A Tough Market Calls For A Tough Plan

Being in the property management business in the present market is certainly challenging. Many landlord/owners are finding their properties are competing for a smaller number of tenants in an ever increasing sea of vacancies. Properties are staying on the market longer because of the increase in inventories. Some tenant/applicants are finding their applications are being rejected because they have just experienced a foreclosure and it has tainted their credit record. Others are faced with evictions because they may have lost their job due to the economy or layoffs.

How do we as property managers and landlords/owners deal with the situation at hand? Rents are dropping in many areas because of increased inventories, but mortgage payments, taxes and insurance may have also increased.

Choices are few and far between. As a landlord/owner it may come down to deciding "how much cash can I pump into a property" to make up the difference between the rental income and the expenses on the property.

Another choice is ensuring the property is a top competitor in the market when you are faced with a vacancy. The way to do this is to be aware of two major considerations:

Condition - Is your property in the best condition it can be in? In the present market rental shoppers have many choices and condition is certainly a major consideration. If a property is pristine “move-in” condition and the tenant can actually take possession without putting forth any effort to clean it up, then that property moves to the top of the “shopper’s list”. If a property is in less than desirable condition it will be placed low on the shopping list or be eliminated altogether. Some rental shoppers are spending less time looking at properties that are not in better-than-average condition. One look and they eliminate it from their shopping list. The “curb appeal” may draw the shopper in, but if the interior fails to live up to the first impression you’ll be hearing doors slamming as they leave to rush off to the next prospect on their list of eight to ten properties.

Price – How do rental shoppers select a group of prospective properties? The answer is price. Location and bedrooms are important considerations, but the main driver behind choice is price. When a rental shopper looks at results from internet searches price is the playing field leveler. They know what they can and will pay and they know the competing properties. If you have a property for rent it needs to be competitively priced to draw attention. Without competitive pricing the property will continue to sit empty. That means no income. The longer a property sits empty the more the owner looses. The longer it sits on the market with a non-competitive price the more qualified tenants keep right on passing it up. Price a property correctly right up front and get it rented quickly. Don’t try to “fish” for that one tenant who will pay more. That’s not working in this market. Remember what kind of market we are in – more properties less tenants.

Some owners develop a false sense of security about their property, their market knowledge and what renters want. They fail to look at the property as a business. It’s difficult to turn loose with your heart and think with your head when you may have lived in a home for many years and now are faced with the need to find a tenant until the market is right for selling. But as an owner you have to be objective and not sentimental during this time. Occasionally I have to tell an owner that there is no way I can help them if they are not willing to cooperate with the market. It’s not that I’m making unreasonable requests. I’m just doing my best to help the owner by placing their property in a competitive position among so many other properties on the market.

If you are thinking about renting your property try these suggestions:
- Interview several property managers.
- Ask about their company and their experience.
- Learn the market or hire a professional who knows it.
- Take time to put the property in better-than-average condition.
- Price the property competitively.
- Shift from “heart thinking” to “head thinking”.
- Market the property where rental shoppers are looking.

If you can adhere to some straight-forward principles you can weather this market.

Jack McSwain, PRM, Realtor®
Managing Broker for Walter Williams Property Management, Inc.

Jack McSwain is a Managing Broker for Walter Williams Property Management
in Jacksonville, Florida.

Jack is a member of the National Association of Residential Property Managers, the Florida Association of Residential Property Managers and is currently serving as president of the Northeast Florida Association of Residential Property Managers.

A Tough Market Calls For a Tough Plan is copyrighted by Jack McSwain, PRM. For reprint information contact Jack at jmcswain@cbwwcorp.com