A tenant recently moved out of one of my single-family rental properties.
This particular rental property is a 3 bedroom/1.5 bath colonial. The home is on a slab and doesn’t have a basement. It also doesn’t have a garage. And finally, it doesn’t have air conditioning. The home is a nice size and it’s located about 5 minutes from my house, making it a lot easier to manage.
This home is my ideal single-family rental property because it’s simple and easy to manage. It also eliminates many maintenance and repair issues. I don’t have worry about damp basements. I don’t have to worry about garage door problems or the air conditioning not working.
Because the home doesn’t have the basement, garage and air conditioning, I was able to purchase the home at a very attractive price. I used these “concerns” to my advantage when negotiating the purchase. These “concerns” actually make my home easier to manage and weren’t really concerns at all. I’m not going to be living there, unless my wife kicks me out. 🙁
When I heard the tenant was moving, I spent 10 minutes studying the current supply of rental homes. I quickly noticed that there weren’t many homes for rent. So I decided to raise my rental rate by 100 a month for this home.
I posted the home for rent on Zillow.com at the higher monthly rental rate and here’s one of the first emails I received:
After reading this email, I started to wonder if I should lower my rent for the home? I decided to just wait a few more days and see how my overall response was from other perspective tenants.
I ended up getting so many calls and emails that I had to take the Zillow post down the next morning. I actually realized that my rental price was too low.
I’m not sure who this prospective tenant thought their email was going to, but it came to me! I didn’t bother replying. If I were to reply, here’s what I would have written:
“The price is determined by the market place. Unfortunately, there aren’t many other homes available for rent in this area. This lack of supply increases the demand. More demand obviously means higher rental rates. The owner of the property doesn’t set the rent rate. The people looking to rent homes in this area are the ones who set the rental rates. If you want to find a home with a lower monthly rent, look for areas where they have a large supply of available rental homes.”
This is the reality of ALL markets. I realize this person doesn’t like this reality, but it-is-what-it-is. She needs to think accurately and realize she has two choices:
1. Look for homes in other areas that meet her price parameters.
2. Increase her income so that she can afford the prevailing rental rates in the area where she wants to live.
Her third choice, which she’ll never consider, is to figure out a way to buy a rental property in this particular area. She obviously can see how profitable these rental homes are based upon her email, yet she doesn’t think about profiting from this situation. The home across the street from my property is for sale at around $100,000. It would provide a very attractive monthly profit for her.
Why am I sharing this?
Cuz it highlights something I’ve written about many times before…
When you see someone doing something that’s (very) profitable, you should figure out a way to copy them.
A great example of this might be for you to copy my membership business! 🙂
Take a second and think about all of the smart people and businesses who have subscription based businesses. Businesses that provide automatic recurring monthly income. Really, take a minute and make a list of all of businesses that use this business model.
Why do you think these businesses and entrepreneurs focus on this particular business model?
As luck would have it, I can help you start your own subscription based membership! If you hustle, you can have your new membership up and running this month.
Study this new report to find out how:
I’ll help you copy this profitable strategy for creating automatic recurring income.