Cash Flow Friday Tip #7: How to effectively test the market demand for a rental property before ever purchasing it

NOLOstudios-8In this week’s Cash Flow Friday tip I’m going to go into detail on how you can use Craigslist as a tool to test a local rental market and the overall demand for that particular investment property before ever acquiring it. I mean, who would want to know how much demand there will be for a rental unit and how much you’ll be able to get for it before ever buying it. Forget proforma’s that the turnkey operators try to sell you on and why would you ever rely solely on the realtors opinion on what you’ll be able to rent the unit for. Let the facts speak for themselves.

Now some of you might feel that this technique is a little misleading or unethical and you’re completely entitled to your opinion. My goal when buying a mobile home park is to ensure we’re buying in an area that has sufficient demand for the type of property I’m offering. Take the guess work out of the equation and let the market tell you whether or not the property you’re considering buying is in high demand and will rent fast.

#1: Write a description for the property and be specific as possible without mentioning the address or neighborhood it’s located in, since after all you don’t own it yet. Be sure to include all the relevant facts: schools, beds/baths, sq. ft., age, upgrades, monthly rent $, etc

#2: Search google images and try and locate a similar looking exterior image (don’t use an image of the exact property you’re looking to buy) as well as a few interior images. Again, don’t go and use the exact images of the property you’re looking to buy. Using similar images which you grab from the web will do the job and won’t get you in hot water.

# 3: Create a free google voice phone number which is where you’ll be forwarding the calls to. Setup a voicemail message with a basic greeting so that the callers think they’re calling an individual. If you’re running more than 1 test ad at a time (maybe you have more than 1 property or are testing different markets) then you can use an app called burner which will allow you to create multiple temporary numbers with VM’s for each for up to 30 days. We use this when we are looking at multiple parks and need to run numerous test ads to determine demand

#4: Post the CL ad and be sure to include the phone number to your google voice or burner app.

#5: Sit back and see how many calls come in. I personally like to see at least 5-6 calls per day for a specific property, but you’ll need to figure out what the right demand for you is. If you’re in a small market then maybe that number is 2-3 calls per day.

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