Location: The Secret to Making Your Rental Property Work for You
October 18, 2017 / by Brent Silberbauer
You have probably heard that there are three rules to real estate: Location, Location, Location. The same is true with where you buy your Chico or Redding rental property real estate. When deciding how much to charge for rent or where you can buy a great rental property you need to first look at location.
Why Location Matters
We live in an era of convenience. We don’t have to leave our house to rent movies anymore, we have the world’s information on our smart phones, and we can keep up with friends and family on social media. We value things being quick and easy, and the same is true with where we live.
If your Chico or Redding rental property is close to a college, large business with thousands of employees, or near a vibrant downtown you’re in luck! Nobody wants to drive an hour to work, or 20 minutes to the grocery store. If you can find a rental property where your residents can walk to work, school, or some great amenity in your city then you’ll be able to charge a premium rent.
The Type of Marketing is Important
Our company manages small homes, but we also manage large apartment complexes. Earlier this year we had just built some brand-new luxury apartments. Overall, they are very nice. They’re spacious, luxury, high-end apartments with a lot of amenities. The property has two pools, a lighted tennis court, clubhouse, large grassy areas with mature trees, and even a volleyball court. This place is ideal!
There was only one problem – location. The property was built on some land that our company owned, but the land was directly behind another property. The new luxury apartment complex is completely invisible from the road. If you drove by it you would never know it was there.
So, it was no surprise that when we went to lease up the property we didn’t have a whole lot of leads. There were a ton of apartments, but because the location was hidden, nobody really knew about it. We needed to spend thousands of dollars on advertising. We created large ten-foot-wide signs advertising the luxury apartments, we did paid social media advertising campaigns, we hired sign shakers, we put out balloons on the busy street near the entrance, and held weekly open houses.
With all of the time, energy, and money that we were spending on marketing, the lease up process was slow. We had to start giving half off the first month’s rent, incentivizing referral bonuses to people who referred friends and family, and eventually, after about 4 months we got the apartment leased up.
Let’s contrast that story with another lease up story. We just got the management contract on a smaller 14-unit rental property on a very busy street. We prepared the owner to have to spend a lot of money on marketing the property online, having large signage, and a social media campaign. The owner was very impressed with our elaborate marketing strategy, but he never gave us a single dollar for advertising. So, all we could do is put up a small “For Rent” yard sign out in front of the complex.
This particular Chico rental property was on a very busy street so apparently that was all the marketing strategy we needed. As soon as we put that single For Rent sign out there we were inundated with phone calls asking about the property. We raised the proforma rents he had on the property close to 10% and had a line of people waiting for them. There was no pool, no clubhouse, no large grassy area, and definitely no volleyball court. The moral of the story? If you’re on a busy street, or a street with a lot of traffic, this could be a huge advantage for you.
Schools Are a Big Deal
In some cities, parents will sacrifice a lot to get their kids into a school with a great reputation. This is something you’re going to want to research when choosing a Chico rental property. I have had a number of phone calls this year from parents directly asking me, “do you have anything in this school district.” They don’t ask any questions about how new the homes are or how large, they just want to know if we have anything in the school district. When we answer in the affirmative, they want to move in ASAP and will pay a premium rent to do so.
Whether you’re thinking about what to charge for rent or are considering purchasing a rental property, there will be no single factor that will affect the property more than location. Make your property work for you by utilizing your location - and consider hiring a rental property management company.
Topics: Residential Property Management, Rental Property Tips