Two weeks ago I was sitting in my local barber shop taking a breather from a hectic rental unit renovation schedule for make-ready units and lease ups. I had a few moments to relax, get a hair cut, and to read the local newspaper and found myself scouring the classified ads. I always liked to check out my market for available rentals and see how the rental market was doing in my area.
Not only was my hair getting trimmed
I remember just a few short years ago scanning through the listings which took up about four full-page length columns under the “Apartments For Rent” section of the classifieds. On this particular afternoon as I skimmed over the listings, I did not see four columns of listings at all. In fact, all I did see was only four listing in total!
Was this a mistake? Did the newspaper forget to put in the rest of the rental ads? What was going on here? I decided to dig a little deeper when I got back to the office to do a bit more research to see what was going on here in my market. Sure enough, there were more ads on Craigslist than in the newspaper. But here was something strange too. There were a good amount of ads, but a lot of these ads were for the same apartments. Apparently some landlords and property managers may think by placing the same apartment ads several times that rental prospects may not notice the difference. I have to give the renting public more credit than that. Now it may just be that there are some savvy landlords testing there marketing to see if one ad gets more responsive traffic than another ad. I like to test ads too so maybe that would explain the “multi-unit multi-ad phenomenon”.
Digging deeper down
So I sifted through my latest rental ad stats to see what kind of traffic has been hitting our ads. It had not occurred to me that the market had been changing. All of my inventory was rented and I have very little turnover at all. I admit it. I had taken my eye off of the ball for a bit. So let’s re-focus on those stats. The last unit I had on the market for rent was a 3 BR unit in Gardner that was totally renovated with contemporary upgrades, stainless steel appliances, and all new cabinets and tile flooring. Other landlords are shocked to hear that I was able to rent that out in Gardner for $1,200 a month. I just figured that it was a great rental so it rented at a premium. For the past few years we have been steadily raising rents. Our resident retention has not dipped much at all but the rents are rising increasing the spread between our monthly cash flow and our mortgages. I strongly suggest if you have some great residents, and you are keeping up with offering them exceptional services, it might be time to consider bumping up your rents.
When I pulled up my Zillow stats that one ad alone had been in over 900+ search results for a rental apartment. That was incredible! When I checked my phone logs, emails and texts for this one ad, that also added data to the story. I had received about 70 emails, 30 texts, and only about 10 or so phone calls. Most of the inquiries were of digital nature not too much to my surprise. That’s what I was asking for in the ads. Out of that one ad I must have had over a dozen showings. I pre-screen applicants for a debt-to-income ration before setting up the showing, so these were a dozen likely candidates all qualified as far as monthly income and solid revenue streams.
Adding it all up
My investigation using this one ad revealed quite a few observations about the summer market. There is not much out there to choose from. We do a pretty good job on our units and the feedback we have been getting from prospects is that there are a lot of sub-standard units out there asking higher rents and not doing too much to entice renters to lease up. We have heard some down right horror stories of what some landlords are passing as turn-key rentals. So the competition for good to great units is fierce.
A lot of landlords we know with good units, have no vacancies. I think the good renters are on the move leasing up any decent rentals they may be able to find. From the looks of it, there are not many good units left out there. Hence the multiple Craigslist ads showing the same tired units. You have to have something special to rent to thrive in this market.
Another factor driving the rental market is digital advertising. More and more renters are looking up inventory on the go using their phones to scan the listings. They are not picking up the local newspaper to scan the ads. They ARE hitting sites like Craigslist, Zillow, Trulia, and HotPads just to name a few. They are on the go and in the know and when they see something they like; they are all over it like a cheap suit.
Testing the waters
For several months I have been building a data base of all of the pre-screened candidates I have been speaking to. A lot of them call back, text, or email frequently to see if we have anything new in inventory, but we can only work so fast cranking out new units to rent. So I decide to try a little test to see how hot the market really is. I lined up a few of the folks who looked really good with their numbers and called them back. I asked if they would be interested in seeing the layouts of units I had under construction as a work-in-progress. They jumped at the idea of being able to see something I would allow them to semi customize. I discussed the options of cabinet styles and colors, tile and flooring options and finishes, and possible paint selections from our palette of colors we use.
I could not believe the results
As of June 1st, we have pre-rented two additional units that are not even in our rental inventory yet. We have one couple that has reserved a custom 2 BR for an August first move in date, and another couple willing to wait for a customized unit all the way out to November when we think we will have that one ready. In 16 years of renting units I have never seen rentals going so hot. I knew that condos and construction pre-sells under construction, but I never thought about leveraging this concept for rentals. Well,it worked. At least in theory. I know not to count my chickens before they hatch and I know the apartment is not rented until the rent check clears the bank.
But it sure is heating up out there.
Do you have any ideas on this topic you could share to help our online community?
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Warmest regards,
Brian Lucier
Belaire Property Management
Regional Property Manager
(978) 448-0669
info@belaire.co
www.belaire.co
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