If you’ve bought or looked into buying real estate within the last few years, I’m certain you’ve heard of properties selling for “Over-Asking Price.” But have you ever heard of properties RENTING for Over-Asking Price?
One city in Essex County that we have a few properties under management in is Irvington, NJ. If you’re not familiar with Irvington, it’s primarily a renter city and most streets are lined with multifamily houses that look similar to this one here that we manage.
The owner of this property brought us on for management in the fall of 2020 during the middle of the pandemic. At the time, the 1st floor apartment was vacant after just being renovated. Our team was excited to add value to this owner by placing a good tenant, but we were also very cautious. To give some background, during this time we were still under the Federal and State Eviction Moratoriums that had been in place since March. Landlords everywhere were put in a tight spot.
Sure, as a professional Property Management company, at Capital Street Management we have a system in place to thoroughly screen tenants. But during this time, there was a greater risk of selecting a tenant who was just coming from a situation where they hadn’t been paying their rent for months. Under normal circumstances a Landlord could file an eviction which would show up during the screening process. But with the New Jersey Eviction Moratorium in place most landlords with non-paying tenants were either not filing, or worst, wouldn’t mind giving misleading info just to get rid of their headache tenants. With all of this in mind we listed the property for rent and started the marketing process.
With this property being newly renovated the marketing aspect was cut out for us. We had the property cleaned, photos taken, floor plan drawn up, and filmed virtually. The floor plan and virtual tour really helped this listing because this wasn’t your average 1st floor apartment, it also included a liveable basement with a lot of extra space.
Side note: As you can see, the owner did a great job with this renovation and didn’t cut any corners. During the renovation they were able to cut their overhead for this property by adding electrical baseboard heating in each room. Prior to renovation, the owner was responsible for the heating bill for the property. Now their overhead would be significantly reduced.
With this being the first time that this property had been rented with the basement included, the owner wasn’t sure how much rent the apartment could demand. Based on other properties that we manage nearby and after checking market rents, we settled on $1,800/month.
The property was a hit. We had 74 inquiries, and 26 scheduled appointments during the 3 weeks it was listed. From all of this activity, not everyone showed up and some prospects even wanted to bargain for a lesser rent. Through all of this 1 prospect stood out the most. They requested a 10-month lease and had a corporate sponsor who would be paying their rent. After looking into the situation further we were able to speak directly with the sponsor and negotiate a $200 monthly premium due to the short stay request.
To some this may sound unbelievable but consider that this prospect was currently residing in a hotel on the sponsor’s dime while apartment searching. A month or 2 longer in that hotel would’ve equaled way more than the premium that we requested, and they were happy to pay it. The tenant ended up moving in about a week before the 1st of the month and our owner was able to receive interim rent on a prorated basis for those days as well.
Looking back, this was a great situation for all parties involved. The new tenants got to move into a freshly renovated apartment instead of spending the holidays in a hotel. The Owner of this property was able to rent their apartment for $200 more than they originally planned, and our team at Capital Street Management was able to provide enough value that we ended up covering our management fee with the additional premium that we were able to negotiate. All in the middle of the Pandemic and Eviction Moratorium.
If you’re a landlord local to Essex County, Union County, or a surrounding area here in New Jersey and you’re ready to trade your landlord title in and become a passive real estate investor, schedule a call to speak with our team. You can reach us by phone or on our website. I’m Albert with Capital Street Management. Thanks for reading this post.
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