9 minute read
EDUCATE
TIPS & HOW-TOS
by Yardi Breeze
Are your rental listings attracting prospects? When you’re marketing your properties online, there are certain messages you want to avoid. There are also specific words that you might think will attract renters but can leave a negative impression on readers.
But we’re not going to simply tell you what not to do. We’ll round out the article with some tips on what you should say when marketing your properties online.
Messages to avoid in your online rental listing
DON’T ASSUME WHAT THE READER LIKES OR DISLIKES
“Our properties offer great throwback designs to a simpler time.”
Maybe your prospects and residents aren’t into old-fashioned décor. In other words, you’re accidentally telling them to move along and look for something else.
Instead, ask each prospect what they’re looking for, then highlight their interests throughout your communications, property tours, etc.
AVOID PUTTING DOWN YOUR COMPETITION
“We’re much more affordable than several other properties across the street.”
This is almost like giving free advertising to your competition. Wouldn’t you want to see if those higher-priced units come with bonus amenities that make the extra cost worth your while?
It’s also a bad look to be negative. Stick to marketing your own property and show everyone why they should rent with you. If you just renovated several vacant units while your competition lags behind, focus on how great your improvements are. Don’t even mention the folks “down the street.”
NEVER MAKE EXCUSES
“We haven’t had time to redo the carpeting, but that’s why this unit is such a great deal!”
If any aspect of your property isn’t up to snuff, make it a priority to renovate and improve those items. If you have photos that show old or ragged carpeting, for instance, explain that you have plans to change the carpeting before anyone moves in.
ONLY SAY YOU’LL DO SOMETHING OR PROVIDE A SERVICE YOU KNOW YOU CAN DO
“Have friends who want to live here? Let’s get together to work it out.”
It’s never a good idea to try to sell someone on a feature or idea you can’t provide as a certainty. If we go with this example, you have no way of knowing that all three prospective renters will pass a credit and criminal background check. This is a perfect of example of what not to say when marketing properties online.
Pro tip: It’s always a good idea to ask for references. Just don’t make promises you can’t keep.
DO NOT MAKE ULTIMATUMS
“It might be a noisy neighborhood, but that’s the price you pay for such a great location.”
Never ask anyone to make a sacrifice. You might as well be challenging your prospect to keep looking until they find their dream home. On the other hand, if the prospect has a concern, acknowledge what they’re saying, then contrast it with positive features of the property that offset the negative. Other words to avoid in online property marketing
“COZY”
It’s well-established at this point that this word sounds like a substitute for “small” or “cramped.”
“CHARMING”
Like cozy, this word sounds like you’re covering something up. Are you putting a positive spin on a tiny, unrenovated kitchen? That’s not charming. It’s undesirable.
“CLEAN”
This should be a given. How dirty was it before?
“UNIQUE”
Do you mean no closets? Angled walls?
“VINTAGE”
Old. If you are referencing a particular style—like midcentury modern—say so!
“MOTIVATED”
Why? Some people are just casually browsing rentals. However, you might be able to motivate them with the perfect strategy, which includes knowing what not to say in your online property marketing.
Smart & impactful words to use in online property marketing
“YOU”
Use “you” as your pronoun in any descriptive sentences to give the reader a sense of ownership already. Write like you are talking to a person who will probably move in. “You will see breathtaking mountain views from your kitchen.” “You can get to the freeway in just five minutes.”
“UPDATED/NEW”
If you’ve done anything to update your vacant space—whether it’s residential or commercial—let readers know right away. Updates tell potential renters that you’re the kind of property owner who takes care of their properties. It also puts them at ease to know there’s at least one thing they don’t have to worry about fixing anytime soon.
“LANDSCAPED/LANDSCAPING”
Be sure to describe the grounds as well as the building, especially if you live in an area with nice weather. Landscaping and other curb appeal factors add value to rentals too.
“READY”
Let renters know your space is ready to go, and there will be no wait or hassle moving in.
“TILE/GRANITE/WOOD/STAINLESS”
If your vacancy has any of these finishes, be sure to call them out in your online listing.
“PETS”
Whether you allow pets or not, being upfront about your policy will make sure you attract the right applicants without wasting anyone’s time.
Remember, you need to know the difference between pets and emotional support animals.
“CALL NOW/APPLY TODAY”
Like any ad, you should include a clear call to action that will help convert prospects into leads. Tell them what the next step is. If you use Yardi Breeze and market your residential properties on rentcafe.com (for free), interested renters can apply online right then and there.
Adapted from “What Not To Say When Marketing Your Property Online,” published Jan. 21, 2021, on yardibreeze.com
HOME OFFICE DEDUCTION RULES
If you’ve commandeered a spare bedroom or ADU to work from home throughout the pandemic, you might be considering applying for a home office deduction. However, according to the Internal Revenue Service, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. That means employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.
Per IRS rules, the home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.
There are two basic requirements to qualify for the deduction: First, the home must be the taxpayer’s principal place of business. Second, a taxpayer must use part of their home for one of the following: • Exclusively and regularly as a principal place of business for a trade or business • Exclusively and regularly as a place where patients, clients or customers are met in the normal course of a trade or business
• As a separate, freestanding structure that is used exclusively and regularly in connection with a trade or business
• On a regular basis for storage of inventory or product samples used in a trade or business of selling products at retail or wholesale • For rental use
• As a day-care facility Read more about home office deduction rules in the IRS’s article, “IRS reminds taxpayers of the home office deduction rules during Small Business Week,” published Sept. 23, 2020, here: irs.gov/newsroom/irs-reminds-taxpayers-ofthe-home-office-deduction-rules-during-small-business-week
What is cost segregation? Cost segregation (aka cost seg) is a term used by tax accountants to describe a process whereby rental property owners can segregate interior and exterior components of their property and depreciate them over shorter time periods (five, seven and 15 years) versus the standard 27.5 years for residential buildings. This depreciation can be used to offset property income for tax purposes.
How does it work? Typically, an owner would hire a cost seg specialist from a CPA firm to perform a study of the building and to prepare an analysis and report on which portions of the property can be depreciated over shorter time periods. This accelerated depreciation can then be used to offset property income. Any extra depreciation in the first year of the cost seg study would carry forward to future years.
What are the benefits? The main benefit is to increase the amount of depreciation you can take today to offset rental income. Bringing forward (accelerating) depreciation would reduce the amount available in future years.
Comparison examples: Tom purchased a property 10 years ago for $1,000,000, with a land value of $200,000 and building value of $800,000. Annual income on the property is $40,000. Normal 27.5-year depreciation example: Tom depreciates the building portion over the standard 27.5 years, which equals $29,000 (rounded) per year. Tom can offset his $40,000 income with the depreciation and would only be taxed on $11,000 of the income.
Cost seg depreciation example: The cost seg study allows Tom to reclassify certain components (e.g., lamps, cabinets) with five-, seven- or 15-year life spans. Therefore, Tom could take full depreciation now for all the five- and seven-year items and two-thirds of the 15-year items. In this case, Tom’s depreciation this year is $100,000, and he offsets all $40,000 in income for tax purposes. None is taxed. Tom can carry forward the remaining $60,000 in depreciation to offset income in the following year. In future years, depreciation can still be taken on the building portion that’s depreciated over 27.5 years.
Additionally, there are greater tax benefits as a result of the Tax Cuts and Jobs Act and the 2020 CARES Act.
The Tax Cuts and Jobs Act enables double bonus depreciation for five-, seven- and 15-year property placed in service after Sept. 27, 2017. This means that Tom could deduct 100% of this category of depreciation in the year the cost seg study is performed. Thus, the $100,000 in depreciation could be much larger.
The 2020 CARES Act allows an owner to go back five years and use depreciation to offset income. Since Tom had $60,000 in extra depreciation, he could carry that $60,000 back to offset any income from 2015-2019.
Who should consider it? The cost of performing a cost seg study could be $3,000-$5,000 or more per property. There are also additional tax preparation costs. Typically, multifamily properties purchased over the last 5-10 years still have a large amount of depreciation available that an owner could use to offset taxable income in an amount that significantly exceeds the cost of the cost seg study.
Talk to your CPA to assess if cost seg is right for your situation.
An Introduction to Cost Segregation
Learn how this tax strategy can help real estate investors reduce taxable income. by Chris Moore
Chris Moore is a local real estate investor and manager with a focus on providing housing in rent-controlled communities such as Oakland, California. Chris began his career as a California CPA, and then was a product and sales executive for global telecommunications companies prior to his focus on residential real estate in 2012. Chris is currently a board member of EBRHA.
