Know Your Buyers: My $2,700 Mistake

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One of my rentals is back on the market. Last time, it took me three months to find a tenant. That’s because I made a crucial error which cost me $2,700 in lost revenue.

Know Your Buyers

You see, if I needed to rent a home, I’d check Craigslist. It’s the only place I’d search. I wouldn’t squint my eyes to read tiny, grainy black-and-white boxes in the Classified section of the newspaper. (Remember printed newspapers?)

My friends would do the same. We’re young and tech-savvy.

I’m so attached to my Internet-driven lifestyle that I carry my assumptions across borders. When I traveled through Australia for 10 months, my first two questions to my local hosts in Perth were “What’s your wireless password, and what’s the Aussie version of Craigslist?”

The answer: a website called Gumtree. I used the site to buy a car, camping gear, and a wetsuit. Then I used the website to find rideshare buddies who would split the cost of gas (or as it’s called there, “petrol,” which sounds more dignified.)

If Craigslist/Gumtree didn’t work out, I’d search eBay or Amazon or some other website. It would never occur to me to check newspaper ads.

My assumptions worked across international borders. But they failed to translate across the borders of Atlanta neighborhoods.

30 Minutes Apart. Worlds Away.

The tenants who live in my Midtown, Atlanta property — a “lifestyle” spot, walking distance to yoga studios, martini bars and dog parks — feel the same way. When I post an ad on Craigslist, my Inbox is overflowing within 30 minutes.

So when I bought a $21,000 house situated in a low-income neighborhood (duh, the houses sell for $21,000), I should have considered that my target tenant might not be as enamored with the digital age as I am.

But I didn’t. I thought about where I — Paula Pant — would search for houses. I didn’t think about where my target client would search for houses.

As a result, I spent months posting ad after ad on Craigslist. I’d get no response. I’d delete the ad, write a better one, and post it fresh. No response.

I doubled-down my digital efforts. I created a website displaying beautiful photos of the house. I linked the Craigslist ads to the website.

No response.

I created a “virtual video tour” of the house, uploaded it onto YouTube, and embedded the video on the website.

No response.

I posted “For Rent” ads on other websites: Zillow, Redfin, Trulia.

No response.

I lowered the rent by $100 a month, and repeated everything I described above.

No response. Not one single email.

At this point I was nearly tearing my hair out. Two months had passed by, and with it, $1,800 in potential rent had evaporated. This was becoming an expensive experiment.

I went to a landlord’s meetup (which I found online) and relayed my issue. The other landlords in the room, the ones with experience renting in that neighborhood, looked at me like I was an imbecile.

“Have you tried putting an ad in the newspaper?”

I doubted it would work, but I was willing to try anything. I contacted the Atlanta Journal-Constitution and asked about their Classified ad prices. It cost $50 to place an online ad and $175 to run a printed ad.

Being prone to frugality, I chose the online ad, a decision that was penny-wise and pound-foolish. Then I waited by a phone that never rang.

I had now entered the third month of vacancy. $2,700 in lost rent had slipped through my fingers. Time to bite the bullet.

I called the Atlanta Journal-Constitution again, dictated the ad over the phone, and paid $175 for a two-week print run.

Suddenly, my phone wouldn’t stop ringing. I found the golden ticket. I found a tenant within two weeks.

****

That happened a year ago. The tenant is perfect: clean, quiet, pays rent on time. His job is requiring him to move. I’m happy that he got a promotion, but of course I’m sad to see him go.

This time, I placed an ad in the newspaper the moment he told me he was leaving. Just for old time’s sake, I also ran an ad on Craigslist. I figured I’d double-check my assumptions.

The experiment is simple: The Craigslist ad contains my email address. The newspaper ad contains my phone number. Guess how I’ve gotten contacted 100 percent of the time? :-)

****

Moral of the story? Your personal preferences don’t matter. This ain’t about you. It’s about THEM — your target audience. Know what THEY read. Know what THEY care about. Know what they dream about, what frustrates them, and what motivates them.

Master that, and you might end up $2,700 richer.




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28 Responses to “Know Your Buyers: My $2,700 Mistake”

  1. Pauline
    23. Jan, 2013 at 12:52 pm #

    I am interested in what kind of tenant you got, does he not check the internet often, or for rentals, or had he just begun his search by buying a paper?
    Living abroad I prefer to find my tenants online (on gumtree generally) since I want them to use email with me and be reactive if something is wrong or they need to give notice.
    I put my flat for sale on the paper and it brought a lot of interest, the buyer ended up being an online lead but the paper was surprisingly strong in generating leads.

    • Afford Anything
      23. Jan, 2013 at 5:14 pm #

      @Pauline — The tenant doesn’t check the internet at all. As far as I’m aware, I don’t think he even has an email account.

      If I were overseas, I could definitely see the value in having a tenant that you can communicate with by email. In this particular neighborhood, that type of tenant may be tough to find. As an alternative, I’d probably have a Google Voice phone number where they could leave me messages, and then I’d call them back via Skype or Google Voice. Or I’d just hand everything to a property manager.

      • Jane Savers @ The Money Puzzle
        23. Jan, 2013 at 11:42 pm #

        I hope you use some sort of high tech tenant search to find out who has been a bad tenant in the past.

        I rented a room in my home to a student for 1 semester last year and I got a lot of very strange people contacting me. I was very happy to have used kijiji, a free online advertising site in Canada, to post my advertisement. They provided a intermediary email account so that I could communicate (weed out the wildly inapropriate clients and all the people with cats or rabbits) without giving out my email address or phone number.

    • valleycat1
      25. Feb, 2013 at 11:04 am #

      When I saw that the rental house in this instance is in a poorer section of town, I could immediately see the problem with internet only ads. The people who live in the area probably don’t have access to the internet (because they can’t afford it) or have to make a huge effort to get online. Likewise, if your target tenants are older retirees, they also would be more likely to use traditional listing sources such as classified ads or rental agents.

  2. Emily @ evolvingPF
    23. Jan, 2013 at 1:08 pm #

    That’s a crazy story. I would have made the same mistake. Good thing you finally accessed your network to find the solution.

  3. Renee Fortin
    23. Jan, 2013 at 1:11 pm #

    This reminds me of the post where you mentioned painting/decorating your apartments in you personal color preferences. Removing ourselves from the situation definitely not the first to come to mind, especially when money is involved.

    • Afford Anything
      23. Jan, 2013 at 5:10 pm #

      @Renee — Great observation. I was thinking about that post, too, when I wrote this. That same lesson keeps repeating itself. Will once told me that life hands you the same lesson, again and again, until you learn it. I guess this one was my second dose. :-) (For the sake of other readers — this is the post we’re talking about.)

  4. Megan
    23. Jan, 2013 at 1:14 pm #

    I’m a new real estate agent and when my partner suggested using newspaper ads to promote our listings, I had to laugh, but in the market we’re selling, it’s actually been very useful and we’ve gotten not just people calling on the properties, but other homeowners who want to sell with us now.

    • Afford Anything
      23. Jan, 2013 at 5:19 pm #

      @Megan – That’s fantastic! As an agent, I’m sure you understand the importance of knowing a particular real estate market. Each neighborhood has its own “culture” or “habits” or “ways of doing things” — whatever you want to call it. Sometimes it’s subtle, but it’s there.

      That’s why I love experimenting and testing ideas. An untested idea never goes anywhere. But a tested idea might surprise you with more success than you imagined …

  5. Tisha Johnson
    23. Jan, 2013 at 1:51 pm #

    Very insightful. Thanks!

  6. Paul Latta
    23. Jan, 2013 at 3:20 pm #

    Paula,
    Another great and useful post that applies to any business. I’m glad you figured it out and were able to rent to a great tenant. Having been in the business of renting out properties in less prosperous areas the phrase “know your buyers” (i.e. renters)is great advice on many levels. I learned to perform a proper and full background check on prospective renters after a freshly renovated home was destroyed by my new tenants. I know you know this but I add it here for your readers.

    • Afford Anything
      23. Jan, 2013 at 5:08 pm #

      @Paul — Ouch, sorry to hear about that. I’ve been lucky so far with my tenants. I know that almost every landlord has some type of horror story, and (eventually) mine will probably come, too. So far, though, so good. :-)

  7. jlcollinsnh
    23. Jan, 2013 at 7:09 pm #

    Great post Paula….

    not only in the important lesson learned and how you arrived at the solution, but in the elegance of your story telling.

    Funny, well paced and very well written. Great read even for those not invested in RE.

  8. Mrs. Pop @ Planting Our Pennies
    23. Jan, 2013 at 7:17 pm #

    We seem to get our best tenants either through direct referrals or through flyers that we put up in the laundry facilities at the nearby university. Kids waiting for the communal dryers are definitely enamored by the thought of their own washer-dryer in their apt!
    Craigslist, not so much. Which always struck me as odd since that’s how I found every single place I ever rented! Our callers from Craigslist are definitely not as reliable, and their first question is usually, “what’s the minimum cost to move in” instead of “what other amenities does it have besides the washer/dryer?”
    Know thy market, I guess…

  9. Kathleen, Frugal Portland
    23. Jan, 2013 at 8:00 pm #

    Great lesson to learn, and if it only cost you $2700, then it was worthwhile. Now you’ll ask yourself every time, “am I doing what I want or am I doing what my customers want?”

  10. Canadian Budget Binder
    23. Jan, 2013 at 11:24 pm #

    It’s true that we are turning our heads to print and are glued to what’s happening on-line. We still read the ads in the paper when they come but you hardly see any classifieds anymore. I remember asking myself once, “why are people still using the newspaper” now I know. Not everyone has a computer or uses one. My mum and dad don’t even know how to turn one on. Think outside the box. Smart!

  11. Little House
    24. Jan, 2013 at 9:49 am #

    That’s a very good point. I think it’s easy to assume that everyone is just like yourself, then you realize that’s not at all the case. At least this time around, you know how to advertise the rental. ;)

  12. Brian
    24. Jan, 2013 at 11:59 pm #

    Facinating – I never considered that newspaper ads would be more effective in certain neighborhoods. Luckily we own in an area of the city that we’ve always been able to use craigslist quite effectively.

  13. Sandy
    26. Jan, 2013 at 1:58 pm #

    Paula,

    Man oh man as I was reading this I was nodding my head. I made the SAME mistake with my last property. I could NOT understand what happened until I realized that I made the same mistake. Better to spend the money on the newspaper than to have the house sit empty for months!

  14. Sandy
    27. Jan, 2013 at 10:52 am #

    If I had a house that I wanted to rent, I would Always place an ad in the daily newspaper AND on Craigslist simultaneously. I don’t understand why you didn’t get this? You want to saturate the market, right? Anywhere USA, and I would post 2 ads simultaneously, period. Sometimes people over-analyze things and can’t see the trees through the forest. (If this was mentioned in earlier comments, I apologize – don’t have the time to read them).

  15. Alex
    27. Jan, 2013 at 11:08 pm #

    It really is interesting how we get our “digital blinders” on. I’m glad you found a tenant!

  16. Jason Hull
    28. Jan, 2013 at 2:03 pm #

    Holy cow, your post reminds me of the first fixer-upper I bought. It was a foreclosure in a pretty seedy part of town (a “historic renovation district”). It was strategically located for all sorts of narcotics activities, so one of my partners let her husband use the place as a stakeout location for their narc raids.

    I think it would have been fine, but we brought in a contractor who wanted to turn the darn place into the Taj Mahal. We wound up pumping much more money into the place through him than we spent paying for it, and while it would have been a very nice place in a different neighborhood, all it wound up doing was sticking out like a sore thumb in the neighborhood where it was located.

    Why?

    Because we didn’t consider the occupants. We could have provided a clean, safe, sturdy house to a family that wanted a reasonable place and wanted to be treated respectfully and could have done it for MUCH less than we wound up sinking into it.

    A five digit lesson learned.

    One other thing to consider is if you’re going to list it or use a property manager, get one who knows that neighborhood. That person is going to be much more likely to know how and where to reach people who want to live in that neighborhood than you are.

  17. Lee
    29. Jan, 2013 at 3:10 am #

    I made a similar mistake with one of my rentals… except mine had to do with pricing. I was being greedy and trying to hold out for an additional $50-$75 per month… well, the unit went empty for 2 months, and I had to settle for the lower amount anyway. And, the tenant I ended up with wasn’t that good. If I had taken one of the first tenants at the ending price, I wouldn’t have missed out on the two months’ rent and maybe I wouldn’t have ended up with a lemon of a tenant. Lesson learned!

  18. Monica Toress
    29. Jan, 2013 at 9:15 am #

    Hey, Paula, great post with a great moral. I guess it wouldn’t hurt to post an online and a printed ad at the same time just so you can target more people. I wouldn’t worry about the money you’ve lost too much because after all it’s a lesson learned.

  19. sylvia
    01. Feb, 2013 at 3:06 pm #

    Thank you for the resources, the 1% and the cap rate calculations. The neighborhood scout website is very useful too.

    thanks

  20. Jules@Faithful With a Few
    20. Feb, 2013 at 10:34 am #

    What a great article! It’s so crazy how we miss the obvious sometimes. Looking at the audience we are trying to reach is very important. Glad u learned your lesson:)

  21. Heather near Atlanta
    23. Feb, 2013 at 7:10 am #

    Great writing, and pacing, and point!

  22. Kendal
    24. Apr, 2013 at 2:32 pm #

    Wow. Now I’m going to remember that if/when I get into real estate!

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