The Rental Market: Something to Holiday Cheer About
By: Nicholas A. Dunlap, CPM
For those familiar with the for-sale and rental segments of the residential real estate market, you know that the end of the year typically marks a two or three month slowdown. November, December and even January are historically seen as times in which residents stay in their homes and opt not to move until after the holiday season. This is great for the landlord or owner of the occupied property. The problem is for the owner/operator of the vacant property which can sit for three months, losing income and incurring maintenance and other turnover expenses. There are several things to consider when marketing and leasing your property over the holiday season to ensure that you do not miss your best shot at a full-house (pun intended).
Do not judge a renter by your own for-sale standards. Often times property owners, especially those who have recently purchased or financed a home have a tendency to evaluate their prospective renters along the same guidelines they were required to comply with. Newsflash, if they met the requirements you did, they would be purchasing a property of their own and not leasing for the time being. Evaluate the total debt/credit profile, not just the credit score. There is a huge market for former short sale/foreclosure-owners as tenants, evaluating the full credit profile is key. Specifically, look for the impact of the foreclosure or short-sale on their credit report and evaluate other aspects of their payment history, credit cards, etc. If they have a history of paying on time or in full with the exception of the short sale or foreclosure, consider them strong applicants.
Part of the holiday slowdown is brought on by the fact that people are not looking to spend extra money on housing. One of the best ways to generate activity and get more showings is to adjust the price or introduce an incentive to prospective residents. For example, waiving an application fee, offering a gift card or offering a dollar amount discount off of the rent can do the trick and drive additional prospects to your property. Not doing so can result in 2 or even 3 months of lost rent. You decide for yourself: is it better to lose $1,000 off of the first month’s rent as a move-in special or to lose 3 months of rent on a vacancy? I know my answer.
Responding quickly to prospective buyers or tenants is of the utmost importance. Nothing puts a person off more than submitting an offer or an application and having it ignored or not acted upon. I recently made an offer on a property that was privately-owned and waited over 30 days before getting a response from the seller. Needless to say, they have now contacted me 3 times and have subsequently lowered the asking price by over $45,000. Had they responded sooner, I would probably own the property now. Luckily for me, I passed on it after not hearing back and have no regrets. Applicants or buyers for that matter, will pass if they do not hear back in a timely manner of less than 24 hours. It is human nature and we are dealing with a person’s home, the one place they can go to be comfortable. They expect a timely response.
By taking these 3 points into consideration, you will be better prepared to welcome the prospects that come your way. Please keep in mind, I am not a credit counselor, but I do evaluate the rental applications of prospective tenants on a daily basis and am happiest when I can call a Resident Manager with approval of an application. However, it is unfair to existing residents to be imprudent when considering new applicants. If you are able to introduce an attractive special, have in place effective resident screening criteria and respond quickly, there is no reason you should not have a happy holiday season at your rental property.
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