I was asked the other day how the wintertime is affecting our rental rates. Even though we are entering the late fall period, we are still renting all of our properties without a problem, so traffic is still there. Instead of averaging 21 days on market in the summer, we are now at around 32 days, however.
A few of the added days on market could be eliminated by us being stricter with our owners on price competitiveness. One method that works quite well is to have a loss-leader rate in your advertising (e.g. $900 for 6 months), where you can negotiate a higher lease amount for the additional months. This is a lot better than waiting 2 months to get your desired $1,100.
The goal is to get eyeballs and calls on YOUR ad... not the others. Once you have a conversation going, the deal is typically yours.
Scott
Tuesday, December 23, 2008
Wednesday, December 10, 2008
Investor Competition Heating Up - Time for Turn-key Rentals?
Competition for Denver residential single-family investment homes, at least at the wholesale level, has picked up dramatically in the past 2 months. We understand this is due largely to a massive amount of out-of-state money moving in, making cash offers, sight unseen with no inspection contingencies. It is very hard to compete with this, though Echo Summit is still having success via its network of investors.
Given this phase of the market, it is probably time to start thinking about purchasing turn-key rental propertes, and aiming for cash flow, rather than short-term cash-on-cash return. Obviously, almost any property held for a minimum of 5 years will produce some form of cash-cash return based on appreciation alone. What I am a suggesting is to focus away from the masses who are hoping for quick returns on a wholesale flip, and target areas/property types that they are not.
Without getting into the boonies, I recommend focusing on transportation corridors (SSE is off the charts) and anything feeding into the Cherry Creek School District (for those of you who don't know what bond proposals 3a and 3B were for in recent elections... study up. They passed, and will have significance for property valuationn in the coming years).
Scott
Given this phase of the market, it is probably time to start thinking about purchasing turn-key rental propertes, and aiming for cash flow, rather than short-term cash-on-cash return. Obviously, almost any property held for a minimum of 5 years will produce some form of cash-cash return based on appreciation alone. What I am a suggesting is to focus away from the masses who are hoping for quick returns on a wholesale flip, and target areas/property types that they are not.
Without getting into the boonies, I recommend focusing on transportation corridors (SSE is off the charts) and anything feeding into the Cherry Creek School District (for those of you who don't know what bond proposals 3a and 3B were for in recent elections... study up. They passed, and will have significance for property valuationn in the coming years).
Scott
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