Article originally authored in 2005 by Jackie Tom

Your unit is vacant. You have spent time cleaning it and upgrading the appliances and fixtures. Now the time has come to put it on the market. With the rules of rent control spinning in your head, you are determined to get the highest possible rent—so you aim high. Many landlords feel they can dictate market rents for their properties, so they market them on the high side. They take this approach in order to compensate for negotiations; and also in order not to be trapped with low rents in a rent-controlled unit. They conclude that by setting the rents high, they will eliminate financially irresponsible applicants. But in my experience, tenants dictate the market and what the market rents will bear. This is mostly a result of the Internet. Tenants are able to both research and compare available rentals more thoroughly than ever before, so this is why setting realistic rents can offer you so many benefits.

Set Realistic Rents….Knowing what the market can bear is the key to pricing your unit correctly and getting the highest possible rent. As a landlord, your goal should be to get a good rent, with a great and responsible tenant. Sometimes, however, landlords aim too high and are disappointed with the turnout at open houses, followed then by even further disappointment with the quality of applicants who apply. When you have a vacant unit, your first question should be, “How much can I get?” Your second question should be, “How do I determine what is market rent?” There are many sources that list available rentals. You can even narrow your search to specific neighborhoods. But the problem is these sources only list the asking price. What you don’t see is the final rental price of the unit. But rest assured—experienced rental experts have this information. Increase the pool of qualified tenants by advertising your vacant unit at market rents. Imagine having the difficult task of choosing from multiple, well-qualified, eager, potential tenants who want to move in now. One of my clients with a unit in the 900 block of Castro had just such a dilemma this month. Having priced her unit at market rent, she received several nice, exceptionally qualified applicants within a week and had a signed lease shortly thereafter.

Rent Your Units Quickly…. Each month your unit sits vacant you are losing money that could help pay the mortgage, property taxes and insurance. Every month it stays vacant increases the amount of time you will need to recoup your losses. For example, let’s say you list your unit for $2,300, and three months later you finally rent it for $2,000. Obviously you will have lost out on $6,000 rent. So why would anyone overprice their unit? About four months ago, I had a listing appointment and presented the landlords with a very realistic rent for their unit. But the owners wanted to market it at a rent that matched a comparable house located just down their street. So they politely declined my services and put the house on the market themselves. Just last week, they came into my office to have me help analyze credit reports from some potential tenants. Thus, I was able to find out that the landlords had ended up renting their unit at the same rent I had quoted them. Sadly, all this occurred four months after my first meeting with them, which meant they had lost out on $8,000 in rent. Aiming high cost them money.

Reasons Landlords Price High…

“I won’t rent it too low because it’s a rent-controlled unit and I don’t want to be stuck with these rents for a long time.”

I know this feeling well. Having a vacancy in this market is a lot of work and no fun. Tenants are out looking at properties all the time, so they see what is available in their price range. Thus, they know how units should be priced, and believe it or not they keep track of how long units are on the market. Armed with this knowledge, prospective tenants will not pay more than market rent. Would you?

“Charging higher rents will give me the type of applicant that is more financially stable and mature.”

In this economy, nobody can guarantee the stability of their employment. People get transferred and move now more than ever before. They move for promotions or better jobs, or they get laid off and are forced to move to a less expensive unit. But keep in mind that regardless of how financially qualified tenants are they will not pay more for their units than they are worth. In January 2005, we rented 26 units. This success was due in part to a pricing strategy that relied on our experience in the rental market. We have seen clients aim high; and we have seen the result—lost income. But when you know where the target is, your aim will get you a pool of qualified tenants, a filled vacancy and a rent check in your hands. Meanwhile, those who chose to aim high will still be searching for the target.

Article was originally printed and published in 2005. Jackie Tom is a native San Franciscan and started her real-estate career in 1995. She has been an active participant in many different aspects of the real-estate market and has found her passion and expertise in rentals. Jackie is the owner of Rental In SF, a boutique Leasing Agency providing exclusive representation for landlord clients and the Co-Founder and Managing Broker of ReLISTO a Leasing and Management Solutions company. She can be reached at 415-552-3263, or at Jackie@rentalsinsf.com

This article written for the San Francisco Apartment Association by ReLISTOs Managing Broker Jackie Tom. -Relisto

Making Your Rentals More Marketable

By Jackie Tom- 2005

People often say that if your product is good enough it will market itself. Back in the dot-com days, good enough was any vacant unit, for all we had to do was clean it and hang a “For Rent” sign out front. In just a matter of hours, there would be a line of people with applications in hand, hoping to rent your unit. These people were not looking for a view, laundry, gas stove and/or parking. In that tight market, they were simply hoping to find a vacant unit in the city by the bay.

It is a very different story today. Unemployment is a reality to many, for most of the dot-com jobs have dried up or moved out of town. As a result, the number of vacant units has risen dramatically. “Good enough” is no longer any vacant unit. We now realize that we must each change our frame of mind. We can no longer rely on a quick cleaning and a “For Rent” sign to attract tenants. We have to learn new ways to market our product. As a real estate rental agent specializing in filling landlords’ vacant units, I will share some of the techniques I use in this “tenants’ market.”

Preparing Your Unit

As you begin to prepare your vacant unit for showings, remember that in this market, prospective tenants are concerned about the landlord as much as they are with the unit. The condition of your unit and building is seen as an indicator of how you will treat your tenants. A dirty unit in need of maintenance suggests the land landlord will be unresponsive to his or her tenant’s requests for service when problems occur. As I mentioned above, we all know the need to clean our units prior to putting them on the market. But how much cleaning is necessary? My rule of thumb is that your unit should leave no evidence of the previous tenant(s). This advice sounds obvious, but I cannot begin to tell you how many times I have shown units that have not been cleaned to this standard. I was handling a vacancy in a great, grand Victorian. The unit had been lightly cleaned and I had shown it several times without getting much interest. I decided then to follow my own advice. I worked with the landlord to have the entire unit thoroughly cleaned and repainted. In addition, we installed new knobs on the kitchen cabinets, installed period-looking fixtures and hung nice sheer drapes. Gone was any evidence of the previous tenants. The unit had the look of a recent remodel, elevating it from the look of a typical rental to that of a nice home. The landlord signed the lease with a new tenant a week later.

The example above also illustrates another way to prepare your unit: upgrade it with a new, fresh look. Now is the time to consider strongly ways to make your vacancy stand out from all the others. This is also a great way to increase the value of our investment. The best part is that you do not need to spend a lot of money to spruce it up. Knobs for kitchen cabinets, new drapes and even new lighting fixtures can be bought inexpensively if you shop for deals. Last, consider simple staging techniques before showing the apartment. You will be surprised how even a few props can elevate the look of your unit. I remember showing a client’s unit with a kitchen and several other rooms that felt small and awkward. To improve its look and feel, I had dark cabinets in the kitchen painted white and put a bowl of fruit on the counter. In one of the small rooms, I staged pillows on a built-in window seat; and in another well-lit room, I placed a nice comfy chair. Simple and inexpensive staging turned the vacant unit into a warm, inviting home. Within two weeks, I was presenting several qualified tenants to the landlord. Advertising There are several media outlets and resources available to advertise your unit. Before you list your unit, you must accurately describe its attributes. In today’s market, prospective tenants do not want to be deceived or have their time wasted looking at units that do not match the description in your listing. This became very apparent when one of my clients had a one-bedroom unit for rent. It was on the smaller side, and the doors between the bedroom and living room had been removed. When I first listed the unit as a one-bedroom apartment, I had many people come through, but the feedback was that it was too small. In response, I decided to advertise it as a junior one-bedroom unit. I had the unit rented within a few weeks. The same unit that was deemed too small when listed as a one bedroom rented quickly at the same price when the advertising accurately described its attributes. For owners of Victorian units, remember that a fainting room is no longer considered a bedroom. List it as an office or spare room. You have now crafted an accurate description of your unit and you are ready to place an ad, but have you considered whether or not to allow pets? In today’s market, it is definitely worth considering. By doing so, you can attract a larger group of prospective tenants. Remember that you can specify cats or small dogs only, even though many of the large or giant breeds are more docile apartment dogs. As a landlord, all my units are pet friendly. I simply photograph high traffic areas prior to the move-in inspection in order to document the condition of the unit. I then ask the tenant to initial the photographs during the move-in inspection, and I request they sign a thorough Pet Agreement. The photographs and agreement are helpful when settling any potential issues about pet wear and tear to the unit. Setting the Right Rent Obviously there are many factors that determine the amount of rent you can charge for your vacant unit. Though it is paramount that you set a realistic rent, determining the appropriate amount may prove a bit of a challenge. Yes, you can use the trial-and-error method of starting out by listing a high rent and lowering it if the unit is still vacant after a certain amount of time has passed. Setting a realistic rent upfront, however, often reduces the time your unit is on the market.

Author: Eric Baird

Aiming High Can Cost You Money

Making Your Rentals More Marketable

Making Your Rentals More Marketable

By Jackie Tom- 2005