5 Reasons Your Rental List Price is Important!
January 25, 2022
Landlords usually have a list of qualities their ideal tenants possess, like willingness to sign a long lease, having excellent credit, no pets, stable jobs, and income, etc. Still, they rarely think that pricing their property right from the start is the best chance they have of getting ideal tenants.
Here are 5 reasons why you should price your home at market value or a little lower:
- If you price it too high, it may take longer to rent, resulting in lost rental income while the home is vacant.The higher the price, the fewer prospective tenants view it, and the fewer applications you’ll receive.
- You may end up with a less qualified tenant. Fewer showings lead to fewer applications which means you may end up accepting someone to get the property rented and may not be getting good tenants, which can lead to issues and potentially lost income down the road if they start paying rent late or not at all and you need to evict them.
- Your property may rent for even less than if you had priced it right from the beginning. Here’s the scenario, you price it a little high and wait. Nothing happens for a week or two, or maybe you get a showing, but no applications, or you get one application, but they have bad credit and not enough income to qualify. You continue to wait and wait and eventually lower it to a price that’s lower than it could’ve rented at to get someone fast.
Unfortunately, prospective tenants have already seen the property sitting on the market and are more likely to negotiate so that you may get an application from qualified tenants (finally!). Still, they’re offering less than what you’re asking, and it’s already taken a month. You don’t have to accept their offer, but then you’ll continue waiting and possibly lower it again before you get another application.
- You may end up needing to bend on other terms.You may want tenants without pets but guess what? When you price it too high, you have fewer tenants interested, leading to you needing to be more flexible on other things like pets or maybe a shorter lease term to get it rented.
- Save money with less tenant turnover. If tenants feel like they’re getting a good value or paying market rent, they’re more likely to stay and renew their lease, saving money or normal wear and tear repairs that the landlord is responsible for between tenants. Avoid losing rental income while it’s vacant, not to mention if you paid to have it leased or for marketing and your time if you’re doing it yourself.
If tenants feel like they’re paying above market value, they’re more likely to go through the hassle and expense of moving since the amount they spend to move will pay for itself in money they save on their monthly rent if they move to a rental that’s like yours but priced slightly lower.
While pricing your property on the high-end of the market may seem like a good idea, there’s a better chance of getting your ideal tenant and preferred lease terms if you price it at market value or slightly lower since there will be more interest and applications.
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