Landlords: how to compete with cheaper rents
September 1, 2008
We need to take charge and use our imaginations to counter the new threat to our business. We can fill our vacancies with good tenants; all we have to do is use some different ways of marketing our properties and take advantage of the edge we enjoy as businesslike landlords.
They should all be coming back to us. With record foreclosure numbers, there is a slew of people looking for a new place to live. Yet vacancy rates in apartments a high. People who have owned or lived in single family homes, though, are not candidates for apartment living. They live in single family homes, and that’s where they’re going when they lose their homes to foreclosure.
That would seem to indicate that single family home rental vacancy rates would be low. Maybe they are, but the professional landlords I hear from are having trouble getting their properties rented, just as are apartments.
As we reported in the article “Rent from a Pro” in the September issue, part of the reason is “shadow rentals.” Those are houses being rented out by people trying to save their homes from being foreclosure. They are not professional landlords and run their rentals on hope and fear. They hope they can make the mortgage payments with the rent they receive, and fear that they will have to make a repair on the property the cause of which will keep them from being able to make the mortgage payments. They respond to repair calls begrudgingly, if at all, and provide little or no customer service to their tenants.
The shadow landlords are not be too particular about whom they rent to, either. They don’t realize that no tenant is better than a bad tenant. They epitomize my observation that the only two times a landlord gets into trouble are when he is in a hurry or feels sorry for somebody. People whom we would reject out of hand are welcomed by shadow landlords. People who have a good sob story make shadow landlords’ hearts bleed. These shadow people don’t check credit because they both don’t know how and are afraid to, lest they find out that a prospective tenant is really someone who will put them in a worse hole than they are already. Many of times they don’t even have somebody fill out a rental application. After all, these people have money, cash in many cases, and are ready to hand it over to this naïve landlord, and besides, “They’re so nice.”
Sometimes good tenants get sucked into renting from the shadow people. After all, these landlords know enough to get their house looking nice before they put it on the rental market. They probably have been trying unsuccessfully to sell it for some time, so they have at least a vague notion of how to make it look inviting. Plus, there is no waiting to move in.
How do we compete with that? What can we say in our marketing that will encourage good tenants to rent from us, rather than the shadow people? Why do we provide better places to live than our shadow competition?
Our biggest selling point, and the one that will strike the most fear in the hearts of prospective tenants, is that we can guarantee them a place to live. Imagine in four or five months, when the shadow rental is foreclosed on and the tenants are booted out on the street by the lender. That is happening every day. Because the shadow person doesn’t realize that the law in many states requires a landlord to inform prospective and current tenants of possible foreclosure, the sheriff knocking on the door with the eviction notice comes as a complete surprise. Sure, the shadow landlord broke the law, but he or she has lots bigger problems than some judge ruling to that effect.
That is the first thing we need to make clear in our marketing. We will be here. We are professional landlords, in the business of providing wonderful places to live for our tenants, and are in it for the long haul, not just until we lose the property to foreclosure, get to the point where it sells or where we can move back in.
The second thing to make clear in our marketing is that we provide impressive and eager customer service. Our main concerns are the maintenance of our investments and the satisfaction of our customers. We realize that our business depends on our customers. If one of our tenants calls with a repair request, we will get it done. If one or our tenants has an issue with another of our tenants, we know how to deal with it so the problem is resolved. If improvements would make our property an even better place to live, we will make them. After all, it improves our investment and it keeps our tenants happy.
A shadow person cannot and will not provide impressive and eager customer service; he or she will not get repairs done in a timely or willing manner; and he or she cannot afford to make improvements on the property, he or she can barely afford the mortgage.
A great place to live—that’s what we offer our customers: not a place that could go away in a few months and leave them on the street; not a place where a tenant can’t get in touch with the landlord; not a place where the property will deteriorate around its occupants. We provide a place someone can be proud to live in and be confident he or she will continue to have a home. That’s how our marketing can be most effective.
How we can use our imagination and take charge of our marketing is to think about what our best tenants really want. Their homes are where they go after work and where they stay on weekends. Their homes are where they celebrate family holidays. They are where their children have friends over. They are where memories of a lifetime are created.
We can help them have wonderful memories, not memories of being summarily tossed on the street because their shadow landlord couldn’t pay the mortgage. Take charge of your marketing by pointing out the service and stability you can provide. That’s what people want in a home. Let your marketing reflect that.