Ask The Landlord Feature
Welcome to the first Ask The Landlord Post! After an informal survey the majority of readers of the Educated Landlord overwhelmingly preferred email/article format so this is where we’ll start.
It may evolve to the occasional video or audio file, but I’ll also include the answer in text to try and satisfy the majority. So let’s get started with our first question.
Our first question comes from Prit who’s located in the North Eastern part of the US. He is focusing on one specific area of rentals right now, garages and his plan is rather brilliant.
Prit negotiates with property owners to rent their garages and then sublets them to other individuals and in only his first month has six deals for garages in process. The beautiful part of this is the low point of entry.
If he can negotiate the garage for say $200 a month he may need to put $200 plus an equivalent deposit down so it’s $400 to acquire, then he needs to rent it out for $300 per month with a matching deposit and he is now $100 up per month.
I’ll ignore the deposits as they are basically cancelling each other out and aren’t profit, but on his $200 investment he is making $100 profit. That’s a 50% return on his investment which isn’t bad at all. If someone doesn’t have $10,000, $25,000 or more to put down to purchase a rental property this allows you to get your feet wet and learn some basics of Real Estate, contracts and rentals.
Now if you can get that garage for $100 a month and still rent it out for $300 that return gets even better. But there’s still challenges.
To make this really work you need to scale it up, you need solid contracts to protect yourself and you will also need insurance to cover your liabilities. These last two will eat into your profits, but as you scale the costs go down.
I can see Prit expanding this as he gains confidence and moving to potentially renting full properties and subletting and from there who knows. There’s lease options or rent to own situations which are similar, but on a bigger scale and even commercial opportunities. The sky could be the limit, but the important question for Prit is the focus of this article. So here it is.
What Are Ways I Can Market My Garage(s)?
To be successful in this venture one of Prit’s keys will be to have people ready to take his rental garages as quickly as he lines them up. If he secures a garage for June 1st, but doesn’t have a tenant until July 1st, it can take him two additional months to just break even.
If this is a once in a while occurrence it’s not bad, but if this happens on every unit or it takes even longer to fill, suddenly it’s not very profitable and becomes a huge headache. So you need to create a system to funnel interested parties to call you. you want to be come the GoTo Garage Guy!
So how do you do this? (and this is where everyone needs to pay attention as this doesn’t just apply to garages!)
First, Who Would Want To Rent A Garage?
You need to start thinking like your typical tenants. You need to find out who they are, where they hang out and make sure you’re there.
People who rent garages usually fall into a few categories. Many of them are handymen who need a place to work on their projects or they can be small business owners like plumbers, renovators or even landscapers to name a few that need storage space and lets not forget those weekend mechanics who want a place to tinker on their vehicles or their friends vehicles.
I suggested initially he start by doing online searches for garage rentals to see where people are already advertising garages. This also gives you a way to track current rental rates and availability.
With supply and demand prices can go up and down. With garages, especially in Northern areas, there is increased demand in the fall usually right after the first freeze or snowfall, then in the spring when outdoor conditions improve it slows down.
The rational is that it’s ok to work on your vehicle or store stuff outside in the warmer months, but once it starts getting colder it’s nice to have it indoors, especially if it’s a heated space!
Next targeted area would be the weekend mechanics or the guy who wants to store his precious vehicle during the off season (again back to the winter months).
For this you could contact local car clubs or even some of the car dealerships. I know one garage owner who rented out half of a garage to a vehicle owner who kept his collectible Porsche stored indoors in a heated space all winter and then took it out every weekend during the summer months just to drive.
You could also contact auto parts stores and see if they have bulletin boards where you could post you have garages available. Many weekend mechanics get a lot of flack from spouses for taking up the garage with their old vehicle, auto parts stores would be a great source of potential clients.
I personally rented a garage to a weekend mechanic who needed to get his vehicle off the street so he could really tear it apart, he found me on an online ad and was with me for four years until I recently sold the property. Once they get used to having it, it’s hard to give up.
Side Note – Prit already contacted a car club and they want him to come attend an event on the weekend. What if he not only got a new tenant, but also had a list of additional people who want a garage and would put a deposit down in advance so he can go find them a garage! He could have his funnel filled for the next half dozen garages
Let’s talk about small business owners now or trades people. Where do they congregate? This can depend on the type of business, but why not check union halls for plumbers, electricians and carpenters?
Also, how about plumbing and electrical distribution companies? If any of these have bulletin boards that allow you to post on them why not create a nice simple brochure to attract potential clients.
Small landscaping companies can use space as well. During the winter months they may want to store summer equipment and then in reverse during the summer. Most year round landscaping companies have snow removal services in the winter to keep busy so they need to store plows, shovels and items for extended periods.
I can’t think of where they may congregate but I know every spring I get all kinds of door hangers, flyers and brochures that appear at my house so why not start calling a few of them? The big guys can typically pony up the money for nice buildings and storage yards, but the smaller outfits need ot keep costs down and a garage may be just the ticket.
You Need To Think Further Outside The Box
By knowing who potential tenants are you can start approaching them before they even know they need you. With the car folks if you provide a good product and a good service word of mouth may be your big ticket.
If you believe you can get referrals, reward people!
Whether it’s $50 off the upcoming month for a referral that rents for a minimum six months or something more creative, if you get tied in with the right people you may have a constant stream of referrals. Maybe if you’re just focusing on car people you reward them with gift cards from select auto parts places.
Now you’re helping the auto parts place and they may be even more helpful going forward. Or perhaps just hearing why you are buying the gift cards is enough to start the conversation about what you’re doing. That conversation could open new doors and referrals!
Rules and regulations vary incredibly from city to city, district to district and state to state, so know your local rules before you go too far down this path.
There may be restrictions on what can be stored in a garage, what work can be done in a garage or even whether renting a garage itself is legal in your area. Knowing this in advance you save you considerable headaches.
This concludes my first Ask The Landlord post. Hopefully you found it interesting and you can see ways to apply some of this to your landlord business.
Maybe you don’t have a garage you rent, but instead a house or suite, knowing who is renting in the area or who your tenants could be makes it easier to market.
If you have any comments or feedback, I’d love to hear it! Leave me a comment at the very bottom of the page or you can use the handy form just below and I’ll receive the question via email!
But before you ask, I have a couple rules.
1. The question can’t be about specific rules or laws in your area, this is meant to help landlords around the world!
2. Specify whether I can use your name and/or where you are from in your question.