The winter worries!!
My company BCL Properties LLC continues to build a steady increase of leasing and management clients in and around Georgetown, DC. I wanted to write a small blog today on the winter worries that face property owners and some brief solutions they can use to help alleviate their anxiety.
One of the consistent challenges we continue to face is working with new property owners in the winter time. The leasing business in Washington, DC is a very seasonal business. Most businesses, schools, Embassy’s transfers are usually done in the spring or summer months with some roll over in the fall. People are generally happier when the weather is nicer and willing to spend a day or two viewing property.
Usually owners prior to contacting me have a rental amount in mind. That’s typically made up from the owner calculating their mortgage, condo fees (if applicable), management fees if they want that service and or future possible repairs which is usually around 10% of the yearly income.
Owners typically want to break even or make a small profit. I am then presented with a number that sometimes is just too high. My job is not to offend the owner as I want to sign them as a client, but rather educate to give a realistic view of what they can achieve. I try to use systematic and research driven data to provide information on pricing.
Owners may scour the internet and use various real estate websites to produce “their” number. The numbers that those real estate websites produce can be based on moving averages over months or even past years. A number of the larger scale websites are based typically more for sales than rentals. Their developers usually care more about sales data then rental data.
What those websites fail to do is show on a consistent basis the accepted price and when that happened. A lot of websites do send an email to ask you to provide that information but by then the owners are just happy to have a tenant or just don’t want to place that data online. Some owners do provide those numbers which is where the software companies get the rented amounts from. It is just a very inconsistent system that can cause owners to be misinformed.
As agents are required to enter data in to the MRIS system we can show the price amount obtained, days on market, and specifics about the building or neighborhood. We can view additional information that can give us specifics about pricing. We can even contact other listing agents around our listing to see how their traffic has been. One of the even bigger factors an agent can provide is experience. As I have been doing this for 14 years and have rented probably over 1000 properties I typically have a ball park number of what the property can rent for without much research.
Price ceilings are important to keep in mind. In other words no matter how nice the property was renovated someone is only going to pay so much for a 1 bedroom or 2 bedroom and so on. That’s another blog entirely.
With Amazon coming to the DC area it should help rental pricing over time increase. We are not there yet! (Blog to come on this)
Below are just a few ideas/tips that I use when marketing property in the winter time. The biggest takeaway is just to be patient. The winter comes and goes and with some marketing tricks I use the property will typically rent come early spring.
My comments below are based on my experience and not concrete data. Take it with a grain of salt. It’s not set in stone but will give property owners some tips when renting in the winter months.
1. A property owner should have a reserve of at least 4 months of carrying money. Remember at least one of those months will go towards commission when rented by an agent. A few additional months in case the property does not rent right away.
2. Always have 2 months of reserve even after rented in case of a large repair.
3. The “lets try your price”. I will agree to this within reason for 15-20 days. If we do get it than great. If not we have to start considering a price reduction to stay aggressive in the winter. I will talk about vacant property status in another blog post and the negative effects of that.
4. Remember that come November your faced with the start of the holiday season. From Thanksgiving, Christmas, New Years and any additional holiday one may celebrate. Most people are focused on the holidays that rather than moving.
5. February / March the winter months hit stronger. Unless someone is being transferred into the area the cold weather, snow, and dreary days don’t bring out tenants looking around to move. Not many want to walk around in the cold looking at rental properties.
6. Be patient… Your agent does not make money unless they rent the property. So trust me they are working to produce a tenant.
7. When spring hits people tend to start walking around so if you can place signs outside of the property that is still one of the best marketing techniques out there. **One benefit is that if you can start a lease in the spring the tenants will typically move out in the spring/summer positioning yourself in the better time of year for future marketing.
For additional information feel free to contact me directly at Barry@bclmgt.com