Hardly anything really happens overnight, but changes often appear to be spontaneous because most people most of the time are not paying attention.
This has certainly been true in rental real estate where landlords are feeling the pain of record foreclosures, a housing crash and economic recession.
More people owning houses they could not sell meant more landlords and more vacancies and the economic down turn brings more jobless people, resulting in tremendous downward pressure in rental prices.
But, in fact the forces which are really driving rental real estate were in motion far before the collapse and no one noticed because upward distortions in the market had masked the developing problem.
The dramatic changes in the way Americans rent and buy houses had been shaping up over the last decade and the changes weren’t noticed by most landlords and real estate investors until the real estate market itself collapsed.
Personally, two years ago I was looking at 20 percent vacancies in my rentals and tried to fix the problem by cutting rents. I learned that was not the answer and set out to find real answers. The results we discovered have been so powerful that we now often fill vacancies in days and in as is condition, saving loss of rent and cost of renovations.
The changes we made to bring about the change were neither intuitive nor cheap. In fact I had to go through a process to discover the secrets to renting homes fast in the current market involving more time and effort than I remember spending to get a masters degree.
One of the first things I discovered was that most of what most landlords, certainly including me, “knew” was wrong. Not wrong like go on red and stop on green, but society’s concept of marketing had run away from us in the last ten years and we had not noticed because the real estate market appeared so strong that we did not need to change.
Ignorance is no longer bliss. When we started to look for research that would show how to rent houses faster the first thing we discovered there is no social science research in the relationship between landlord and tenant. But, fortunately there is tons of research done in areas that translate almost directly to our field.
Psychological motivations to buy both irrational and rational are at play and have been research by people like Dr. Robert B. Cialdini, while Regents’ Professor of Psychology at Arizona State University. Published research shows that in certain circumstances people willingly and happily pay more for the identical goods and services.
Not only is cutting price for rent unnecessary, it actually attracts the wrong people. The secret is be aware you may be doing things wrong and look for ways to improve and that information is available. Of course we would recommend our new eBook “911forLandlords” as a source, but libraries and book stores all carry reports of the types of research that we surveyed to learn how to rent houses faster and for more money.
Our research led us to the conclusion which we have (and are) tested that in order to compete in any marketing effort today, you absolutely have to take into consideration the way the internet has changed marketing and respond to that change.
The Internet is driven by the word FREE. Free chapters of books at Amazon and the brick and mortar stores respond by letting prospects read books for free in the store. We have found that the same psychology is required to compete for tenants today and while I have seen others offering free rent, we have found that is not necessary.
We would suggest that you need not give away rent and can still be aggressive in the competition if you can satisfy other needs of the tenant by offering—FOR FREE your professional expertise and honesty in helping the tenants find the best accommodations possible.
It is the flip side of the old image of the bad salesman forcing his ill fitting product onto the customer. While you as the landlord do not represent the customer and should not pretend that you do, you will fill more houses more quickly with people that will be happier with you longer if you fully disclose what you house has to offer and do not overstate.
Of course this also presumes that you have a powerful marketing machine driving prospects to your sales funnel and how to do that is another of the secrets we discovered in our research project and will address in an article soon.
Author Resource:
George Beardsley has written extensively about finance and business starting as a financial reporter for the Chicago Tribune and was an editor for the publishing firm Dow-Jones, Irwin and is now a landlord in Florida. He has just published a new eBook called “911 for Landlords” available at http://www.911forlandlords.com with the information he learned during the last two years which has reduced his vacancies rates from 20 per cent to often zero.
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