Don’t be a landlord who skimps on pennies
Most of us who are small real estate investors who buy and rent single-family homes are accused of making every dollar count. It is that habit that makes us make foolish decisions when we advertise a house for rent.
Just take a look at the Home For Rent classifieds section of your newspaper. You’ll see rows of two or three line ads that seem to blend into an uninspired balloon. Yes, I know newspaper ads are expensive, but have you ever stopped to think how much a three-line ad is really costing you? Let’s do some logical thinking on this saving of pennies.
In our example, we will use a rental house where you have a monthly mortgage payment of $850. That includes principal, interest, taxes, and insurance. You are offering the house for rent at $900 per month. If you divide your monthly mortgage payment by 30, you’ll find that it’s costing you $28.33 to own the house. That’s $198.33 per week. So every week the house is vacant you are losing $198.33. Eliminating two weeks of that vacancy will save you $396.66.
If you’re saving a penny with a small three-line ad that fails to find a tenant for weeks, you’re seeing $198.33 slipping out of your hands each week. That’s when you need to realize that it makes good business sense to buy a nice big classified ad, which will give you the best chance of getting a renter’s attention the first time it’s posted.
Filling vacancies quickly is the mark of a good investor. As soon as your current tenant gives you the required 30-day notice to vacate, you need to take action. Your goal should be to have a new tenant ready to move in the day the old one moves in. Do this…
1. Ask your current tenant if they know anyone who is looking for a rental. Ask them to spread the word to their friends and co-workers. If you have a good relationship with the tenant, you should be willing to help them find a tenant. Offer them a hundred or two hundred dollar reward if they find you a new tenant before you move in.
2. Immediately post a For Rent sign on the property with brochures describing the property and the rental cost. We have a page on our website for each property we own with internal and external photos. Included on the page about room dimensions and the location of nearby features such as schools, hospitals, shops, public transportation, etc. We include the website address on the For Rent sign and flyers.
3. We send a postcard announcing that there will be a rental available for neighbors. They may have friends who would like to live nearby. We offer a cash reward of one hundred or two hundred dollars if we rent from someone who recommends us before the current tenant leaves.
4. We distribute flyers to nearby businesses such as hair salons, nail salons, dry cleaners, etc. We make them the same cash reward offer as the neighbors.
Stingy people don’t do those things and they pay dearly for their mistake.