renting your property

How to Determine the Rent Rate for Your Rental Property

April 17, 2020July 22, 2014 by Julie Broad

What the heck should you charge for your monthly rent?

Charge too much and you’ll struggle to find great tenants.

Charge too little and you’re leaving money on the table AND you’re probably going to have to sift through a ton of applications.

There’s a lot of work that has to go into figuring out what a fair rent rate is … and at the end of the day you won’t really know what you can charge until you start advertising it and evaluate the response (Want more on my process around renting out your property? Check out this article on troubleshooting a vacant property).

But, there is a lot of research you can do so that when you first post a rent rate, you’re in the ball park. Plus, figuring out rent rates for your area and what is happening with the rental market is always going to be a critical skill as an investor – not just when you’re renting out a property but also when you’re evaluating a property to buy! So, let’s spend a bit of time discussing this important piece of the puzzle.

Questions you want to try and answer when you are researching rental rate trends include:

• The specific rent rates for different bedroom sizes. What is the average two-bedroom unit renting for in my area, for example? What is the range being offered for 2 bedrooms? Can you identify why there’s a difference (whole house versus basement suite, apartment versus carriage home)?
• What is the average rental rate for the area and where is it trending? What was that rate last year? What about 6 months ago? Is it more, less or the same?
• What government controls exist on rents? Some areas have rent control, and that poses artificial controls on the market rents; so when you’re evaluating the numbers, you’ll want to know if that is the case.

Website resources to use (for Canadians):

• Rentometer (http://www.rentometer.com/)
• Craigslist (http://www.craigslist.org/)
• MapsKrieg (http://www.mapskrieg.com)
• Kijiji (http://www.kijiji.com/)
• Local newspapers
• Search for landlord/tenant legislation for your area to find out about rent controls.
• CMHC (http://www.cmhc-schl.gc.ca/).

A caveat about using CMHC: Please note that if you buy single family homes that CMHC is not the ideal source of information for you. They survey properties with at least 3 units. They ask for market rent, available and vacant units. They do this via phone and site visits. It’s always done in April and October so reflects that time of year as well as properties that are not the same as single family homes. Generally they will get more data on the larger buildings than any other property. This is why you’ll almost always find the rent rates they say apply to a 3 bedroom are much lower than what you can get for your properties. It’s useful for trend analysis but our rents are always higher than what they report. The one bedrooms are only a little higher but as the unit sizes increase the difference between what an apartmnet gets versus what we get for rent grows dramatically. For example, their 3 bedroom apartment was reporting a $1,011 a rent rate in their Spring 2014 report. The lowest we’re getting for a 3 bedroom suite is $1,300 and most are getting $1,400. If it’s an entire house we’re getting $1,550 or more.

Website resources to use (for Americans):

• Rent.com
• Craigslist (http://www.craigslist.org/ )
• Local newspapers
• Search for landlord/tenant legislation for your area to find out about rent controls – many states do have very strict landlord legislation to be aware of.
• http://www.letstalkpm.com/ – a great resource to find just about anything you need to know about rentals in the U.S.
• Bigger Pockets Forums (http://www.biggerpockets.com/).

Offline rent rate research:

Drive around your chosen area, and call the numbers on the FOR RENT signs that are not those of professional property managers (you know – the homemade ones or the signs bought at Staples). Get a sense of what’s available, what they are asking, and what amenities or features they emphasize (if any). We don’t need to call the professionally managed properties because a quick look on their website usually provides us with all the details we need.

Also, take a look at housing starts and how many of them are condos, apartments, or other properties that may impact the current rent stock and rental rates.

In 2009, we bought a couple of properties in Kelowna, BC. Prices were down and we saw a few opportunities to buy in fabulous areas with growth potential. The single-family home we purchased as a rent to own did fabulously and we sold it to the tenants a year later. The two-suited home near the lake, however, has been a struggle for us. While it’s in a stellar location and in good condition, the challenge has been the large number of condos that have been built in Kelowna. Because the condos didn’t sell, the builders rented them out, dramatically increasing the rental stock in the area. We’re only just now able to raise rent rates. We really underestimated the impact of the extra supply on the rent rates.

It’s economics 101 to know that when supply goes up without an increase in demand, it puts downward pressure on rents. Our rents dropped several hundred dollars a unit – killing our cash flow.

The good news is that rents pop up almost as fast as you feel them go down. And, in every market across Canada, we’re hearing reports of rents going up. We’re raising most of our rents by $50 – $100 per unit when the tenants vacate. But first, we always do some refresher research to see what else is on the market that we’ll be competing with today and in the near future.

If you have a favourite resource for researching rent rates in your area send me a Tweet by clicking right here! I will update this post with your Twitter ID and suggestion!

Rental Rate Resource Recommendations From Other Investors:

>> From Debbie in Alberta: Another website I’ve been using a lot is Padmapper.com. I’m not sure how it works in other areas of the country, but it’s been great in Calgary so far. In terms of time efficiency, I like it because it combines ads from Kijiji, Craigslist and a couple of others into one site. One note of caution though, it also lists B & B rates which skew the numbers a little. You just have to read each listing carefully to weed these out.

>> From Wade Graham in Alberta: Rentfaster.ca has amazing stats for Alberta. Helps me every time.

Why Can’t I Find Good Tenants? Troubleshooting Your Vacant Rental

April 17, 2020June 10, 2014 by Julie Broad

Over the last thirteen years we have worked with many different property managers. Whenever we’ve had a property that was slow to fill the property manager would tell us “It’s just the market – it’s slow.”

The property managers weren’t lying when they have said that to us. Vacancy rates were high and properties were taking quite awhile to fill on average. However, after investigation, a slow market was not really why our property was vacant. In one case, the property was run down and really needed some money spent to give it a good cleaning and updating. In another case, the ad was placed in the section for apartment units when it was the top half of a house. Fixing these issues resulted in finding good tenants fast.

But maybe you’re not sure what the issue is? Here’s how I troubleshoot my vacant rental properties to uncover the reason it’s not filling … whether we’re managing them or we work with a property manager.

1. Is the phone ringing with interested tenants?

We direct all interested tenants to CALL US to set up a viewing. I have three main reasons for this. The first is that I have wasted a ton of time in my life going back and forth over email answering questions from people who get an answer to a question only to have two more questions. Second, close to half of the people who set up appointments via email do not show up to their appointments. This wasn’t just one experiment where I tested this … I have periodically tested this over the last five years and this is consistently the case. Finally, not getting to speak with them on the phone means missing an important step in my tenant screening process.

If a tenant is interested enough to call about the property I find we’re well on our way to finding the right person for the property. And with this process firmly in place, I can now properly judge how many truly interested people are contacting us about the ad.

If the ad has been up for a week and I have had less than 5-10 calls (that’s my typical number but this number does depend on the target tenant type, price range, condition of the rental market and the time of year), I will go back to the ad.

Is Your Rental Ad Working For You?

How does the ad compare to the others on the market right now? Is the ad interesting and appealing? Do the pictures look great?

If everything is ok, the next thing to do is to change your ad headline and change the lead picture. The first picture people see when they are scrolling through ads can make or break your ad response so make it the best image of the exterior of the house, the kitchen or some other outstanding feature of the home.

Maybe It’s The Rent Rate?

If you think your ad is great then it’s time to reduce the rent. Typically we’ll drop it $50 to see if that gets the phone ringing. We’ll also look around to see what we’re currently competing with. Maybe there’s a bigger issue we need to pay attention to like lots of new product on the market or everyone else has a garage or some other feature we don’t have.

2. The Phone is Ringing … But People Aren’t Showing Up to the Showing

If you’re getting calls but people aren’t showing up—review your process. If you set up appointments by email or text message – stop. Only set up appointments via the phone (See above). Next, review other things you’re doing.

How long are you taking to return calls? If you take too long there’s a good chance they will be far along the process with another landlord by the time you set up your appointment. Your place becomes the back up property.

How much time passes from the time you talk and the time you show the property? We find that if people have to wait two or three days to see the property they often find another place to live before we can show it to them. Same day or next day showings are ideal if it’s possible.

When you’re on the phone with the person ask them to commit to coming to the showing and require them to take down your phone number. Have them confirm that they will call you if they can’t make it.

TIP: If a tenant doesn’t do what they say they are going to do at the beginning of the relationship—they never will. In other words if they don’t show up or they don’t call when they say they will—that is not going to change just because you have a lease. We give people one chance to redeem themselves but if they consistently don’t do what they say they will then they aren’t going to be a good tenant.

Our best tenants have always arrived for showings 5—15 minutes early. That doesn’t mean if they show up late we don’t rent to them but 99% of the time the indicators you get when you’re first speaking with someone and showing them the property show you what to expect throughout your relationship.

3. Tenants Are Viewing the Property But Not Applying

If you are showing the property but not getting applications—take a look at your unit and your rent rate again.

We’ve had to face the harsh reality a few times – sometimes a place doesn’t look as nice as you want to believe it does. Usually a good professional cleaning will do the trick to make a property show well but other times you just HAVE to do a little work to replace the stained carpet or paint the room that you tried to just touch up.

If you’re getting calls, the rent rate seems competitive, and people are showing up to see the property but nobody is interested take a hard look at the property. The other thing … and this is a big one for us now … if the unit is currently occupied and just doesn’t show that well you may have to wait until it’s vacant. It sucks to guarantee yourself missed rent but if it isn’t looking good, you are wasting your time showing it and you could be attracting the wrong kind of tenant showing a rougher looking property.

Finally, check your suite décor and features against other suites. Is yours outdated? Simple changes like upgrading the hardware on cupboards, changing light fixtures and paint can often update a unit cheaply and quickly and make it appealing.

Making sure the inside looks good is important, but curb appeal is critical. If there is junk in the yard or the yard is not maintained, this can make potential renters walk away before they even look inside. A lot of renters find their new homes by walking or driving around an area they want to live and looking for signs. If they see a run down exterior they probably aren’t going to be too anxious to check out what’s inside!

We’ve been through some really slow rental markets in the last 13 years. We’ve suffered from several vacant rental properties and these steps have always helped fill our properties within a few weeks of making adjustments. Sometimes it does mean putting in some time, effort or cash to make your property look better but it’s always worth it to get a great tenant in there paying rent again! If you have a place that has always attracted good tenants in the past or it’s in a great area, these simple steps will solve most of your rental challenges. In slow markets you do have to be a little more patient and you have to take special pains to make your property shine compared to the competition but again, it’s possible to keep your places rented most of the time.

We have plenty of videos and articles to help you manage your properties well. Here are a few others you might like to check out:

>> How to prep for your rental property showing

>> 5 Steps to Rent Out Your Property

>> Tenant Move Out Inspections – Things Tenants Never Remember to Clean Out

How to Find Great Tenants with Tenant Screening Questions

April 7, 2014 by Julie Broad

Once you’ve taken the time to make sure your property is ready to show and you’ve written a great rental ad the next step is to screen the prospective tenants that call you.

Many people are content to exchange emails with potential tenants to set up viewing times and I have seen others that encourage text messages. You can do that, but you are missing out on a great opportunity to screen your tenants and you will absolutely waste time going to show your property for the wrong people or people that do not show up.

We’ve learned that if someone won’t pick up the phone to speak with us to set up a time to view the property, they really aren’t that committed or interested in the rental property. These are the folks that will email you to set up a time to see the place and then never actually show up or call to tell you they aren’t coming. And when they show up, a good percentage of the time, we would not rent to them because they want a shorter lease, too many people are going to live in the property, they don’t have jobs or there is some other challenge that we could have covered quickly on the phone and saved us all the trip.

My recommendation – get your potential tenants on the phone before you get up off your comfy couch and show your property. It’s up to you … but it’s been a much more effective way of handling tenant showings for us. But, what do you ask the tenants when you get them on the phone? I’m glad you asked … I shot a video to help you with just that very question:

Tenant Screening Questions to Ask Before You Waste Time Showing Your Property to the Wrong People:

When you are asking questions you’re listening for things that might be a yellow or red light. Not sure what I mean, check out this video Dave shot for you on our simple screening tenant screening process:

When you do get set up a time to show the property, here’s how to get ready:

Finally, if you aren’t sure how the whole rental process works, here’s 5 Steps to Rent Out Your Property and Handling Tenants Who Break Their Lease (prevention is the best medicine). Tenants are your customers. You will not be a successful real estate investor without them. However, you need to find the right ones for you and your property to minimize the stress and strain you can feel. It takes work but a little effort finding the right people will go a long way! Good luck.

If you want more help on picking great tenants for your property, grab a copy of More than Cashflow. There’s an entire chapter dedicated to finding great tenants – plus the whole book will help you understand why you get bad tenants and how to prevent them.

Tenant Move Out Inspections: 5 Things Tenants Never Remember to Clean When They Move Out

October 16, 2013October 16, 2013 by Julie Broad

My Mom will be so proud to learn what a clean freak I’ve become. Running a motel and then a Bed and Breakfast for a total of 34 years made her very particular when it comes to cleanliness and working for her for 5 years cleaning motel rooms as a teenager did force me to pay attention to details.

But being a property owner for over 12 years has really taught me the importance of clean houses. We’ve talked over and over about how a clean property attracts MUCH better tenants. If you’re having trouble renting out a place – a professional cleaning just might be the answer.

There is a big difference between a property that seems clean and one that actually is clean. Surface clean is actually easy to attain and you’ll get away with it when the rental market is hot or it’s been a short tenancy. When you’ve had long term tenants or you’ve had several move outs where the property has only been surface cleaned you’ll soon find the property just “feels” dirty. Good tenants will walk away and not apply.

Guys (aka my husband Dave) may walk in and think it’s clean at first glance but discerning guys will even notice it’s not sparkling clean. Gals (aka me) will walk in and think – eeewww feels gross in here. Floors are clean and counter tops are wiped so why does it feel dirty? Likely it comes down to these 5 things that no tenant remembers to clean (unless you remind them) and most landlords forget to check.

When you do your tenant move out inspections make sure these 5 things are getting the attention they deserve:

How fun was that? I never knew cleaning could make you smile but I think it just did.

Now let me hear from you … pop on over to YouTube … give this video a thumbs up if you like it (and why wouldn’t you like it – we had some fun with it!) and let me know what your top tips are for clean up after your tenants leave!