Note: I want to apologize beforehand to any Realtor who actually does a good job. I have received a couple emails about how to locate tenants and wanted to share my 18 years of property management experience with you. If you can locate good tenants in an efficient and cost-effective way, you can create a lot of wealth for you and your family. The internet in this regard has become the great equalizer
A fair assessment is about 3 out of every 4 agents don’t have enough experience and will probably never gain enough experience to develop themselves into the professionals they should become.Why People Hate Real Estate Agents (thebalance.com)
When finding tenants avoid Realtors; Bright MLS is a relic of the past
I tell you all this as someone who was a licensed Realtor/property manager from 2013 to earlier this year. Of course, if you or your family choose not to manage your properties you may need to use a Realtor, but be prepared to leave a lot of potential money on the table.
As a well-seasoned property manager, I have not used any Realtor services for locating tenants for my personal holdings in almost 10 years. They have become a costly middleman and there are a number of reasons why I do not recommend them:
–My local MLS system, Bright MLS, is a clunky, out-of-date relic that the Realtors must use to list their client’s rental property. As the years have gone by, Realtors have found it more effective to concurrently list on Zillow and Trulia. The Bright MLS system is functionally obsolete when trying to flesh out a fair rent as there are fewer comparables. Zillow is much more transparent and there is usually much more data in which to determine what to charge for rent.
-If you involve a Realtor agent in any capacity, you may be liable for up to one month’s worth of rent as a commission. You may actually get the tenant on your own, but that doesn’t matter. The Realtor gets his or her money. Since it’s a transaction-based business, the agent only cares about getting paid and will usually present the landlord with the first person who contacts the agent.
-The goal of the landlord is to minimize tenant turnover, but the Realtor agent makes more money when there is high tenant turnover. These two objectives often clash. The result is that Realtor leads are less likely to present the landlord with good, long-term tenants.
-Desperate Realtors scour Zillow rental listings trying to drum up business. They often present me with non-qualified candidates. I have learned my lesson and post on my Zillow and Trulia listings that I do not take any Realtor leads.
-Realtors are generally responsible for screening the tenant and they may have different criteria than you. The internet has services available for the landlord to more comprehensively screen candidates. My tenants pay for the screening at mysmartmove.com. The fees are nominal and you will be able to view a candidate’s detailed credit and criminal background reports, and discover any prior or current eviction proceedings.
–While Realtors generally advertise for the highest market rent available, and that may sound like the right way to maximize revenue, you may not make more money. If your tenants are paying top-of-the-market rent you will have higher turnover, your tenants will be less likely to take care of the premises, and you will receive more repair phone calls. Moreover, the best tenants seems to search for the best deals, because they know they can get them. Keep in mind that the Realtor is taking a chunk of that, so you need to stretch for higher rents when using one.
If you locate your own tenants you can save on commissions, pass it along to the tenant and make your management experience a much easier and profitable one. I generally charge 3% to 6% less than what the Realtors would charge, but I save so much more money, time, and aggravation on the back-end. I have less wear and tear on the units, lower turnover, higher quality tenants, and spend much less time with service calls.
Use Zillow and Trulia To generate more leads and it’s free
Best of all, it’s free!
Placing a rental listing on Zillow is very easy and straightforward. Zillow owns Trulia.com and hotpads.com and when a landlord lists a property on Zillow it is automatically uploaded to Trulia and Hotpads. Once Zillow verifies your ownership of your rental property (it asks a couple questions that only the owner would be able to answer) you are free to advertise as you see fit. You can upload up to 40 photos and can present it in any way you wish.
There are a number advantages to listing your property on Zillow vs. using a Realtor and Bright MLS:
–It’s free and easy to use! It is by far the most popular destination for prospective tenants looking for a great place to rent. These people usually do not want to live in rental apartment buildings. These places usually have higher crime rates and more loud residents. Moreover, rental apartment complexes cater to a transient crowd and many single female tenants feel less safe.
–Many qualified tenants do not want to use a Realtor. It is usually much easier to log on to Zillow, Trulia, or Hotpads and see what is available. These sites cater to individual landlords, and while the institutional landlords advertise heavily, many candidates prefer condos and single-family properties. This is where we come in.
–It has been my experience that I have always been able to get better qualified tenants through Zillow. In the Greater DC area I usually receive about 50-60 inquiries over a seven-day listing period. Granted, I get a lot of people who do not qualify, but they usually answer the questionnaire before submitting their request. Thus, I can immediately remove at least half from consideration. However, there are usually 4-5 qualified candidates who do request to see the property and in about a week I usually have a new tenant.
-Realtor rental listings on MLS can linger for a month or more. The Realtor has no sense of urgency to procure a tenant. Realtors don’t pay the mortgage, but they will get the commission. MLS is almost an anachronism. My experience with Bright MLS has been poor and would never recommend it to anyone. The Realtors are legally forced to use it. Because of Bright MLSs data hoarding and lack of traction, most Realtor listings end up on Zillow anyway.
-Zillow and MySmartMove.com offer tenant screening services that are free to the landlord. You get to see a candidate’s credit report and check for any criminal history and prior evictions. These services tap into a national database that makes for simple, quick, and comprehensive background screening. Best of all, these services will actually provide the landlord or property manager with a recommendation.
Successfully operating a portfolio of rental properties has never been easier. The internet has definitely made my property management job more manageable. Long gone are the days of placing ads in the Sunday Washington Post or the local military papers. There is absolutely no need to ever use a Realtor or Bright MLS again. They are just stumblingblocks to success. Cut out the middle man and keep more of what you earn.
Anyone can succeed being a landlord.