerator as quickly as possible by placing pans of hot water in the freezer or use hairdryers. This procedure does not give the condensation, which forms ice and builds up within the walls of the refrigerator, a chance to thaw and dry out. In older refrigerators the problem is extremely bad since only fiberglass, which holds moisture like a sponge, was used as insulation. In newer refrigerators, where the use of urethane foam is supplemented with fiberglass, the problem is reduced but nevertheless exists. Shut the refrigerator down as long as possible. It will have to work much less in the future.
If you have the type of refrigerator with the coils in the back, clean the coils every few years. A refrigerator cannot "get rid of heat" if the coils are covered with dust. With the newer types of refrigerators, the front kick panel must be removed after the plug is pulled, and the dust cleaned from around the fan and coils at the bottom of the refrigerator. Also check to see that the light inside the cabinet shuts off, and the magnetic or plain gasket that fits all around the door is not coming apart. Check particularly the bottom of the door. If the gasket is coming apart, it can be repaired with caulking compound and pressed back together rather then spending a small fortune on a complete new gasket.
Another interesting and money saving item: If you have laminated counter tops, marred by stains and small scratches, moisten the counter tops with a bleach soaked rag and let sit for ten minutes--the results can be astonishing.
If you take the measures stated above, you will not only save money, but will reduce the maintenance requests to almost zero. You will also add years to the life expectancy of paint, carpet, counter tops and your refrigerator.
As you start to show the tenant around your well prepared unit, there should be little need to oversell it. Some professionals recommend the use of "positive words" which "assumes" the prospect is definitely going to take the unit. You are not a used car salesman. If the tenant gets "roped" into something by high pressure sales or misleading information, you will be the one who regrets it. If the prospect is foolish enough to fall for such a scam, you should not want them for a tenant. If they are smart enough to know what you are doing, they shouldn't want you as a landlord. Just point out the features of interest in a positive way. The rental will lack things others have and make up for things others lack. You must point out the benefits of your rental so tenants see the value in them.
A few years ago we conducted a survey with our tenants and found the difference between what women thought important, and what men thought important, was astonishing. When we listed items such as washer/dryer, garage, etc., guess who normally ranked washer/dryer above garage? Guess who normally ranked garage above washer/dryer? With the younger men, it was always the garage. If you are showing a married couple the rental, try to gauge what the woman likes and point out these features. In most cases, women make the final determination. Even in today's liberated world, women spend more time in the kitchen, so point out the positive features to her and how well they function. Coincidentally, an attractive kitchen has sold many unsaleable homes. Renters are no different. It is the most important feature of a rental.
As you move through the rest of the unit, point out anything new or in very good shape: Floor coverings, paint, wallpaper, hardware, or any feature you feel would be of interest. Always point out the cleanliness of the place.
If the particular unit has a view, whether wood, water, hill, city, or one lone bush in a concrete yard where an occasional bird lights, mention it. Also pointing out which rooms get the morning or afternoon sun is of great interest to a large portion of renters. In fact scheduling appointments when the sun shines on a particular side of the rental can have great benefits.
When showing the bedrooms, point out features such as closet space, rear doors, heating equipment, and light fixtures. If a woman is expecting or has small children, let her linger in the bedroom that is ideal for children. A sentimental smile is not uncommon on her face as she visualizes the placement of her little one's furniture.
When you get to the bathroom, which after the kitchen is the next most important feature in a unit, make double sure it is shining and without a trace of odor. There isn't anything which will turn a viewing person off faster than a dirty and dank bathroom. Mention the cleanliness and any good features.
Fill any voids in the conversation with the location of the school, nearest grocery store, shopping centers, churches, and hospital. Not many women care whether the best trout fishing is a mile away. To most men, point out the things of interest to them: basement, outside storage, parking, garage, or extra room. If the man is one of those that shows little, if any, interest in the details of the unit, mention the availability of recreational activities in the area or the convenience to his job.
When showing married couples, remember, they can't have everything they want. There is a give and take between men and women about what they will settle for.
No matter who you are showing the rental to, go through the same routine. Try to gauge the prospect's needs by their age, the way they dress, and the information you gathered on the phone. Point out features of interest near the property, such as parks or commercial centers. Keep in mind, older tenants are not very interested in the nearest pizza shop. Well-dressed career people would not normally be interested in the location of the bowling alley.
If the person is single, mention if singles live nearby, especially the opposite sex. If the prospects are married, mention the same age couples around. If there are neighbors in similar lines of work mention it, especially in dealing with career people who place great importance on this factor.
We have found that younger couples are usually in such a nervous or excited state they hear little of what is said. Consequently, let them "run through" the rental to satisfy their curiosity. After they have settled down, start a shorter version of your routine. This also works very well with most younger and especially blue collar males who normally show little interest in the details. Like a shopper in a department store, leave them to make up their minds before assisting them. However, unlike in a department store, you will be there to answer any of their questions and point out any of the plus features they usually overlook.
Unless the prospect mentions it, ignore any bad features. Many people don't notice or don't care about things you consider a draw-back. If it is something that must be known about the operation of the unit, mention it when everything else has been said. If the subject of neighbors hasn't been cleared-up during the showing, the best prospects, male and female, will normally ask. In fact, if they don't show any concern at all, they may be tenants no one wants as a neighbor.
Depending on the person, their questions about neighbors cover a wide range of subjects: Are they quiet, what they are like, their ages, what they do for a living, if they have children, or even more personal questions. If the neighbors are good, mention it. Tell how quiet they are and how your past tenants or neighbors never complained about them. Mention their well-behaved children, friendly attitude, or anything else that is true. If a questionable family resides nearby, but isn't really "bad," assure the prospect by tipping them off about such things as, the man who may raise his voice now and then, or the mean-looking teenage boy who is really a nice person. If the neighbors are a little noisy on one side, mention the quiet one that lives on the other side. Even though they have driven by, the best and smartest prospects are even concerned about the neighbors living two or three houses away, and across the street. Unfortunately it is probably out of your control and all you can do is assure the prospect. If some classless operator has three cars jacked-up at a property near yours, give the prospect some reassurance. Maybe there are no other complaints about the people. If the neighbors aren't "good" people, don't say they are. You must assure the potential tenants but never lie to them. All you can do is hope for the best.
Nonetheless, if you have attracted a few tenants to your clean rental, showed the unit in a logical manner, convinced the tenant the neighbors were of their social class, and the unit did not lack anything the tenant definitely wanted, you should have little trouble convincing at least one prospect to choose your rental. On the average, large look-alike cornplexes rent to one out of four prospects who view their rentals. A small multiplex will normally rent to one out of three. Single unit homes will rent to almost one out of two.
I. Good tenants cannot have everything they want and looking for a home is a trying