22 Unit Building 10 Vacancies Help!
We own a 22 unit apartment building in Arlington, Texas which is about 15 minutes out of Dallas. We bought the building in July . since that time We have had 12 tenents leave or had to evict them. The problem was that when we bought the property it was advertised as 100 occupancy, but 9 tenants had not been paying regularly. Some hadn't paid in 6 months. The owner had given us fradulent rent rolls. Anyways we are having a very hard time filling these units. We have an excellent management company that has been doing this for 30 years and they are really trying to get these things rented. They said that the market is very slow for rentals. I just wondered if anyone had any ideas to help us get tenents. The rent is only $ 375 and they are priced at the going rate or even a liitle low. I was thinking about sec 8 ???? Any advice would be appreciated!! Thanks :-(
I would certainly consider section8 if you are having that much trouble. Where are you advertising? Get creative, free TV with anual lease, etc. Be sure to get sec deposits regardless of how desperate you are.
GL
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One creative item I've used with some success is to advertise free rent. The ad goes like this Free Rent 123 main st anytown usa call for details 740-555-1212
Explain that if the pay for 11 months on or before the first that you will give them the 12th month fre or 12 and get the 13th free. It sounds like in that particular building you have no chance of them all paying on time, but you can raise the rent to 400 to make up for the free month, you can let them in w/ 1 month and 1/2 security upon move in and 1/2 on payday or the following month. You can be a purist and not accept folks w/ no security deposits, but cashflow is cashflow.
Good Luck,
Shawn(OH)
I like the idea of giving away a free month. As far as not taking a security deposit. Anyone who's been landlording for awhile can tell you that no tenant is better than a bad tenant. When they have no sec deposit they really don't care if they get kicked out or leave in the middle of the night...of course, after they damage the place.
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Just because your mgmt. company has been around for 30 years doesn't mean they aren't resting on their laurels. If you're in CA and the apts. are in TX, you probably can't monitor them well. They may sound responsible on the phone, but the "slow market" spiel is lame. Maybe they just don't like showing yours? Maybe yours are too run down and they don't want to offend you by saying so?
Maybe, like often happens with Realtors and houses, the low $$ units don't get much attention? Are they managing other units in your area? Who is? How's their success ratio? What if you offered a per unit spiff to anyone from the company who gets a unit rented, to be paid half now, half after one year?
Slow market for rentals? No such thing really. Either your price is too high or you need more/better promo, as mentioned above. Don't underestimate promotions. It's amazing how interested people can get when they hear "free."
Ok, so back when Alexander Hamilton was Secretary of the Treasury and dirt was a relatively new concept I managed this company that had 500 apartments. We had a significant vacancy factor and I was new so i wanted to get scientific about the matter.
We ran ads in every media outlet in the city of Chicago, Both major papers, all the neighborhood papers even radio. Put flyers up in grocery stores, every thing we could think of.
We tracked every phone call that came in and asked how the respondent heard of us.
We tracked every showing and every rented apartment so that we could find out which ads resulted in actual rentals.
We tracked all this data back to the price of the ad and had a chart that showed where we placed the ad and how much return that ad resulted in in terms of cost per phone call, cost per rented apartment.
Then we did the same experiment over again with changed ad wording, etc.
We found surprizing things. For example, one of the major dailies had the lowest cost per phone call. But one of the highest costs per rented unit because so many of the tenants from that source were not qualified.
The word "Superclean" added 15 to 20% to the traffic off any ad in any media outlet.
We ran an add giving away a free microwave oven if you signed a one year lease. $80 microwaves brought twice as much traffic as month's free rent.
In the end we re-routed all our advertising to the most cost effective source and dropped most of the rest of it.
The point is that renting is not rocket science-- its marketing. Try all the traditional marketing stuff which means mostly find some way to make your units stand out and be more attracive. Your problem is noise, your competitors are also advertising their units and you need some way to create a buzz about your place.
One method that we've found especially effective is a free months rent to each existing tenant who referrs a new tenant.
In terms of cost effecitveness nothing beats a sign on the entry door saying that you have a unit available. But that's mostly because the cost of such a sign is nill.
Those are some great comments CK, we have not had to put a sign up for our last 3 or 4 vacancies as we got referrals from existing tenants. We got these becauase we take care of our units, we did give a $25 discount on the rent to those that referred, but we had not even advertised this.
Thanks again CK, the superclean tip alone was great.
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I just filled a unit using a "move in special" ad. The special was that they get to spread the security deposit over 3 months. At $1895 a month and the same for security deposit, it can be hard for people to come up with almost $4K at one time. This way, the put up the first month plus $1000 of the deposit and make up the rest in the coming months. If you are going to try this technique - make sure you write it into the lease so there is no confusion.
HI ,, I would not mind sec as tenant,However they might not allowed all tenent by hosing authority in that [particular building or in complex..
They have some percentage of total unit in the building.. YOu may be betterof calling them your local sec8 authority..
collecte the rent depoist in full. and you do not have to use lease agreewmnt as per housing Authority, you may amke your own as long it confirms the laws.. and in non discrimination way.. I used to be lanlord for many many years for sec, 8 but none others, all were single family residences and condo in chicago suberb..
Gppd luck,,
My comment to all this is..... Do not OVERestimate the impact of exterior paint. Painting the exterior will not likely change the quality or quantity of tenants. I bought a triplex years ago (still own it) that was run down and had a history of bad tenants. Even with new exterior paint/landscaping and interior repairs it took YEARS to break the stigma the place had..... Many prospective tenants would not consider living there due to the bad rap it once had......
If there is any way possible to avoid giving away free rent for new tenants and for existing tenants for referrals do it. As long as you are in line with the market rent stay there. People will not go somewhere else because of price as long as you are in line with the market, apples to apples. I agree that it all comes down to marketing. And I would much rather give away tvs, dvd players, dinners, wal mart gift cards, weekend trips, etc. Even if the gift is equal in value to a months rent, it will be worth it. Let them choose from any of the above. Your rent will be the same but you will be doing something no one else is and get a full year's rent. And market/advertise the heck out of it.
The point I am trying to make is when you start giving away free rent, you start messing with numbers like NOI and overall value of your property. Think in terms like bonuses and manager appreciation potluck rather than free rent and concessions.
Yes, this still goes against NOI but I can write off operating expenses, I can't do anything with free rent. Plus, once word gets around that your giving away wal mart shopping sprees you may fill them all in a week then can pull back on the "two week special". I would hate to hurt the overall value of my building by trying to solve a problem that should be short term.
Good Luck
Larry
If you do end up with exterior painting to do I can forward several paint contractors that do quality work and travel.
I'm also a paint contractor but probably won't have the time
this year. I could always give you a rough estimate since I travel by there taking my daughter back and forth to college.
If theres no hurry.
Good luck[ Edited by chomsky8 on Date 01/19/2005 ]
As for a source of ideas to attract tenants, I just sent for Dave Lindahl's special report on 77 ways to attract tenants--fast. It is free and it actually has 93 ways. I found this doing a Google search for "Dave Lindahl".
Dave's ideas are very much in concert with some of the posts here, particularly commercialking, concerning marketing. If you have a hard time finding this, send me a PM and I can probably help you.