As a landlord of a growing empire of 7 & counting rental houses, no matter the amount of times you have placed a house or the amount in your emergency fund, having a house come up is for rent is stressful.
Even a professional like myself still stresses about their ad. I don’t know about you, but having to cover that extra $1,400–$1,900 mortgage payment is not how I wish to spend my funds. Traveling to Bahrain, Fiji, or even going out to dinner with the hubs is much more my style when it comes to spending that extra cash.
It can be even more stressful when you have never rented a house out in that area, or when there are unusual circumstances involved — like it is more expensive than normal, or it’s an off-season rental, etc. The great thing is that there are tons of ways to reduce your vacancy.
One thing I have learned is that not every listing is your rental competition. Before I fret, I always keep these things in mind.
1) Is the house exactly the same as yours — bedrooms, bathrooms, updating etc.?
Bedrooms and bathrooms make a huge difference. I have found in my markets that the difference between a 3-bedroom and a 4-bedroom can be $200 depending on the time of the year.
2) Is the house even your competition?
Not only can a 3-bedroom be cheaper than a 4 bedroom, it might not even be your rental competition. Many families will not waiver in the number of bedrooms, even if the square footage is the same.
3) Does it offer the same amenities?
I have found that a 3-car garage, pool in the backyard, HOA amenities, etc. make a big difference. So look at everything that is included when comparing houses and determining which ones are your competition.
In my experience, $50 can make a difference between 20 interested applicants and crickets. If you competitor’s house is overpriced, that could be the reason it has been sitting empty.
Another HUGE differentiator is pets. Not allowing pets could have a very large impact on the number of qualified tenants, because, according to the Humane Society of America, 65% of households have pets. If a family has pets, they are not even going to look at houses that don’t allow pets. I have rented every time because I allow pets and that gives me an edge. Still, I have a very specific pet policy that helps me cover me.
6) Are you responding quickly to applicants and showing the house ASAP?
In my experience, it is more important to show quickly than to be in perfect condition. I have rented houses with no carpet, not moved-out cleaned, laundry everywhere, etc. The key has been to let people in as soon as they’re interested, as I find that people stop looking when they find the perfect house. This also means less cleaning for me!
7) What does the ad look like?
As much as I hate to admit this, there is a wrong way to write an ad. Simply put — an ad is really important, as this is the deciding factor on whether or not to come view the property.
8) What does the house look like?
Sometimes a house can look amazing, but be in terrible condition when showing the property. That is why a great property in an awesome house that meets all the criteria could be sitting.
9) Was the house overpriced in the beginning?
Sometimes if a house is overpriced in the beginning, even if it was reduced overtime, can cause a loss of interest. Those who have seen it at the higher price are not interested.
Still, no matter how many times you have placed a tenant, when a vacant house becomes available, it is still stressful. Even as someone who has done this once or twice, it is still nerve-racking and stressful.
Over the years, these few pieces of advice have kept me sane during this process (who doesn’t stress over the potential of carrying 1 or 4 mortgages at the same time?).
1. Don’t Stress ’til It Doesn’t Rent — Don’t underestimate your house’s ability to rent. Every time I have been just about to give up or get frustrated, the house rents. So don’t stress until it doesn’t rent!
2. Every Turn is a New Price — No matter what you got for your house last time, this is a new time. So, evaluate what the market is going for and what your house will rent for based on its current competition. That is your price. Sometimes it will go up and other times it will go down.
3. Don’t Overprice Your House — As hard and painful as it is to drop a house’s rent after you were renting it at a higher price, it needs to be done. Having an overpriced house compared to the current market simply won’t work.
4. Treat This as a Business — At the end of the day, treat it as a business. Your applicants are going be ridiculous in your head. They will stand you up, ask for the moon in requests, ask to drop the price, etc. Keep your head, say no as applicable and remember not to take it personal.
This is a marathon, not a sprint. Your tenants are paying off your rentals, and you sweat equity and are managing the house. Stick with it, savor the great moments, and survive the awful moments. Just keep your eye on your prize — the reason why you are doing all of this — for us, that is early retirement.