Houston rental property owners are reporting weeks of no showings, or the wrong leads, while the mortgage payment is pulling from their account every month. We speak to many of the Houston rental property owners with rental properties sitting vacant and we find that most of the situations could have been avoided by properly marketing the property first.
If you are a Houston landlord, reading this, then you know all too well the feeling of having a rental property sit empty while the mortgage payments continue to pull from your account. We speak to many landlords every week who are experiencing the exact same situation with their rental property, and it is our experience that the majority of these vacancies are due to the property not being correctly marketed.
The post outlines the real ways to increase the speed of lease up for a rental property, exposes common mistakes that are costing landlords thousands of dollars in lost rental income and how to position a rental property to garner interest from the right type of tenants. Whether you're renting out a townhome in Rice Military, a single family home in Pearland or a high-rise condo near the Galleria this post is for you.
Your Listing Photos Are Doing More Damage Than You Think
A number of our clients have listed a property in very good condition and gotten very few showings. Then we take some professional photos of the property and put the listing back on the market and within 48 hours the phone starts ringing. It's shocking.
Professional photography of a property increases rent up to 32% above comparable properties photographed with smart phone cameras according to CoStar statistics. In Houston, where the average lease-up rate is approximately $2,000 per month for a single family home or townhouse, increasing lease-up by two weeks could result in an additional $1,000 in rent prior to signing lease agreement. That's the value of high quality photography of a property for lease. Typically priced at $100-$200 for entire property, most owners would agree to that cost to ensure highest and best exposure of property for lease to qualified potential renters.
For example, a single-family home listed by one of our clients in Pearland (approximately 30 miles south of downtown Houston) had been on the market for 45 days with virtually no serious inquiries from serious potential renters. As it turned out, he had listed the home with poor phone quality photos and a plain vanilla Craigslist post. After we provided high quality photos and we re-listed the home on Zillow, Zumper and Apartments.com (in addition to Craigslist) the home was rented in 18 days at 100% of list price.
Light, angles, and how your property's interior photos read on a screen in a matter of seconds for potential renters.
Where Your Listing Lives Matters As Much As How It Looks
Zillow, Zumper and Apartments.com account for over 80% of online renters searching for rental properties across the US, followed by other websites like Trulia.com, Rent.com and Craigslist.com. If your rental property does not get syndicated across these sites to list on, you will get very few views of potential tenants to apply for your rental property for showings.
We still hear from owners who rely on Craigslist, a yard sign, or word of mouth. For some properties in some markets, that's fine. But in the Heights, Montrose, and EaDo, where your renter base is 25 to 35 years old and searching almost entirely online, a yard sign is basically decorative.
The Energy Corridor offers unique challenges for landlords seeking to fill rental properties. This part of Houston is home to many large corporate energy companies including Shell Oil, BP America and ConocoPhillips. In the 77077 and 77079 zip codes, many of the renters are in relocation status as employees of these large oil and gas companies. By including the proximity to these large employers in your listing copy, you can entice these relocation tenants to your rental properties. In contrast, many of the rental properties in the up and coming areas of Katy and Pearland are being filled by tenants who are filtering for properties near certain highways. This means that landlords must be sure to include in the listing copy the proximity to I-10 or Beltway 8 in order to make the first cut with potential renters.
Syndication across multiple platforms isn't optional. It's the baseline.
How Pricing Errors Can Cost You Thousands of Dollars Lost in Rental Income
Many owners set their rent price based on incorrect assumptions. In Houston, many owners incorrectly base the rent of their single family home on what a neighboring house is going for. Others base it off of what they saw Zillow list a comparable house for 6-12 months prior. Lastly, there are many who incorrectly believe that the market will pay a certain amount for their house because they believe it is worth it. In reality, rental pricing is specific to each neighborhood and even to each specific property.
The Houston area can be broken down into various neighborhoods and even smaller geographic boundaries within individual neighborhoods. A simple example is of a townhome in Rice Military (77007) that is renting for $2,400 per month. In contrast, another very similar property in Spring Branch (77055) is listed for $1,700 per month. One would lose a significant amount of money listing a property in a given geographic area at the average rent in the metro area as a whole. You would be similar to someone trying to do their taxes and trying to apply a broad range of averages across various categories that simply do not apply to your specific circumstances.
Overpricing your rental by as little as 10% will allow it to sit vacant for an additional 3-6 weeks. That's $1,500-3,000 in lost rent before you even start to think about lowering the price.
A comparative market analysis for a Spring Branch property that the owner had been trying to rent out for nearly two months at $2,050 per month found that had the owner priced the property at $1,750 per month, he would have had a qualified tenant under contract within three weeks.
Lastly, by lowering rent to chase a few leads you will end up killing your pricing strategy. By way of example, for every $150 that you lower your rental rate is over market you will lose $1,800 over the term of the 12-month lease while getting to fill up the property one week earlier. Fix the marketing strategy – don't fix the price by lowering it.
How Fast Landlords Respond To Rental Leads Determines Success
Lead Response is a huge factor in converting leads to applicants and closing rentals quickly. As reported by Zillow, a rental property that responds to a lead's inquiry within 1 hour is 7 times more likely to close that lead than a property that takes 24 hours to respond.
That same data point also hits differently as well as the fact that most self-managed landlords are leaving their work to answer rental inquiries between their dinner time and bedtime.
If you cannot respond to leads in an hour then someone else will be able to fill your rental property before you can.
Timing Your Listing Is An Underrated Edge
Houston's rental demand peaks between April and August, driven by school-year transitions and corporate relocations. Properties listed before Memorial Day consistently fill faster and often at stronger rents.
Owners who delay listing until September frequently sit vacant through the slower fall cycle. In a market where every week of vacancy costs around $500, that timing gap has a real dollar value attached to it.
Vacancies typically occur due to lease endings in late summer and it's wise to start listing a property 6-8 weeks prior to ending of current lease. Listings begun in late summer are typically filled by the time typical vacancy occurs in the fall and are often filled at better rates. Fall listings sit vacant longer due to slower tenant searching activities in the cooler weather and in turn can cost landlords approximately $500/week in lost revenue. Use our Vacancy Loss Calculator to see exactly what those empty weeks are costing you.
The Wrong Tenant Costs More Than a Long Vacancy
Days on market is one of the things that most owners worry about and can sometimes focus on at the expense of quality of the tenant placement. A placement that goes into a property and is evicted out a few months later, causes $3,200 of damage to a townhome in the Galleria area of Houston, and also leaves the owner with a couple of months of back rent has cost that owner far more than 2-3 months of vacancy on a rental property. And this is something that we deal with on a pretty regular basis.
The property owner of this Galleria area town home had typically screened tenants on a 'gut feel' basis. One of his placements had left the property after four months worth of damage ($3,200) and two months worth of unpaid rent. After we took over the management of the property, we implemented a strict screening process using the property management software, AppFolio. Using the verifications available on Pet Screening verified that the animals were suitable for rental property liability. His current placement is over a year young and could not be better. He is a quality tenant who has gone above and beyond to take care of the property.
More damage in rental properties come from wayward tenants then vacant houses! Aggressive screening of applicants, verification of actual income of applicant(s) and a complete background check(s) of all applicants for rental properties prior to leasing out the property(ies) for a longer period of time then normal will yield better results in the long run then hastily filling a vacancy with less stringent criteria for placement in rental properties.
However, we back our quality placement with a 9-month retention guarantee. Simply stated, if a tenant placed by us vacates before 9 months, we will waive our re-leasing fee in their void.
Your Listing Copy Is Probably Too Generic
"3 bed, 2 bath, available now" is not a listing. It's a placeholder.
Good listing copy tells a story that matches what the tenant in that specific submarket is actually looking for. Near the Medical Center (77025, 77030), healthcare workers are looking for short commute times. In Upper Kirby and West University, renters are looking for walkability and nearby restaurants. In Katy, families are asking about school districts and highway access.
Listings that get a lot of attention are written with the prospective tenant in mind. They detail the attributes of the rental property that prospective tenants are looking for in that submarket. In the Medical Center (77025, 77030) area, a placement listing would note that the Medical Center is close to this rental and would stress the proximity to this major hospital. A listing in Upper Kirby and West University Place would focus on proximity to local restaurants and shops, while listings in the Katy submarket would discuss the rental's proximity to a school and major highway(s).
Maintenance and Condition Still Drive First Impressions
A well-marketed dirty property doesn't rent. Simple.
First impressions can be short-lived. Before your tenant gives your property the once-over, the dirty, dusty details will be on full display. Therefore, renters form an immediate opinion as to whether they can be interested in a property prior to actually entering it for viewing. They will go to your property listing on-line and scroll through your photos. By then it is too late. Dirty, worn and lackluster photos can give a very negative impression and steer potential renters in the opposite direction. By not putting the proper work into preparing your rental prior to taking its photos, you can kiss your investment's potential return goodbye.
The work that you do before you put the property out for lease is what is going to get you that full asking price for the rental of your property.
Fill Vacancy Without Dropping Rent
If you put the work into your dirty properties and take great photos of them, then list your properties at the right time of year with descriptions of the submarket that the property is listed for, then you will get full asking price. Your vacant properties will lease in a matter of days. You will be one of the many successful single-family rental property owners in the Houston, TX area who consistently outperform the average vacancy rate for single-family rental properties in the Houston metro of 6-8%.
By controlling these variables, owners can perform consistently better than the Houston metro average vacancy rate of 6-8% for single-family rentals.
We can help diagnose why your rental is vacant. Contact us to get started.
FAQ
How long should it take to rent a property in Houston?
If your single-family rental property is sitting vacant for more than 60 days, chances are it has something to do with the listing. Was the price not quite right for the local competition? Were the photos of the interior not of high enough quality? Was the listing not being distributed to all of the proper websites where potential renters are searching for a place to live? Are you listing your rental at the right time of year for peak season? If the answer to any of these questions is no, then your rental is not going to lease as quickly as it could if the proper steps were being taken before the listing even went live.
Is it worth hiring a property management company just to find a tenant?
We can consider leasing-only your single family rental property. Our team of rental property marketing specialists handle the photos, property listing, showings, tenant screening and lease. Many single family rental property owners hire a property management company just to have someone to find a tenant for them as they know they will get a better property manager leasing their home than they would doing it themselves. Our leasing guarantee states if we don't find a tenant for your rental property within 60 days, we will waive your first month of management fees. You can learn more on our Leasing page.
What's the biggest marketing mistake Houston landlords make?
Overpricing is one of the biggest errors made by property owners however utilizing poor listing images is typically one of the faster ways for a listing to get dismissed by potential renters browsing listings online such as Zillow or Apartments.com. While a dark, poor quality image may get dismissed in a matter of seconds. Listings with professional images rent on average 2 – 3 weeks faster in the Houston rental market than those with subpar listing images.
Is Cutting the Rent to Fill a Vacancy Fast a Good Strategy?
Lowering your rental property price can actually backfire and result in less revenue in the long run. Of course there are circumstances in which lowering rent temporarily can result in more long-term profits. For example lowering the price of your rental by $150 per month to fill a vacancy in a month and a half instead of two months would cost $1,800 for the additional 6 months of a 12 month lease. All the while bringing in a tenant who is on the financial edge and can become just as big of a problem as a vacant property. Use our ROI Calculator to model how pricing decisions affect your annual returns.
Does location within Houston affect how I should market my rental?
Each area of the Houston metropolitan has specific characteristics that a landlord must include in the rental listing in order to garner sufficient leads. Rental properties that are located near major employers, (i.e. Energy Corridor) would mention said employment in the listing. In contrast, rental properties that are located in submarkets such as Katy or Pearland should highlight the property's proximity to major highways as well as the specific school district. In neighborhoods such as Montrose or EaDo, which are in close proximity to local amenities and stores, properties would receive more leads if the listing had higher quality interior photos and described the walkability of the property. This is in contrast to a generic listing that would receive minimal leads.
What happens if a placed tenant leaves early?
With AREA Texas, we waive the re-leasing fee for tenants placed by AREA Texas who vacate before 9 months. This is in line with our policy when it comes to our screening process for tenants. We strive to place the right tenant for your property to begin with, in order to avoid unnecessary costs of re-leasing when they do vacate. You can find answers to more common questions on our Owner FAQs page.
