One landlord on our Q&A Forum, known as NE (PA), was getting extremely frustrated with trying to increase the rent prices with his properties. His concern was that all renters were interested in was the price, price, price.
My Response: I would dare say that you are focusing on the wrong thing. Your focus should not be “price, price, and price”. If your priority is higher rents, your focus should be figuring out how to reach out (and cater) to the right target market, target market, target market. Here’s part of the discussion that followed, with a couple of other landlords chiming in.WMH (NC): I remember hearing Jeffrey talk about target markets several years ago and a light bulb went off for me. Basically, in thinking over your many residents, does any group stand out as being overall better residents? Or worse? I realized that our best and longest term residents were made up of a couple of specific groups. And it was NOT families that wanted 3-4-5 bedroom homes. THAT group ended up being uniformly horrible for us as renters. So, we got rid of the homes that attracted that group. Once we focused on our specific target markets, our business was transformed.
NE: I really should look at my history of residents and see who the best were and where they came from.
My Response: NE, Now you’re thinking! You are beginning to answer your own question. Not only seek to identify where your best residents come from, but also look to see if you can determine where they tend to work, shop, or socially interact. Then take your advertising or marketing directly to where they are.
However, let me add and emphasize something: Your original aim of this discussion was that you wanted to get higher rent. So, when I suggest going after target markets, I’m also saying going after target markets that are able or willing to pay the price point you want. It’s not enough to simply discover who have been your best residents in the past. Because if you determine that one of those best type residents in the past are not willing or able to pay higher rent, then to accomplish your goal of getting higher rent, you will need to consider going after and cater to OTHER target markets.
For the purpose of this discussion, to cater simply means to fix up and prepare the homes with your target market in mind. Or cater could mean to market where your target market socially interacts (where they will see or hear about what you have available). It should also be noted that just because a target market is not as huge as renting to “anybody”, this can actually work to your benefit, because fewer landlords are probably catering and reaching out to them.
WMH: Based on what Jeffrey said above, we KNOW we are some of the only landlords on the beach offering Pet-Friendly housing. That’s our main niche. MANY of our residents are with us ONLY because of that. There are certainly nicer houses out there! Ours are fine as
we do our best, but there are much nicer spaces out there. But no pets allowed. Also smoking. Many residents smoke. Fewer and fewer these days, but they are still out there. We allow smoking. Again, it’s a niche market because most of the nicer houses out there say, “No Pets – No Smoking”. Our houses are cute, and allow both. We have ONE laundromat within 180 miles or something like that. Too many of the houses out there say, “No Laundry Hookups”. Or they don’t provide them if there are. We do. We have used machines which cost us almost nothing, but they work.
My Response: The elaboration by WMH is right on the money. In fact, I liked the BIG point she brought out in regard to the fact that there may be nicer homes in her area, but because of how she “caters” to her target market (which others don’t), they are attracted to (and stay) at her properties.
PMH (TX): Absolutely as Jeffrey said. I also “target” my markets. For example, I state “No Smokers”. There’s a big market of non smokers who don’t want to live in a house that has been smoked in. I also target pet owners by highlighting fenced yards. I target those who don’t have time to mow by providing lawn care which is included. I rent to anyone who meets the criteria. Those criteria are: No evictions, No late rent payments with prior landlords, and the ability to pay the rent (gross must be three times the rent). I just have houses and so I can see the possible issues with barking dogs in an apartment complex. But anyone moving in will know up front if there are other pets, so they make the decision to be with other pet owners. Since so many complexes do not allow pets; I fenced in an area for pets and raised rents as renewals or for new renters. There are many ways to skin the cat. All my rents are higher than market value because whoever rents from me appreciates what I offer and stays on average about two to three years. Also consider a referral fee to anyone who steers an applicant to you that you rent to. I offer $100 cash and it works.
My Response: All good points from the above. One additional note in depth training on target markets is usually reserved for my landlord boot camps, where it can be taught and discussed in great detail with numerous interactive examples given and how to best market. Such marketing can be extremely effective and produce higher rents.
One other word of warning! If it is done incorrectly, you can be guilty of a fair housing violation and it can be very costly (in the thousands of dollars in fines). For this short discussion, let me at least state that when you are going after target markets, you do NOT in anyway describe or allude to the PEOPLE you are targeting in your marketing. You describe the housing features and related benefits that your target market would appreciate.
Fake Pay Stubs!
A landlord shared an eye-opening experience for him on our landlord forum that happened a couple of weeks ago: “I had an application from a prospective resident. Everything looked okay but I was a little uneasy about his application. It just seemed a little off. My wife started digging to rule out any problems. He had good wages but his credit was poor at best. The more we looked at everything, the more we sensed that something was definitely off. But we couldn’t quite put our finger on it. We spent an hour going over everything.
Then my wife found it. His employer’s phone was linked in an online post to a lawn mowing business he had several years earlier. Then the Google map showed his employer’s place of business as a single-wide trailer although they were writing over 100 payroll checks every pay cycle. The Secretary of State’s webpage showed no business of that name.
Then I ask myself: Could this be a fake paycheck stub?
Yes, it was!!! You can go online and for $10 or $20 you can print off fake payroll stubs for the wages you choose from any business you choose, or you can make up one. I spent several minutes looking into it. There are many different styles and designs. I found at least 20 different companies that are offering this scam. Landlords: BEWARE!”
9 PHONE PRE-SCREENING QUESTIONS
1. Full name?
2. Monthly income?
3. How many will be living in the home?
4. How much rent do you pay now?
5. Are your pets friendly?
6. When do you need to move?
7. Any problems with your last rental or landlord?
8. Anything in particular you are looking for in your next home?
9. When you find something you like, how long are you looking to stay?
Questions were suggested from several landlords. Be quiet after asking each question. Don’t suggest an answer. Let applicants fill the silence. Most important – listen carefully. Most of the time, they will tell you exactly what you need to know — IF you listen.
The above tips are shared by regular contributors to the popular MrLandlord.com Q&A forum, by real estate authors and by Jeffrey Taylor, Founder@Mrlandlord.com. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.