SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

The Business of Landlording

Protect Yourself With An Independent Contractor Agreement

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Being a real estate investor means working with contractors.  As I said in my previous post, many of the properties we purchase need large amounts of work.  That work is often where the value for us investors is found.  Working with contractors however exposes us to risk.  You need to protect yourself with an independent contractor agreement from that risk.

Where does that risk come from?  The risk comes from the fact that repairing and rehabbing properties is somewhat dangerous.  People can get hurt, seriously hurt.  Just think of what is often involved.  There are roofs dozens of feet above the ground.  Ladders are used to get the workers up to them.  Electric cords and wiring are run or strung everywhere.  Natural gas lines are opened and exposed.  Floors that keep us upright are ripped apart.  Debris is often scattered about.  Nail guns shoot nails right next to toes.  Sharp objects are both used and found all over any job site.  All of this and more obviously increases the risk of injury and harm.

You, as the investor and property owner, have to take steps to protect yourself from this risk.  Those steps begin with hiring qualified people to do the job, but of much more importance in my opinion is the contract you sign with your contractors before any job begins.

You are using a contract on every repair job with every contractor right?  I hope so.

If not, you are exposing yourself to unnecessary risk.

It’s All About The Contract

Contracts are important documents because they spell out who is responsible for what, including the people that are coming to and working on your property.  These contracts spell out that these folks are not your employees.  You are not telling them what time to show up.  You are not telling them when to leave, nor are you supervising every move they make.   Instead they are independent contractors who (in many cases) are responsible for their own missteps and for their own insurance.  You as the property owner are just telling them to “make it so” and then letting them get it done.

By using an independent contractor agreement, you place much of the burden of responsibility on your contractor instead of you.  This is how you reduce your exposure to risk.

If you do not use such a contract and an accident, or worse a death occurs, then you might be held responsible.  Further, when these accidents and deaths do occur, people start looking for the deep pockets and who do you think they are going to assume has the deepest pockets?  They are going to look at and assume that you, the property owner are to blame and have deep pockets to pay.

It can all happen very quickly.  All someone has to do is slip on a roof and be paralyzed or killed in the fall.   Even experienced contractors can make mistakes or take a wrong step and if you are not protected, you and everything you own may be liable and open to damages.  People often want to blame someone after an accident happens and it is easy to look at and blame the property owner.

The Phrase To Use

It is such a simple thing to get a contract signed with your contractor before work starts.  It does not have to be long winded and full of legalese to be effective either.  Short and sweet often can and does work.  Here is a clause that I use in my independent contractor agreement.  Feel free to use it, or some form of it, in yours.

Contractor and Client intend this Agreement to be one of independent contractor and client.  Contractor therefore retains the sole right to control or direct the manner in which the services prescribed herein are to be performed.  Client retains the right to inspect, to stop work, to prescribe alterations, and generally to supervise the work to insure its quality and conformity with that specified in this Agreement.  Contractor warrants that upon signing of this agreement that Contractor has obtained all stated and necessary insurance, including worker’s compensation coverage, and that it will be kept in full force and effect until the completion of the work contracted for herein.  As such, contractor herewith agrees to sole and complete liability for any injury to self or contractor’s workers.

Whatever you do, just make sure you use a contract and make sure you use one that will protect you.  Beware that the contract your contractor wants you to sign usually protects their interests, not yours.  You need your own independent contractor agreement (reviewed by your own attorney too) that protects all you have worked and are working for.

 

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Is It Possible To Get A Quality Rehab Quick And Cheap?

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Working with contractors is often a significant part of a real estate investors business.  Many of the properties we invest in need work, lots of work.  Getting that work done on time and on budget can greatly increase our bottom line.  But is it possible to find a contractor who can deliver a quality rehab quick and cheap?

Maybe.  But it is really difficult to do so.

Working with contractors can be one of the most frustrating parts of this business.  Many will over promise and under deliver and you never really know how well they will work out until you have had at least one go around with them.  And in a tight real estate market like we have today, your choice of who you can get to do some work may be quite limited.

Many contractors will also tell you that they can deliver a quality job quickly and cheaply, but doing so requires skills that are often lacking. It is much more common to find contractors with two of those qualities, but not all three.  It is the rare person who can actually deliver quality quick and cheap.

This situation can put us investors in sort of bind.  Which two out of the three do we want?  Do we want quick and cheap but low quality or higher quality with an increased price?  And what about the time frame for completion?  How important is that?

Over the years I have come to the conclusion that quality and price are the more important of the two.  I would rather extend a job a few weeks and get it done right than get it done so quickly that I just end up doing it all over (and spending money) again in the near future.  I have found that while I may save a bit of money on the holding costs on the front end by getting a job done more quickly, I often lose it on the back end because quality was sacrificed for speed.

Plus, a good contractor is going to need time to make sure that a job is done right.  There are some things you just do not want rushed.  If you try to rush tings, shortcuts will be taken.  I am not a fan of most shortcuts as they always seem to come back later and bite me in the butt.

Contractors who can and will do quality work in a reasonable amount of time are usually not the cheapest you can find.  That lower price quote often means that something is being skimped on somewhere.  The old saying “You get what you pay for” may sound canned, but it is just as true in the contracting world as it is anywhere else.

Go For Quality

So while I do not think that quality quick and cheap is very attainable, quality at a fair price and done in a reasonable time frame is. How do you find that?  Here are a couple of ideas:

  • Shop Around – Get several estimates, even if you plan on using the same contractors again and again. Familiarity can often breed complacency along with a mistaken comfort to not double check your numbers.  Getting multiple quotes all the time keeps both you and your contractor honest.
  • Use Incentives – People respond to incentives. Give a bonus if a job is completed ahead of schedule.  Use a penalty if things run too long.
  • Be Available – Make yourself available to solve problems. I can tell you that every major rehab job will have unforeseen issues.  Be around to help solve those issues.
  • Let Them Work – Do not nitpick and do not hover. Sure, point something out that does not meet your standards or looks out of place.  But otherwise let them work.

We can all strive for a quality product done quickly and cheaply but when it comes to contractors getting all three can be a tall order.  Over the years I have found that quality is the most important of the three.  Even if it is often a it more expensive and takes time.  Cheaping things out will eventually hurt you, your good name and your bottom line.  Remember that part of being in business is making people want to do it all again.  A poor product will not get you there.

Is Mass Marketing Worth The Hassle?

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There must be a new real estate guru out there selling a new mass marketing system.  I say this because I have received too many calls in the past few weeks all repeating the same script asking if I want to sell for it to all be a coincidence.  Someone, somewhere just put on a seminar and sold a “system.”  Marketing is something we all have to do.  I just wonder, is mass marketing worth the hassle it generates?

I have not seen whatever this system is, read it or watched it.  But I have been down this road before and I have a pretty good idea of what the system entails.

Some entrepreneur has managed to put phone records and real estate records together.  It had to happen sooner or later.  Then, they wrote a course describing how one can get rich quick with real estate.  It lays out an “easy script” that anyone can use to quickly buy properties.  Buyers are told that people will be banging on your door in no time.  All they have to do is buy the list, record their message, broadcast it and then wait for the money to come rolling in.

These systems, usually in letter formats, get peddled every so often.  I know every time another real estate seminar has come to town because I start receiving tons of letters asking to buy my properties.  The phone call aspect is just an updated version of this mass marketing technique, and I have to say it leaves me with feelings of annoyance and trickery.

Why?

For one thing, you called me on my phone.  Phones today are basically computers.  I am always looking something up or doing some other kind of business on my phone.  Your phone call interrupts that, instantly blocking whatever I was doing.  It is not like getting letters in the mail, where I choose the timing of the interruption.  You have instead inserted yourself into my time.  It is annoying, no one likes it and it honestly starts you off on the wrong foot.

Secondly, most of these calls are hidden behind an unknown number.  Sometimes, the phone does not even ring.  Instead it chirps and vibrates, shows the phone screen and just goes to voicemail.  Thing is, about the only person who leaves voicemail anymore is my 82 year old mother.  Many folks I know do not even check it or delete them outright (Perhaps because of techniques such as this).

Why hide behind the “unknown” number?   If you really are interested in my property, why use such a trick?  It conveys an impression of shysterism.

So why even use such a system?  The answer people are sold is that the system will increase response rates.  That may be true, but no matter what mass marketing system you use you will get responses.  But they will likely not be the responses you want and here is where the hassle comes in.

Most people who will return your call fall in one of three positions.  They are either tire kickers just testing the waters.  They are upside down in terms of taxes, liens, loans or repairs.  Or they are experienced investors like me.  None of these three are going to give you a deal.

Motivation is the key to any real estate deal.  Tire kickers are not motivated.  They may want to sell, but they do not need to sell.  They will often then get angry with you because you promised a “fair” offer in your message that does not sound very fair to them.  People who are upside down may be motivated but they are of little value because there is often no way a deal can be made.  The bank, the lien holder or the taxing authority have to take the hit first.  Again, people are going to get mad at you because you will not take over their problems.  Plus you likely just had to sit and listen to a long sob story.  Finally, people like me are not going to play by your script and are angry at you for interrupting them.  We have heard your script many times before.

That is a lot of anger directed at you.  Do you really want that?

I answered one of these calls the other day just out of curiosity.  You could instantly hear the timidity in the person’s voice.  I am nearly positive that timidity came from not knowing what they are doing and not realizing the deluge they were in for.

The call went something like this.

Caller: “Would you like to sell your property?”

Me: “Sure, everything is always for sale (it is too!).  Make me an offer.”

Caller:  “Uhh.  Umm.  Well…what will you take?”

Me:  “No, no, no.  You see you called and interrupted me, so you make the offer.”

Caller:  “Click.”

Was I too harsh?  Maybe, but I am already annoyed at the interruption.

Is any of the above really a good use of your time?  I learned quickly when I tried these systems that it was not.  I got tired of being yelled at and I do not think I ever got a deal out of it, even with follow ups.

Today, I am much more specialized and zeroed in with my marketing techniques and get much better results.  Sure mass mailings and phone calls can generate a response, but everyone else is doing it and the mess you have to wade through is just not worth the hassle to me.

I got into real estate to work and be yelled at less, not more.

Anyone else getting these calls lately?  What are your thoughts on these mass marketing techniques?  Please let me know with your comments.

Real Estate Investors Must Create Value

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I have been writing a lot lately about the business side of being a landlord and real estate investor.  I recently discussed working on not in your business for example.  While that is an important lesson, I think another is that we as real estate investors must create value.  Not just value in terms of properties, but value for everyone we come in contact with.

Landlording and real estate investing is not just about real estate, it is about running a business.  And as any business owner will tell you, running a business is about creating value.  By creating value, we businesspeople persuade other people to work with us or give us some of their hard earned income.  We real estate investors cannot force tenants to live in our properties, nor can we force people to sell us property or work on out properties.  We have to earn it.

We earn it by creating value.

How can you create value for everyone you come into contact with and thus run a leaner and more profitable business?  Here are some ideas.

Creating Value

Make It Easy – Nobody, and I mean nobody, wants a hassle.  Do not be in the business of creating hassles.  Make it easy for a potential tenant to find you.  Make it easy for property sellers to work with you.  Make it easy for contractors to get paid.  Make it easy for your banker to get your financial information.  Making it easy creates value for other people.  Do it.

Be A Person Of Your Word – You would not think that I would not have to say this but there are a lot of people in this world, and in real estate investing, who do not keep their word.  On more than one occasion I have been told I have a deal only to see it slip away to someone else.  The numbers suddenly change, the terms suddenly change, tenants make up stories and on and on.  The thing is, you cannot be a person of your word to me only once.  After that, you have failed to create value for me and I am no longer going to waste time on you.  Do not be that person, keep your word.

Offer Solutions – A major part of the business of real estate investing is offering solutions.  How?  Offer a solution to the property owner that feels upside down.   Offer a solution to the tenant who is having roommate issues.  Being creative and putting puzzle pieces together to create workable solutions to almost any problem creates a lot of value for most people.

Make It So – This is where a lot of people fail.  They can talk the talk, but when it comes to implementation, they fail.  Not being able to implement, be it property repairs, new management systems or just closing a deal, fails to bring value to the table.  No one wants to work with someone who cannot get it done.

“I want to do this again.”

If you do the above you will be well on your way towards crating value for people and being successful. Creating value makes people say “I want to do that again.” which is honestly the best thing any business owner can hear.  Think about it.  You want most of your tenants to tell you that they want to renew their lease.  You want your banker to make another loan to you.  You want that contractor to return your calls and take on more of your jobs.  You get people wanting to do it again by creating value and you create value, in part, by following the tips I outlined above.

Author’s Note – This post was inspired by my friend and fellow real estate investor Terry Kerr.  Terry owns Mid-South Home Buyers and recently spoke at the Memphis Investors Group.  Terry has been fabulously successful by adding value for everyone he meets.  Check him out discussing turnkey investing on Episode 5 of the SmarterLandlording Podcast.

Work On Your Business, Not In It

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When I started out as a landlord, I believed that it was much more sensible for me to be cutting the grass, fixing kitchen sinks and painting walls.  In other words, I believed that working in my business was a much better use of my time than working on my business.

The exact opposite is true.

How many deals did I miss because my head was under the kitchen sink?  How much cashflow have I missed out on because I was cutting grass?

I will never really know, but hopefully I can help you not make the same mistakes.  So check out this short video about working on your business, not in it.

As I said in the video, I got a new camera for my birthday so I am trying out some new ideas for content here at Smarterlandlording.com.  Let me know what you think or if you have any ideas for future videos with your comments. 

First Time Landlord Surprises

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There is no teacher like experience.  To truly understand anything in life, you just have to jump in and do it.  Being a landlord is no exception.  Jumping in however always leads to things you were not expecting, things that surprise or perhaps even shock you.  What surprised me when I jumped into landlording?  Here are five first time landlord surprises that opened my eyes.

  1. People Are Not As Put Together As You Think – Outward appearances are very deceiving and once you become a real estate investor and a landlord, the curtain that people live behind often gets blown away. As an investor or landlord, you see the credit reports, the empty vodka bottles, the clutter, filth and the chaos.  Disorder in other’s lives is much more common than you think it is.  It is often the reason that real estate deals can be made.  Get ready for it.
  2. Repairs Never Stop – Before I became a landlord, I rented apartments; I owned a house and a car; I had appliances and yes things broke some of the time. But it sure seems that the breakage ramped up when I got on this side of things.  I can remember being incensed that every time I turned around something else was broken and that I would have to spend more money.  I’ve gotten over than feeling.  Things never stop breaking in this business and your tenants are just not going to care for things as well as you might (see number 1 above).  The experts say to figure on ten percent of gross rents going towards repairs.  But it sure seems like it is a lot more sometimes.
  3. Deceit Is Very Prevalent – People lie. I knew that before I became a real estate investor but I did not realize how much.  Once that curtain is pulled away you will see how much the truth is stretched.  Tenants, property owners, realtors, contractors and government officials all lie.  Not all of them all the time, but enough that I was surprised.  At first I was naive enough to often believe the lies. Now, I’ve been in the business to long and have gotten pretty good at calling people out.
  4.  A Lot Of Strong Will Is Needed – As investors and landlords, we want to keep the money flowing in, keep our properties in good shape and keep the new deals coming.  All of that takes a lot more effort and force of will than anyone ever told me it would.  It is simply amazing how people will not and do not want to do what they are supposed to do or say they will do.
  5. You Will Be Viewed With Suspicion – This one really surprised me. Sure I expected tenants and other property owners to be somewhat cautious, but almost everyone I tell that I am a real estate investor and landlord seems to view me with instant suspicion.  I can see it in their eyes.  Not a lot, but just a hint.  I have no idea what everyone is so suspicious about or where this suspicion comes from, but this is perhaps one of the most surprising things about becoming an investor and it continues to this day.

Should these surprises keep you from real estate investing?  No I do not think so.  They are just challenges that need to be faced as with anything in life.  Hopefully now you will not be as surprised as I was as you go forward in your investing career.

What surprised you about real estate investing?  What were you not expecting?  Do you agree with my surprises?  Let me know with your comments.

Work Backwards From The Rent

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The real estate market is pretty hot right now, but deals can still be found.  How can you tell?  There is no one size fits all answer.  Nor is there a set formula because everyone and every piece of real estate differs.  The best way to determine a deal is to work backwards from the rent.

Investment properties are investment properties because they generate some type of income.  For our discussion here, I want to focus on rental income for the buy and hold investor.  I will also assume that you plan to manage the property yourself, so no management fees are included here either.  If you plan to use property management simply add those costs on, but be aware they can vary greatly.

Let’s begin to put pencil to paper (or clicks on a keyboard) and work backwards from the rent to determine if a property is a good deal.  Let’s see if the asking price is anywhere close to what you can offer.

How Much Rent

The first number you need to write down is the estimated rent the property will generate.  Write it down as a yearly and monthly number.  This number will be gross rent.

Rental rates are determined by a lot of different factors.  Location, location, location are the first three.  After that, items such as size, condition, number of beds and baths and other amenities come into play.

You may know your market very well and be able to guesstimate rent quickly.  If not, start looking online.  Use general websites like zillow and rent-o-meter to get a general idea.  Then look for local property management websites.  You want to try and find nearby properties that are or have been recently for rent to compare prices.  Your goal is to find pictures of comparable properties so you can examine their condition.  Condition can sway rent ranges significantly.

How Much Cash Flow

The next step is to determine how much positive cashflow per month you want.  Even though this is the last number you will see in the process of determining if a property is a deal or not, you need to figure out what you want it to be ahead of time.

You can think of cashflow in terms of rate of return or cap rate.  But I just like to use a dollar figure, say $100 to $150 per unit per month.  I find such a number easy to use and work with.  It translates easily.  For example, if I want to replace $2,500 of monthly W-2 income, I can quickly determine how many units at $150 per month will I need to acquire to replace it.  It is easy to calculate and easy to see your goals.

How much cash flow you want and are able to get is going to depend on many things.  It will depend on your goals, it will depend on your market and it will depend on how you choose to finance your acquisitions.  For now, just remember that this number can be a bit fluid.

The Hard Numbers

The next step in your analysis is to write down the hard numbers.  These numbers are easily determined.  I prefer to break these numbers down into monthly amounts.  They are:

  • 10% of gross rents for maintenance.
  • 10% of gross rents for vacancies.
  • 10% of gross rents for reserves.
  • Monthly property taxes (be aware this number might increase after a sale).
  • Monthly property insurance.

The Not So Hard Numbers

There are a two numbers that still need to be factored into your analysis.  These are more adjustable depending on your personal preferences and how you run your business.

The first number is the cost of repairs.  Often we investors buy properties that are distressed and in need of repairs.  They may need new roof or HVAC equipment along with new paint and kitchen counters.  How much to do is up to you and what your market will bear.  Keep in mind of course that if you want to get top dollar in rent the property usually needs to be in tip top condition.

The second number is the cost of using other people’s money (OPM).  One of the great things about real estate is that we investors often use other OPM.  You can use your own money of course, but it often makes sense to use someone else’s.

Most times using OPM results in a principal and interest number and is based upon the rate of interest charged for a loan.  The loan amount can vary based on what you intend to offer to purchase the property and the amount of repairs you want to finance.  This number can vary based on the interest rate and the amount financed.   And don’t forget to include points, holding and closing costs.

Obviously this number can vary greatly depending on loan terms and the deal structure.  There are many ways to structure a deal and use OPM.  However you do it, just be sure to include these costs in your calculations.

The Sum Up

Once these numbers are arrived at, it is just a matter of some simple math.  The key is to arrive at your preferred cash flow by working backwards from the rent after subtracting all of the above.  If you find that you hit your cash flow target, look again and make sure your numbers are right.  Then make an offer.  Next time I’ll go through an example. I will also write in the future about how a deal that looks good on paper may not actually be so good.   Stay tuned.

Do You Refund Tenant Security Deposits?

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There seems to be this idea out there that security deposits are unlikely to be refunded.  Many landlords and tenants either have the “I’m going to keep it” or “I’m going to lose it” mentality.  That seems like the wrong way to go about the business.  Landlords should be more than happy to refund tenant security deposits.

What Is A Security Deposit For?

Let’s think for a minute about what a security deposit is for.  A security is a sum of money taken upfront as a sort of guarantee that at the end of a lease your property will be returned to you in much the same condition as it was rented, less normal wear and tear.  You take the deposit to try to ensure that the tenant will refrain from causing damage to your property.

For the above to work however I think that the tenant has to have a reasonable expectation of getting their security deposit back when they move.  If everyone “knows” that the security deposit is going to be kept by the landlord, what incentive does the tenant have to not cause damage to your property?

A Better Business Model

A lot of this landlording business is about dealing with people.  And a lot of dealing with people is about setting up expectations on the front end.  Much like teachers on the first day of class who lay out what is expected of their students; landlords have to do the same with their tenants. If you want your property returned to you in decent condition, you have to set that expectation on the front end.

We set that expectation by explaining to new tenants that we want to and do refund the majority of the security deposits we collect.  This is done during the lease signing process. First, we give them the expectation that they can get their security deposit refunded.  Next, we explain the difference between normal wear and tear and tenant damages.  Finally, we list the charges we will apply to their security deposit for various damages they may cause.

So right upfront we have set the expectation that they can get their money back if they return our property to us in good condition.  We reinforce this expectation on the back end as well by resending all of this information to them when they inform us of their plans to move.

Most of the time, this process works very well.  We often retake possession of our rental units with minimal repairs and cleanup necessary.

The Wrong Profit Center

Seeing tenant security deposits as another potential profit center, to me is a bad business decision.  Doing so only creates the incentive for your tenants to cause damage and cost you money.  Why should your tenant care about your property if you are just going to take their money?  Thing is, they will not and will potentially create more damage than the security deposit will cover.

People respond to incentives; be sure to set yours up properly.

What is your view?  Do you refund most of the security deposits you collect?  Why or why not?  Please share with your comments.

My Tenant Is Running A Business

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Sometime in your life you wished you could work from home.  We all have.  Your tenants have too.  The thing about your tenants however is that their home in also your property.  Their business will therefore be your business. What should you do if your tenant is running a business out of your property?  Should you stop it?

Finding Out About The Business

The first thing course is finding out about the business activity.  This may not be as easy as it at first seems.  Your tenant is unlikely to tell you of their new venture, nor will you be on your property every day to witness what is happening.  What is more probable is that your other tenants are going to notice and either gossip or complain to you.  You may also notice business activity after one of your routine property inspections or after a maintenance issue.

However you find out, you should be a bit concerned.  Your tenant’s business could raise several issues, including:

  • Strangers coming on your property.
  • Disturbing your other tenant’s right to quiet enjoyment.
  • Increased wear and tear on your property.
  • Increased levels of liability if somebody slips and falls, or worse.
  • Zoning and code enforcement issues. They will come after you, not the tenant.
  • Restrictive covenant or homeowner association concerns.

Not All Businesses Are Alike

Should you discover that your tenant is running a business, I think a little investigation is necessary.  Not all businesses are alike.  Some will definitely create a nuisance while others are perfectly suited to being home based.  There is a huge difference between your tenant selling used cars out of the back yard and your tenant conducting an Amazon resale business (I have had both happen btw).  One, the used cars, is certainly going to be a problem while the other may not.

Either way it is your property.  You set the rules.

The Type Of Business Matters

You might think that you should completely ban all business activities on your property.  While you can do that, I am not so sure that is the best course of action.  Some activities will not cause you or your tenants any problems.   Think of telecommuting or designing websites.

Others could turn into a problem.  That E-bay business could mean a lot of odds and ends and empty boxes lying around your property.  While this type of activity is not something to stop outright, you may want to warn your tenant that it will need to stop if other tenants start complaining.

Other business activities will need to be stopped in their tracks.  Selling cars off the back lawn are a no go.  In fact, anything that will regularly lead to customers coming to my property is a no go, as is any business needing a sign or form of advertising directing people to my property.  Not only may this be illegal, but it may increase your liability and will definitely disturb your tenants.

Protect Yourself

The best way, I think, to protect yourself is to place something in your house rules regarding home based businesses or commercial activities.  We have a phrase that states that no home based business or commercial activity is allowed without our express permission.  We do not therefore ban all activity but we can stop anything that may be or become a problem.  After all, not every home based business will create problems and we want to be open to those tenants who may depend on such activities for their income.

Place a clause like the above in your lease or house rules if you do not already have one.  If you discover your tenant is running a business out of your property, do not automatically ban it as you may lose a perfectly good tenant.  Take some time to investigate and go from there.

Why Is Your Property Not Renting?

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One of the most frustrating things for a landlord is having a property that will not rent.  If this happens to you, you need to do some serious thinking quickly to get the cash flowing again.  Why is your property not renting?  Two reasons, your market and your rent.

Are You Reaching Your Target Market?

The first thing any business owner must do is make their potential customers aware of the product they are trying to sell.  If you are not reaching your potential customers you will not have customer traffic.  No customer traffic means no sales.  Reaching potential customers can be easier said than done.  If your phone is not ringing and you are not having many showings then you should think about your advertising.  Is a sign in the yard enough?  Have you posted ads online?  Have you made those ads look attractive?  What about sites like nextdoor.com?  Are you advertising in English in a Spanish speaking area?  All these items and more should be considered in your marketing strategy if you do not have traffic coming your way.

Do You Know Your Market?

You cannot just ask whatever rent you want, the market is going to set those rates.  You need to be very in tune with your market because you could very well be knocking yourself out of it.  There are plenty of ways today that make it easy to see what is happening in your market.  Rentometer.com is one way.  Zillow.com is another.  You can also pound the pavement and make phone calls to find out what other properties near you are renting for and even perhaps how long they are staying on the market.  It might not be just you, everyone could be having a hard time.

Ultimately, It Is The Price

If you are effectively reaching your potential customers and you know what your market will support but are still not getting any takers then there is only one thing left, the price.  The rent you are trying to get is just too high.  The market has spoken and everyone who has looked at your property feels they can get a better value somewhere else.

Why?

Hard to say, but there is something that is turning people off.  It could be something fixable such as an outdated kitchen or bath.  It could be that purple paint in the bedrooms or the brown shag carpet.  If your place is not renting take a good look around and try to determine which end of this scale you are on.  What are your potential tenants remembering about your property?  If you can fix it, then fix it.  If not or you do not want to, then you are going to have to lower the price.

Your problem could also be out of your hands.  You could be located next to a busy and noisy intersection.  A lack of parking might be a concern or the Taco Bell drive thru next door may be trying to take their order late into the night.  These problems cannot be fixed by you and are unfortunately going to cost you some money.  You simply will have to lower the price to overcome the hassles of these nearby nuisances.

The Sum Up

Why is your property not renting?  Maybe you are not reaching your target market or have misread it.  Maybe you are in a declining market.  Perhaps it is because you have not fixed your properties up.  But it can also be because of items way beyond your control.

Whatever the reason a reduction in price will usually solve the problem.  Yes, I know it is frustrating and perhaps even a bit infuriating.  But letting a property sit vacant is expensive.  Do not let your pride get in your way.  Despite your efforts the market has spoken.  Listen.