Forget what Real Estate Agents are SELLING * Ask what Property Managers are RENTING
A prospective client/owner call over the weekend got me thinking about who purchases real estate as an investment in an area they have never been to and know virtually nothing about.
The web allows us to research a lot of information and a call from a CA investor who has purchased 4 units in a converted apt building at almost $1/4 million per unit demonstrate my point.
This investor did talk to real estate agents, most with the company selling the units for the building owner/converter/developer. With a few clicks of the mouse, he could have talked to a local rental property manager about the RENTAL PROSPECTS for his new units.
Unfortunately, he got to me too late for me to give him the 'facts of life' on his new investment properties.
Had he called me BEFORE he purchased units which are essentially 20+ years old, I would have advised him to purchase a NEW home (SFR) in a desirable area like Lake Monticello with his funds. He would get a NEW unit with few repair hassles that appeal to more prospective residents and which will provide greater potential for appreciation AND increased rental income.
Had he talked to me BEFORE he purchased 4 IDENTICAL units, I would have suggested he purchase 2 NEWER SFRs in different areas with good schools. Lake Monticello, Forest Lakes, Northern Albemarle/Greene counties. These are the areas where there are new businesses * commercial building at the ZionXroads area of Louisa county 10 minutes from Lake Monticello makes it an ideal area for families to reside. Additionally Lake Monticello is equi-distant between Charlottesville/UVA and the west end of Richmond/Henrico area. The NGIC has had its plans approved to double the size of the facility which will bring 2,000 more families into the Forest Lakes, Hollymead Town Center, Greene county areas. Those "new hires" will be arriving within the next 6 to 8 months and the facility will rent temporary space until their facility is completed.
He now has 4 units that each rent in the $1,000 range in an area that is overrun with similar properties * approx 3,000 by last count with new coming online daily. The units are not attractive to UVa undergraduate residents as they are too small and too far from the "grounds"(campus). The units are rented to graduate school residents and employees of the UVa Medical Center and because of the sheer number of similar available rental units, the prospects of increasing the rent for the next 3 to 5 years is not possible until these units are absorbed into the rental market. Keeping the units rented will be costly using print media and individual owners without access to the local Realtor MLS, a national rental website, or as a member of the local apt association will be at a disadvantage so they will take prospects on a first-come, first-served basis. The entire property will suffer from poor resident selection which does not happen in SFRs.
The GOOD NEWS is that I was able to refer him to a team of local property managers who are familiar with the local rental market for "converted rental units" and whose company is a member of the local apt association and which has a state of the art website featuring interior photos and floor plans. I turned them on to posting listings on Craigslist and they have been successful in rental units through this "first contact" source.
