Long term rental vacancy vs. market rent

[Jianlan Sheng]

Hi I have just moved out of my previous house, which is a 5Bedroom 4.5 Bathroom in a premium location. Im wondering how long is a normal range of time for a high-end market long term lease to be in place, like rent for $10k per month ? I had someone almost signed the lease one week after listing, then it falls off, it feels like forever to me now. Im wondering how you balance the vacancy and the market rent. Would you lower your rent to lower than market price to get more vacancy ? at which point would you do so ?Thank you in advance 

[Jianlan Sheng]

Thank you for your advice. This is very helpful. My listing went live for one month now, this would be my 2nd investment property. I totally agree with you. Im based on Palm beach area, where similar properties around is charging 11-13K per month. Therefore, im getting into a place thinking is it because of the holiday season or i should just go ahead and less my rent. But your strategy is much better, because once you set up the vacancy goal, then it will be much easier for me to make my decisions rather than GUESSING or PRAYING, LOL !!!! THANK YOU 

Quote from @Kevin Sobilo:

@Jianlan Sheng, I can't speak to your exact situation with a high end rental but I think you are focusing on a VERY important topic and something that isn't discussed nearly enough.

When a landlord looks to determine market rate for ANY long term rental, I think the tendency is to find the highest comps and use those as their guide post. However, if you get high rent at the expense of increased turnover and vacancy then that may not be "market rent". You might actually make more by charging LESS.

I personally have a target vacancy rate of 5%. I budget for that rate of vacancy and work to exceed that rate on average. That can be done by being more conservative with rent prices, offering amenities other properties don't like washers & dryers, or even how you handle turnovers to shorten the time between tenants.

I think its hard to find great statistics on what vacancy is "normal" for most markets and rental unit types, but if you budget for a certain amount of vacancy that you're comfortable with and then identify areas where you can work on lowering your vacancy you are actively tacking and managing the issue/cost.