Tag: Rental Marketing

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Landlords

How Should Landlords Handle the Recent Rent Price Decreases?

A woman opening her wallet and realizing there are no bills
Source: Emil Kalibradov on Unsplash

It might have come as a shock to a lot of landlords as market conditions have drastically reversed in the past year, bringing the 20-month streak of increasing rent amounts to a halt. Unfortunately, this drop in rent prices is seen across the nation, affecting many investors’ potential returns.

So, what can you do about it to stay profitable in your real estate investment?

Let’s discuss it below.

How did rent prices decrease significantly?

In recent months, the US real estate market slowed down, where rent decreased by 0.1% across 40 of the most extensive metropolitan areas in August 2022. Renters celebrate financial relief (excellent), but investors clutch desperately to their original investment returns (not ideal).

Here’s a snapshot of the rent price movements across 40 markets, where we see that our home area, the City of Detroit, has dropped 0.5% month-over-month:

Source: Apartments.com

Jay Lybik, CoStar Group’s national director of multifamily analytics, said, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to new deliveries outpacing lackluster demand.”

Beyond that, places like the City of Detroit are experiencing a labor shortage in the construction and maintenance industry of the City of Detroit. While this news means that it’s harder to build homes (bad news for anybody developing a property), it means that the demand for housing stock is still increasing. And, more importantly, people are competing for a limited number of units (good news for landlords and rental property investors).

If you’re a rental property investor in the City of Detroit, ensure that you stay ahead of the curve and keep your properties in excellent shape to attract and keep tenants. And of course, always keep an eye on the market and prepare to adjust your rents accordingly.

What should landlords do when rent averages decline?

The most important rule in real estate investing is to stay updated with the market’s current status to change your strategy on the fly and avoid significant financial losses. For instance, if you know that there’s an oversupply of rental units in your area and not enough renters to fill those up, opt to lower your rent to attract quality tenants willing to pay for a comfortable space.

But if you think that the rent prices in your area will continue to decline, selling your property might be the best move to make. This tip is especially true if you’re carrying a lot of debt—the last thing you want is to end up upside down on your mortgage.

Of course, there are other strategies that you can do to stay profitable during a rent price decline. Here are 4 tips to maintain financial viability:

#1 – Review your financials and make necessary changes

Go over your finances and see where you can make adjustments. This might mean looking for ways to reduce expenses, like cutting down on maintenance and marketing costs. You should also consider ways to increase your income, such as by finding new tenants or increasing rent for existing ones. If you have vacant units, consider offering discounts or incentives to attract new renters.

#2 – Negotiate with your lenders

This could involve asking for a lower interest rate on your mortgage or a longer repayment period. You might also want to consider refinancing your loan so you can get more favorable terms. This could help you free up some extra cash each month that you can use to cover other expenses.

#3 – Raise rent for existing tenants

If you can, consider raising the current rent amount for your existing tenants. Doing so could help offset any decline in rent prices that you’re experiencing. Of course, you must be careful not to price your tenants out, so raise your rent slowly to keep occupancy up without dragging your returns down.

#4 – Diversify your portfolio

Diversifying your portfolio means investing in other types of property, like commercial or vacation rentals. Doing so could help you mitigate some of the risks that you’re facing with your rental properties and generate additional income to cover your expenses.

Rent Drops Doesn’t Always Mean Cash Flow Decrease

The biggest takeaway from all of these is that landlords should always be updated with the latest market trends so they can change their strategy accordingly. This way, they’ll be able to protect their investment and even grow their portfolio despite a rent drop.

No matter what strategy you use, stay proactive and adapt to the changing market conditions. By doing so, you can minimize the financial impact of a rent price decline and keep your business healthy.

One way to stay updated is by signing up as a REIA member. You can also subscribe to our newsletter and join our upcoming meetings, so you’ll be the first to know any tips or advice we have regarding the real estate market. The market is always changing, so you have to as well.

Categories
Landlords

Pros and Cons: Should You Rent to Section 8 Tenants?

Source: Photo by Jem Sahagun on Unsplash

Section 8 tenants are individuals the government has approved for housing assistance. This program is for low-income families, the elderly, and the disabled to afford safe and clean housing. To be eligible for Section 8 assistance, a family must meet specific guidelines that show they require financial help.

Now, of course, there are pros and cons to renting to Section 8 tenants.

Some landlords may hesitate to do so because of the extra work and paperwork or because they have heard stories about problematic tenants. However, there are still benefits to renting to Section 8 tenants, as you’ll realize below.

We’ve listed all the pros and cons to help you make a good decision.

Pros of Renting to Section 8 Tenants

While most information online (especially in forums) list difficult situations with renting out to Section 8 tenants, there are advantages to accepting them that may change your mind. Here are 4 of them to consider if you’re a landlord:

1. Generate Stable Cash Flow

When tenants have Section 8, the government agency pays their rent directly to the landlord or property owner. This means you’re more likely to get paid on time and in full. In addition, the government will still cover the cost if the tenant does not pay their portion of the rent (usually 30%).

2. Increased Tenant Options

When you open your units up to Section 8 tenants, you may have a larger pool of potential renters. This can be beneficial if you live in an area with a tight housing market or if you’re having trouble finding suitable tenants in the area.

3. Opportunity to Help the Needy

By renting to a Section 8 tenant, you’re getting a good deal and helping someone in need.

Families who receive assistance through this program often have low incomes and would otherwise struggle to find affordable and safe housing. As a landlord or property owner, you can make a difference in their lives by providing them with a place to call home.

Cons of Renting to Section 8 Tenants

Of course, there are also some disadvantages to renting to Section 8 tenants—as with any type of rental agreement. Still some concerns are unique to this type of tenant. Here are 3 of them that you’ll need to consider before taking the leap:

1. More Paperwork and Regulations

Renting to Section 8 tenants requires more paperwork and regulation compliance. For example, you’ll need to keep detailed records of your unit and ensure that it meets all the housing standards set by the government. In addition, you may have to deal with inspections regularly.

2. Limited Options for Termination

If you end up with a troublesome tenant, getting them out of your unit may be difficult. The government has strict rules that protect Section 8 tenants, so you’ll need to have a good reason for wanting to terminate their lease.

The increased complexity of contract termination can be time-consuming and frustrating, especially since it’ll be on top of your already-difficult situation.

3. Possible Lowering of Rent

Contrary to the point earlier, if you live in an area with a lot of Section 8 housing, you may be required to lower your rent to stay competitive. In addition, if the government changes its regulations or funding levels, your rent could decrease as well. This may lead to financial problems down the road.

Find Quality Tenants—Section 8 or Not

There are pros and cons to renting to Section 8 tenants. So weigh all your options carefully before deciding. If you decide to rent to them, be prepared for the extra paperwork and regulations involved. You’ll increase your tenant pool, but you’ll need to know the caveats that come with it.

Do you need help finding good tenants? Join as a REIA member today!

We have regular meetings and newsletter that you can greatly benefit from as a landlord. Don’t miss out on this opportunity to further your investment knowledge and reach your investment goals wisely.

Categories
Wholesale Wholesaling

6 Tips on How to Wholesale Real Estate in a Recession

Source: Usman Yousaf on Unsplash

Real estate investors are now finding out that sales prices and rents don’t always go up. It’s not as unstable as blockchain, the metaverse or crypto—but the real estate investment world isn’t completely protected against economic shifts.

The Federal Reserve is expected to continue to raise its overnight rate until inflation is brought back to acceptable amounts. These increases have a negative impact on bond prices, including mortgage-backed securities, which has caused mortgage rates to spike.

Of course, wholesaling has its challenges in an uncertain market.

That being said, knowledgeable wholesale real estate investors navigate them easily—simply because they know how to play the game. So, here are our 6 tips for experienced wholesalers and new ones alike to keep in mind.

1. Increase Your Lead Conversion Rate

Finding motivated sellers is key to a real estate wholesaling business. You have to constantly find people who need to sell their properties fast (usually because they’re facing foreclosure or have inherited a property they don’t want to maintain), because they present an opportunity for you to swoop in and make an offer.

In an uncertain market, finding motivated sellers should be easy, as more people looking to sell won’t be able to find buyers. You can find them by networking with real estate professionals, driving around neighborhoods to search for distressed properties, and more.

But it’s not just about finding motivated sellers; it’s also about increasing your conversion rate:

Number of deals closed / Total number of motivated sellers = Conversion rate

The higher your conversion rate, the better you can weather any uncertain market storms. So, it may be time to cut your marketing budget or at the very least, refocus it on the most motivated sellers. Continue to find motivated sellers, and improve your chances of closing deals with them.

2. Focus on Landlords

Typically when it comes to wholesaling, you’ve probably been selling most of your deals to house flippers. Well, they’re going to have challenges selling in a recession, so they won’t be buying as much from you. Luckily there is another market out there you can target. Landlords.

S, instead of selling to house flippers, you can replace them with landlords.

Now, remember if you’re selling to a landlord means that you’re selling to another investor. In other words, you’re going to have to be savvier and convince that you’re a reputable wholesaler.

3. Know Your Clients’ Numbers

Many wholesalers don’t care about how their clients run their numbers, but that’s a rookie mistake. Because when you think about it, helping their business succeed is just as important as making your own real estate wholesaling business succeed.

So, to stand out from the competition you need to start taking note of your client’s numbers—not just your own. Helping your clients by providing more services is how you stand out and attract new clients. That way, you’ll have a much stronger relationship with them.

4. Have a Plan B

Next, you may want to either consider doing some flips yourself or becoming a landlord. For that, you’ll need to sort your financing, look into flipper insurance, and a lot more depending on how you pivot your business model.

There’s always the possibility that something could go wrong, whether it’s:

  • The deal falls through
  • The market is taking a turn for the worse
  • Property values are dropping significantly

Or a combination of all of those factors. So, make sure you have another plan when wholesaling doesn’t work out.

5. Get Your Financing in Order

If you’re going to wholesale real estate, you need to have your financing in order before you start looking for properties. Getting your ducks in a row is important because, most of the time, the properties you’ll find will require some form of creative financing, like using:

  • Hard money loans: Loans based on property’s value instead of the borrower’s creditworthiness
  • Private money loans: Loans from private investors if you can’t qualify for traditional financing
  • Partner with another investor: Pooling resources together with a partner to finance a property

If you don’t have your financing set up beforehand, it’ll be hard to take advantage of these opportunities when they come up, especially when dealing with uncertain market conditions simultaneously.

For example, if the market crashes and you’re trying to get a loan from a bank, they’ll be much more hesitant to give you the money. Whereas if you have a hard money lender lined up, they’ll be much more willing to finance your deal.

6. Know Your Numbers

In an uncertain market where things can change rapidly, you need to be extra conscious of unnecessary business costs harming your cash flow. Are you spending too much on lead generation? Can you do without the tech subscriptions? Have an honest conversation on how you can keep expenses down to protect your cash flow in an unstable market.

Moreover, know your numbers well enough to make quick and sure deals without costing you dearly. Things like being clear on your maximum offer price, estimated repairs, and expected profit margin all play into the success of your wholesaling investment opportunities.

Say the market crashes and property values drop significantly—you’ll find yourself in a situation where the property is worth less than what you paid, depleting your chances of any profit margin. Only by knowing your numbers well can you adjust accordingly and still come out ahead.

Being Certainly Profitable in Wholesale Real Estate Investing

By following the tips we’ve outlined in this article, you can ensure that your business is as resilient as possible to market fluctuations. So whether you’re a seasoned investor or just starting, remember to increase your lead conversion rate, get your finances in order, know your numbers, and have a plan B.

With these strategies, you’ll weather any storm and continue making money by wholesaling.

Do you need more help? Then, get a membership, subscribe to our newsletter, and join our upcoming meeting! We’ll discuss key industry trends and expert tips—you wouldn’t want to miss out.

Categories
Wholesale Wholesaling

Wholesaling Tips: How to Wholesale Empty Land Instead of Houses

Vacant land in Downtown Detroit
Source: Zillow

Empty land is a valuable commodity. In some parts of the country, it’s worth more than homes—simply because there’s always a market for land for building a new structure or something else.

It’s also easier for wholesalers to find buyers for vacant land than for houses, as there is less competition in the market for land deals. As a result, you’ll find better deals on properties ripe for development than those with established homes.

So, if you want to learn how to get into this small real estate niche, we’ve got tips to get you started in the wholesaling process.

5 Steps to Wholesale Empty Lots

We’ve all seen those empty gravel lots in our neighborhood. But now, you’ll see them as more than just a pile of dirt. Instead, they’re an opportunity. While the land is valuable everywhere‌, some lots are worth more than others—highly sought after by the buyers you want to attract.

So, here are 5 ways you can start wholesaling land:

1. Look for Developing Areas

Look for areas that are being developed or zoned for development, as it’ll give you a good sign of where the market will move to in the coming years.

You can attend city council meetings to get a sense of which areas are being approved for rezoning or development variances. Search online for local land auctions—being good indicators of where the market is moving, and scan MLS listings for “raw land” or “vacant land” to identify hotspots.

2. Research the Title and Zoning

Do your due diligence when researching a piece of property. Check the title to see if there are any liens or encumbrances, and ensure that the property is zoned for the type of development your buyers have in mind. It’s also essential to determine if easements or rights-of-way could affect your prospective buyer’s development plans.

3. Get a Professional Opinion

Before making an offer on a piece of property, it’s always a good idea to get a professional opinion. Have a real estate attorney look over the contract, and have a land surveyor assess the property to determine its potential uses. You can also use the information to market the land to potential buyers.

4. Make an Offer

Once you’ve decided that a piece of property is a good fit for your portfolio, it’s time to make an offer. When making an offer on vacant land, it’s important to be realistic about the value of the property and the costs of development.

Remember: It may take longer to sell vacant land than it would to sell a finished home in some areas, so you’ll need to take the additional waiting time into account.

5. Close the Deal

With a buyer now confirmed, close the deal using a professional team to help with the process. Ensure that all the necessary inspections have been conducted and that the property is free of any environmental hazards, secure the appropriate permits for development from the local municipality, and verify that the title is clear and there are no outstanding liens or encumbrances on the property.

Turn Empty Lots into Enticing Deals

Next time you walk by an empty lot, remember that it’s more valuable than you think. By following these steps, you can successfully wholesale vacant lots in no time. Just remember to be patient, do your research, and work with a professional team to get the best results.

Want more real estate advice?

Join REIA as a member today! Or attend our next meeting so you don’t miss any important information—just like this article. If you don’t have the time to spare, sign up for our newsletter instead to get content delivered right to your email address.

Categories
Flipping

Does House Flipping Qualify as QBI Deduction?

Man repairing a house
Source: GO Banking Rates

Over the years, the IRS has been cracking down on taxpayers taking advantage of the qualified business income (QBI) deduction. Because of that, some house flippers are wondering whether flipping houses can still qualify as a business.

So, let’s dive in and see what you need to know.

QBI Deduction: What Is It and Who Can Claim It?

QBI deduction is a tax break that allows business owners, freelancers, and independent contractors to write off up to 20% of their total taxable income. This effectively decreases the income tax they owe to the IRS. However, not everybody is eligible for it.

For instance, only business owners with pass-through income may take advantage of the QBI deduction. This includes the following:

  • Sole Proprietors: An individual, such as a freelancer or independent contractor, who runs an unincorporated business
  • Partnership Members: Two or more people who made a formal agreement to oversee a business together, sharing in its profits and liabilities
  • S-Corporation Shareholders: People who own shares in an S-Corporation and include its income and/or losses on their personal tax returns

In short, you’ll have to double-check if you qualify for the tax deduction to take advantage of it, as there are some income limits and business types that may affect your eligibility.

What Does Not Count as QBI?

Now, not all income types qualify for QBI. In fact, there are nearly 20 different income types that the IRS does not consider as QBI. Here are a few of them:

  • Income from out-of-country businesses
  • Investment items (e.g., capital gains and dividends)
  • Interest income not related to a business or trade
  • Annuities received from something unrelated to a business or trade

Of course, as a house flipper, your only concern is if income from flipping is included on the IRS list. Well, it’s not specifically mentioned by the IRS. So, are you eligible for the 20% tax write-off?

Does House Flipping Qualify as QBI Deduction?

The law says that the QBI deduction will only apply to taxpayers who are sole proprietors of a business or trade, a member of a partnership, or a shareholder in an S-Corporation. So those in the fix-and-flip business will be eligible if your operations are conducted within one of these entity structures.

However, there are still rules dictating how much you can deduct from your total taxable income:

  • If you’re single or unmarried and your total taxable income is less than $164,900, then you can deduct 20% of your qualified business income.
  • If you are married and filing jointly with your spouse and your total taxable income is less than $329,800—then you can deduct 20% of your qualified business income.

Because of W-2 wage limitations, things become more complicated when your total taxable income exceeds these thresholds. If this is your situation, then it would be better to call an accountant for advice.

Confused? Don’t sweat it—here’s a quick example to help you understand QBI deductions better:

Let’s pretend that you’re a single-house flipper whose net operating income is $100,000 and W-2 wages are $50,000. Since you fall below the $164,900 threshold, you can deduct 20% from your net operating income, amounting to $20,000.

Assuming that you belong to the 24% tax bracket, this QBI deduction will save $4,800 on your tax bill.

Yes, House Flipping Qualifies as QBI Deduction

The QBI deduction has undoubtedly benefited a lot of industries, particularly real estate, where house flippers are now seeing more profits earned from every sale they close. But if you are still confused about the calculations, then we recommend working with a certified public accountant (CPA).

Calculating your QBI deductions is a huge headache and as a busy house flipper, you simply do not have the time for that. That is why you should consider joining the Real Estate Investors Association of Oakland County—our members have access to tons of resources that help them take their house-flipping business to new levels of success.

From landing sales on your fix-and-flip projects to help you determine your tax write-off, REIA has everything you need. Interested? Check out our website to see what your next steps should b

Calculating your QBI deductions is a huge headache—which you may not have the time for. Consider reaching out to REIA and our team of experts to help you with everything. Subscribe to our newsletter as well and join as a REIA member to attend our upcoming meeting!

Categories
Shortterm Rentals

How to Find The Best Neighborhoods for Airbnb

To earn the biggest profits from your STR, you need to find the right neighborhood to invest in. Here, we look at some of the things to consider.
An STR in the woods
Photo by Karsten Winegeart

Investing in a short-term rental (STR) is a great way to make some additional income. In fact, according to 2021 figures, the average Airbnb host in North America can make $41,026 annually from a single rental.

But you need to be smart and focus on a lot of factors to earn that impressive amount. 

For example, just picking a neighborhood can make or break your investment. While the right neighborhood with all the right conditions will give you high occupancy and rental rates, the wrong neighborhood will only give you high turnover rates—or worse, complete vacancy.

So, what are the right conditions that make a neighborhood perfect for STR investments? 

Let’s discuss the conditions you need to consider when picking a neighborhood for your Airbnb.

What Makes a Good Neighborhood?

No one factor makes a good neighborhood. You have to consider several characteristics when choosing the area for your Airbnb. When you choose a neighborhood to invest in, look for: 

  • Airbnb occupancy rate
  • Airbnb rental income 
  • Airbnb rent averages
  • Cash-on-cash return

Each factor is as important as the next and they all have to come together seamlessly. For example, if you only take into account the Airbnb occupancy, you could see an 80% rate. But each tenant might be paying you a low amount—and that might not be worth the effort.

So, let’s define each factor and go through their details:

Airbnb Occupancy Rate

The occupancy rate measures the dates a property was booked versus the total number of days it is listed for rent. Factors like location, market saturation, and seasonality can affect a neighborhood’s occupancy rate. 

Now, the average occupancy rate in North America is about 44%, but you’ll want to find areas that give an even higher number. Instead, focus on locations that have the highest occupancy rates such as:

  • Seaside, CA: 71.3% 
  • Little Rock, AR: 75.0%
  • Phoenix, AZ: 64.1%
  • Los Angeles, CA: 55.6% 
  • Columbus, OH: 60.6%

A quick search on Google will give you these numbers. If you find another neighborhood with a good Airbnb occupancy rate, you can consider investing in property there. 

Airbnb Rental Income

The Airbnb rental income will determine how much income your property will generate over time. For you to determine the potential rental income you can earn in a neighborhood, you need to conduct a market analysis. Using market analysis, you can learn: 

  • The real estate appreciation rates of the neighborhood
  • The current and upcoming trends of the real estate market in an area
  • If the neighborhood you’re scouting is suitable for an STR
  • If long-term rentals are more popular in a particular area instead of an STR
  • The overall demand for rentals in the area

Take, for example, Mashvisor’s heatmap. With this tool, you can see the average occupancy rate in Detroit. You can also get a glimpse into the estimated rental income of an Airbnb.  After you perform a market analysis, you should have a good idea of what your Airbnb rental income should look like in that particular neighborhood. 

Airbnb Rent Averages

This is the simplest metric you need to find out. You basically need to look at the average rent STRs are going for in a neighborhood. If you skip this, you might invest in an expensive property that’ll take too long to generate a good return on investment.

You can use Mashvisor to get a good idea of how much people are charging for rent on their Airbnbs. In general, you want to look-out for properties with similar specifications to the property you’re looking to invest in. Watch for things like: 

  • The number of rooms
  • The number of beds and baths 
  • The kinds of amenities available
  • The location (e.g., if it’s near tourist attractions)

Once you have a general picture of how much people are charging for stays in their Airbnbs, you get an idea of how much you can charge. 

This will also help you estimate the maximum amount you should spend acquiring the property, as you’ll want to charge at least 1% of your total property price to recoup costs fast enough. For example, if a property costs $212,000, you’ll want to charge at least $2,120 for the monthly rent.

Cash-on-Cash Return 

Finding out the cash-on-cash returns for similar Airbnbs in a particular neighborhood will give you an idea of whether investing in a neighborhood is worth it. Again, Mashvisor gives you the cash-on-cash returns of Airbnbs in a neighborhood.

To calculate your cash-on-cash return, you just need to follow a simple formula:

Cash-on-cash return (CoCR) = (annual rental income – operating expenses)/total cash investment 

Let’s look at the potential CoCR of the listing we mentioned earlier, with an annual rental income of $25,440 ($2120 x 12) as an example. With a total cash investment of $200,000 and a safe estimate of operating expenses being 1/3rd of the annual rental income, it’ll look like this: 

CoCR = (25,440 – 8395.2)/200000 

CoCR = (17044.8)/200000

CoCR = 0.0852

For this particular example, the cash-on-cash return is 8.52% per year. This is within the benchmark for good CoCR, which is between 8-12%. If you find an area with a CoCR that measures within that range, it’s a good opportunity for your STR.

Pick the Right Neighborhood For Your Investment 

Airbnbs can be a great investment opportunity. However, much like any investment, you need to invest wisely. Choosing the wrong neighborhood will put you at too much financial risk, and you might not see numbers anywhere close to the $41,026 average.

Do your due diligence, analyze your opportunities well, and maybe even consult with experts in the industry, and you can be confident in earning that $41,026—maybe even higher.

Do you think there are other factors to consider when choosing a location for an Airbnb? Let us know your insight in the comments below!

Categories
Shortterm Rentals

Post-Pandemic Challenges and Opportunities

If you have a short-term rental, COVID-19’s travel restrictions likely had a negative impact on your short-term rental investment.

The pandemic challenged everyone’s travel plans all across the globe last year. In turn, travel-related businesses, such as short-term rentals, initially took a major hit and saw business declined. Many markets rebounded relatively quickly, but COVID challenges haven’t fully disappeared yet.. 

Although we are finally regaining our freedom to travel, the World Health Organization (WHO) still advises that individuals and business owners engage in their COVID-19 safety measures. This includes avoiding crowds, spreading high traffic areas out, and cleaning surfaces which many people touch. 

With all this in mind, there are new challenges for short-term rental investments in the post-pandemic world. But, there may just be some new opportunities as well. 

Challenges for Short-Term Rentals

COVID-19 has brought an increased focus on hygiene, cleanliness, and even crowd density. These days, people are still advised to avoid public places, where cleanliness and social distancing can be compromised. 

This means that if your short-term rental property does not meet the current standards for cleanliness and safety, you may find it challenging to rent out your property. You’ll need to make your rental property a desirable option for people and that it keeps their health and safety in mind.

We suggest you prioritize the following aspects:

  • Cleanliness: Now more than ever, having a clean rental property is a key factor in getting booked in the post-pandemic world. Since the spread of COVID-19 can occur due to unsanitized surfaces, people want hosts who go the extra mile to make sure it’s well cleaned. 

Make sure to highlight your cleaning policies in your posting, and in great detail. You want to show them you care about their needs and will go above and beyond to make their stay with you safe.

  • Pandemic Measures: Another consideration is how your property provides safety measures for the pandemic. Onlookers feel safer when they know that rental property owners promote practices to mitigate COVID-19. Leaving extra bottles of hand sanitizers in different rooms, Lysol wipes, bottles of surface disinfectants, and even complimentary masks, can help your property stand out in the sea of online options.

For the general safety of your guests and yourself, there must be a strict adherence to these standards of cleanliness and safety. More so, even if you do your part, your guest might not. So another set of challenges are the ones presented by guests themselves.

  • Unsafe Guests. To keep yourself and your rental unit safe from COVID-19, you have to examine your guests thoroughly and pick them wisely. For example, Airbnb’s COVID-19 guidelines align with the current advice provided by authorities. Guest bookings for a stay after exposure or after testing positive are not allowed. 

Always keep yourself updated with the guidelines and advice regarding COVID-19 and apply these measures when booking guests. 

Opportunities for Short-Term Rentals

While there are some new difficulties for STRs, there are also some opportunities for short-term rental property owners. Here are some things you can promote about your rental property to make it a hot pick for people’s vacation or business plans in a post-pandemic world:

  • Preferred Lodging. As you already know, the way people travel has changed immensely due to the pandemic. Locations that involve high-traffic areas where the virus can easily spread are still advised against by the WHO. As such, places like hotels, restaurants, and public markets are categorized as higher risk.

Luckily, when weighing the pros and cons of hotels versus STRs, an STR is considered safer and more preferable. Due to an STRs exclusive nature, it minimizes the risk of contracting COVID-19 from strangers staying at the same location. 

In addition, guests don’t share facilities and spaces with other guests, so both airborne and surface contamination is far less of a concern. As long as you do your part and keep your rental unit clean and safe, your rental unit will be the preferred choice for bookings.

  • Local Attractions: Most short-term rental properties cater to people looking for lodging while they’re on vacation. And when rental properties are designed to cater to these people, the surrounding area usually provides options for all sorts of activities for guests to enjoy. 

Some may look to retreat in nature, while others want to explore a new city. Whatever options and activities your short-term rental property provides, you can advertise. 

Since short-term rental properties are a safer option to stay in for holiday, more people are shifting to this option. Pair that with the resurgence of traveling, and you can expect that your short-term rental property will be fully booked!

Want to keep doing business? Keep up with the changes!

COVID-19 has brought many unexpected changes in the way people travel—including what kind of short-term place they want to stay in during vacations and trips out-of-state. But these changes aren’t all bad, as the safety measures that go along with COVID-19 can actually heighten the attractiveness of your short-term rental properties if you can make them stand out from the crowd.

The pandemic may have negatively impacted your short-term rental investment, but that’s all about to change. If you deal with the challenges and seize the opportunities given the travel changes, your investments can make a comeback. 

Did we miss anything? Let us know in the comments below!

Categories
Shortterm Rentals

How to Encourage Repeat Guests for Your Short-Term Rental

Investing in rental properties is one of the best ways to build wealth. That said, the market is getting increasingly competitive, especially when it comes to short-term rentals (STRs). 

While the STR industry took a hit during the height of the pandemic, research showed that many guests stayed longer in vacation rentals to fully take advantage of the work-from-home situation, and data forecasts expect the industry to resume its year-on-year growth starting September 2021.

Given the situation, STR owners like yourself need to grab the opportunity to attract repeat customers to grow with the market. For long-term rentals (LTRs), you only have to find a good tenant once a year. With STRs, however, repeat business is the only way to gain strong cash flow and secure business continuity.

As the industry resumes its annual growth, you need all the tips and tricks you can get to encourage repeat guests and remain competitive against other STRs, hotels, and home-sharing services. 

Here are a couple of ways to do precisely that.

Target Business Travelers

With COVID-19 slowly letting go and businesses restarting regular operations, a large portion of your guests will be business travelers visiting the area for work and extending their stay for leisure. In the industry, this is called ‘bleisure’ or ‘bizcation’ tourism. 

There are several ways to target business travelers, and these are some of them:

  • Promote a Work-Conducive Space: Apart from fast Wi-Fi connection and a proper desk, you can invest in a few essential devices that make your rental work-friendly. This includes a phone line, personal printer, and even a laptop. The more work-conducive it is, the more your guest will feel comfortable enough to extend their stay.
  • Promote Convenience with High-Quality Service: You’re competing with hotels that pamper their business guests. So, meet them head-to-head with convenience and good service to earn repeat customers. For example, provide quality bedding and branded toiletries. 

And since hotels offer concierges, it’s also worthwhile to provide daily housekeeping services to your guests. The absence of these amenities may not bother backpackers and frugal tourists, but it may very well be a deal-breaker for busy business travelers.   

  • Promote Easy Access to Event Locations: Business travelers look for an accommodation close to their meeting locations. You won’t be able to move your property closer to their venues, but you can certainly offer ease of transportation and accessible parking facilities.

If most of your guests don’t have a car (and won’t rent one either), consider partnering with a cab company to have pick-and-drop services included in your business traveler package.

Think of the things business travelers will prioritize and try to include them in your package. Remember that they’re working out-of-office and will gladly enjoy luxurious convenience.

Start a Referral Program

One great way to attract repeat business is by word-of-mouth referrals. To encourage this marketing strategy, start incentive-based referral programs for the highest chance of guests recommending your short-term rental to friends and business associates. 

Here are two of the many types of referral programs you can run:

  • Friend Referral Discounts: You can reward or provide discounts to customers who bring in more business. For example, offer guests a free night’s stay if they give you two weekend bookings by referring your rental to their friends and colleagues. 
  • Discounts and Rewards for Repeat Stays: You can also offer reasonable rewards and discounts to repeat guests to encourage them to return. If their experience with you is fantastic, there’s no reason why they’ll waste the opportunity.

Take inspiration from Airbnb’s Referrals 2.0 program as well. The platform got people to send customized altruistic invitations to their Gmail contacts, giving their friends a discount to travel. The email says something like “gives your friends $25 to travel!” which motivated people to refer Airbnb to their friends.

The program was so successful, it drove Airbnb’s first-time bookings by 900% year-on-year growth, and daily bookings and signups increased by 300%. When done right, Airbnb proved that referral programs could bring in guests and generate a lot of profits.

Promote Upgrades to Past Guests

Of course, you need to stay in touch and follow up with your past guests to keep them interested. There are two effective ways for you to retap past guests: 

  • Constantly Update Your Listing: Did you install new upgrades, features, or have new amenities for guests to enjoy? Whenever you add or improve things in your short-term rental, update your listing right away and update your previous occupants of the new changes.
  • Respond to Negative Reviews: Negative reviews aren’t so bad if you can use them as insights to improve your offer. Any pain points your guests experience are opportunities for you to improve according to their expectations. 

So, encourage all guests to leave feedback and respond to their concerns. Being proactive will also boost your referral program, as guests will undoubtedly recognize your willingness to give them the best experience.

From a business standpoint, it’s much easier to gain back previous guests than earn new ones. Therefore, identify and focus on the factors that will encourage guests to book with you again—and make sure that they hear about your upgrades. 

Focus on Guest Experience

Aside from providing guests with a clean and comfortable place to stay in, add small details that will enhance their experience with your short-term rental. Here are a few examples:

  • Detailed Welcome Packet: Ensure that your guests feel welcomed as soon as they enter the short-term rental. You want them to know how much you care about their stay.

For example, prepare a welcome packet or gift with all they need to know about the rental (e.g., Wi-Fi passwords and technical instructions) and throw in some pleasantries (e.g., free sunscreen or some chocolates) to welcome them in.

  • Send “Thank You” Notes After Their Stay: In the same way, make your guests feel appreciated once they end their stay. Give them something to remember you by even when they’ve moved on. 

For example, give them a hand-written thank you note, personalized thank you email, or even a small gift (possibly in exchange for feedback, too). As they say, how you end is as important as how you began!

At the end of the day, no amount of features or discounts can beat an amazing experience. So focus on providing your guests with the most memorable stay to have the highest chance of getting them back.

Conclusion

It’s not easy to encourage repeat guests. You’ll need to be persistent in figuring out which combination of strategies works best for your particular short-term rental. So, to get the ball rolling, try attracting business travelers, starting a referral program, promoting upgrades to past guests, and focusing on giving the best guest experience ever.

Before you know it, you’ll be fully booked with a long line of guests just waiting for the opportunity to book your place again!

Any other tips we’ve missed? What strategy works best for your short-term rental?

Image courtesy of Dan Gold

Categories
Wholesaling

How to Dominate Wholesaling Houses in Your Area

Wholesaling
How to dominate wholesaling in your area

While you might be tempted to cover areas beyond your local real estate scene, it’s possible that you’re already sitting on a wholesaling goldmine—and you just didn’t know it!

Here are the signs of a market that’s ripe for a booming wholesaling business:

  • Overwhelming amount of cash purchases
  • Abnormally fast sales
  • Houses getting multiple offers
  • Escalation clauses (to avoid getting outbid)

If your local area has all these factors, you’re in a great place to become a wholesaler.

Read along to find out the two-prong strategy that will help you dominate your local real estate market and build a successful wholesaling empire—right where you live.

Search-Optimize Your Wholesaling Business

Aside from doing offline marketing, there is also a world of possibilities online. Not only are geographic boundaries removed, but the internet also enables you to effectively target and reach your audiences with SEO (search engine optimization) tools.

Check out these online marketing platforms for real estate wholesaling:

  • Wholesaling websites
  • MLS (Multiple Listing Service)
  • Online forums and auctions sites

All of these efforts hinge on the fact that we do practically everything online nowadays. Your customers are more likely than ever to search online for new properties.

Your goal is to be visible and easily accessible via an online search. This is where keyword research comes in. By knowing what keywords to target, you can also maximize your reach on search engines, gain valuable traffic, and generate qualified leads.

Do a simple test to see how your business currently ranks in search engines:

  1. Search “real estate wholesaler [location]” on Google.
  2. Look at the top results.

Does your name or business appear? Where do you rank versus your competitors? Who shows up before you do?

Well, you need to beat them.

Optimize your searchability by choosing keywords that your buyers will search for, then incorporate them in your blog posts, listings, and website.

Here are some keywords you can consider:

  • local real estate wholesalers
  • house wholesalers near me
  • local cash buyers in [area]
  • local house sellers in [city]

For in-depth SEO strategies and more information on how keywords work, you should also check out Reibar’s article on keywords that real estate investors should be targeting.

To boost your online presence further, you can also pay to get increased visibility in highly competitive markets. Paid advertising involves platforms such as Google AdWords and Facebook Ads.

Network to Outshine Your Competitors

Given the wholesaling potential of your area, you might be competing with a lot of other investors. It’s definitely not bad for business, but marketing will be a challenge.

In our article on the best places to find wholesaling deals[1] , we mentioned a couple of offline marketing methods such as:

  • Driving for Dollars
  • Bandit signs
  • Direct mail campaigns
  • Networking
  • Newspapers

All of these methods are effective in finding wholesaling deals, but networking is the most important strategy when trying to dominate a market.

The good thing is that all competitive areas have an REIA or two in the community – Metro Detroit definitely does.

REIAs are a great place to start making your presence known—the goal is to establish your wholesaling business to outshine other wholesalers and be the go-to property supplier for the local area. REIAs give you access to a whole group of people for:

  • Building an active cash buyers list
  • Developing strong and reliable connections
  • Boasting your overflowing housing inventory

You can also team up with Bird Dogs or acquisitions managers who are interested in the local market. The more properties they bring you, the more inventory you have to sell to cash buyers.

Conclusion

The key to dominating your local wholesaling market is good marketing—both on-ground and online. By networking closely with the community and optimizing your online presence, you’ll set yourself up for long-term success wholesaling in any competitive space. Ultimately, you want to establish yourself as an expert—and building your credibility with a great online presence and consistent quality service is how you do this.

To succeed even in these uncertain times, go through our wholesaling trends and insights that have surfaced during the pandemic. Get a good grasp of the present and future of wholesaling real estate to dominate the business in your local area—and beyond.

Need help in beating your local competition? Get in touch with us! Our team is more than willing to help.

Image courtesy of Andrea Piacquadio

Categories
Landlords

How to Market your Rentals Online: Screen Appeal and Listing on Digital Platforms

From digital walk-throughs to Zoom tenant interviews, real estate marketing has officially transitioned to digital in light of the COVID-19 pandemic.

Virtual showing techniques aren’t new, but COVID-19 has certainly pushed the industry to adapt as a necessity. Landlords that didn’t have videos of their properties pre-COVID are now rushing to create virtual tours and trying virtual staging methods.

At this pace, digital marketing will fast become an integral and permanent part of real estate marketing before we realize it!

What does this mean for landlords? 

Prospective renters are now viewing and shortlisting properties from their screens, making “screen appeal” a crucial factor to promote your rental property. You want your offer to stand out where the prospective tenants are: online.

In this article, we’ll go through the ways to increase your property’s screen appeal, write an effective ad online, and list your properties where tenants are most likely to find them.

Increase screen appeal with noticeable features

First, you need to make your rental look impressive in photos. To do this, invest in features that will stand out in photos—even if the prospect browses on their tiny phone screens. 

These are the things that will make a huge difference in digital listings:

  1. Sparkling kitchens with shiny appliances, glossy countertops, and newly-painted walls and cupboards
  2. Spotless bathrooms with new showerheads, clean mirrors, and re-grouted tiles
  3. Fresh blinds and curtains without any mold or grime that are updated to fit the aesthetic of the property
  4. Blemish-free walls freshly painted with a color that makes the room look bigger, brighter, and homier
  5. Brand-new fixtures everywhere—from light switches to faucets to doorknobs and fly screens
  6. Clean carpets that even look like they smell great
  7. Bright lights in every room to make the rental property feel new, and more importantly, show that you’re confident enough to put everything in the spotlight

Make sure that you use a camera that does your rental justice! None of the spectacular features you updated and cleaned will be seen if you use the front camera of your beat-up phone. If you need to hire a photographer for decent equipment, it’s worth the one-time payment to get a lifetime of great photos for your listing. 

Write an effective ad that highlights relevant details

Once you’ve updated your rentals with photogenic features, you need to post them on digital platforms. But what do you say? How do you write an effective ad that attracts your tenant pool? 

Here are the important factors to focus on:

  1. Write a great headline. Rentalutions’ formula suggests including the key information tenants look for (e.g., number of rooms or location) plus one feature that makes your rental unique.
  2. Use professional word choices that add value to your listing, as long as they’re an accurate description of your property. You want to avoid generic words such as “great” and “nice”, instead, choose words like: upgraded, spacious, tasteful, landscaped, modern, luxurious, and charming.
  3. Add more information on the key features. Knowing what tenants want (as you should), make sure to highlight these features in your ad. Are you expecting to attract tenants who put importance on parking spaces, walkability, nearby supermarkets, or proximity to a great school? Your copy should indicate that.
  4. Add detailed property descriptions. Similarly, also indicate what the tenants will want from the property itself. How many rooms, floors, and bathrooms? Will they be attracted to a lush backyard or extra storage areas? Flesh out all of the important details to attract tenants.

Lastly, prove what you said with great photos! When you use great photos to compliment everything that you verbally promoted on your listing, your screen appeal will skyrocket. This is where the prospective tenants should go “Wow! They weren’t kidding!”

List your rental on industry-popular websites

Armed with your impressive photos and well-written ad content, it’s time to post your listing where it matters. Most people are baffled by how many options there are to list online, especially since there isn’t a one-stop-shop solution that posts to all the rental listing sites. 

Zillow—the favorite of most landlords—allows you to create detailed listings that they’ll syndicate out to 26 partner sites (including Trulia, Hotpads, and MSN Real Estate), but it still doesn’t cover all of the sites available.

To get started, check these sites that are known to be effective and user-friendly:

  1. Zillow
  2. Trulia
  3. Hotpads
  4. Craigslist
  5. Facebook

Apart from those, you can also consider these lesser-known platforms:

  1. Apartments.com
  2. Apartment Finder
  3. Apartment Guide
  4. Apartment Home Living
  5. Apartment List
  6. Backpage
  7. Byowner.com
  8. Cozy
  9. Doorsteps
  10. Move
  11. My New Place
  12. Nextdoor.com
  13. Oodle
  14. Realrentals.com
  15. Realtor.com
  16. Rent.com
  17. Rentals.com
  18. Rentdigs.com
  19. Rentlinx
  20. Saletraderent.com
  21. Sublet.com
  22. Walk Score
  23. Zumper

All of these websites allow you to post for free. You just need to do some research and decide which platform enables you to attract the tenants that you want. For more details on the sites we mentioned above, check Smart Move and Landlordology.

Conclusion

Technological development waits for no one. In order to keep up and remain competitive in the rental property business, it’s time to level up with online marketing!

The steps are easy enough—simply increase your property’s screen appeal, write an effective ad describing the best parts of your property, and list them on websites where tenants are likely to browse for new homes.

Any other tips on how to market rentals online? Where are your rentals listed so far?

Image courtesy of Joshua Miranda

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