Drop the rent to get tenant?

Question

I've been getting a very slow trickle of responses to my ads (perhaps due to the time of year, I'm not sure). There is nothing wrong with the property that would make it hard to rent. The people who've been responding have a FICO in the 500s and/or other issues.

I was thinking of dropping the rent further to get someone decent in there soon (I've already dropped it $100 over the past couple of weeks).  Is this a good idea or will I just end up getting an even worse applicant pool by doing this? Thanks.

Aron Rogerson · Answer

Great info above but just to add,

Know your absolute floor and ceiling prices.

I had a property advertised at $1700, about 1.5-2 months into the app process i got tenants from a wide array but not biters.

I dropped to $1650...1600... and when I was about to drop to 1575 someone bit it at 1600 and loved the property.

Its a waiting game but note, waiting can cost you allot. If your mortgage (or operating+loan cost) is approx $800, every month you are losing $800, thats approx 67/mo. Lets say you wait 2 mo, thats approx $134/mo you just lost by carrying the mortgage for 2mo.

Sometimes its just best to reduce at the start and find great tenants who will stay longer.

My lowest priced rental property is my most profitable because of the tenant who knows they cant find another rental in this price range. She has been on for about 2.5 years but she is beyond reliable and high quality.

Only thing that helps is research, research and research.

John Rooster · Answer

If it was me, I would lower the price. Some people prefer to let their properties stay vacant, rather than rent it out for 10% less, I would rather have someone in the property at a lower monthly rent. You do what you want. But unless you have at least driven by these other Craigslisted properties, they are not comps. Same zip code is a huge area.

Jon Holdman · Answer

Have you done a rent survey of the area?  And called other owners and managers and pretended to be a tenant so you can get a feel for the competition?  If not, spend some time doing that.

In my experience, higher than market rent produces bad tenants.  Good tenants have their pick of places, bad tenants have few.  So the bad tenant will pay a higher price.  Getting the unit priced at or a little below market should produce a good tenant.

Ask prospects what else they're seeking.  Ask for feedback on your unit, too, but asking about the competition will give you insights asking about your unit won't.

George P. · Answer

bienes,

did you drop the rent? did you get a tenant?

Bienes Raices · Answer

@John Rooster

Thanks, that's what I'm going to try. Better to get a little less rent than to have this sit vacant through the holidays.

Bienes Raices · Answer

@Aron Rogerson

Thanks--I am pretty close to my "floor" right now (I don't think the place is overpriced at all, based on what I've seen on craigs in the same zip, same size of house.

Jon K. · Answer

It depends on the cause for their low scores.

Someone with a 400something or 500s credit score does not pay their bills on time and is not financially responsible with their credit. They're either paying something late or have old debt in collections bringing their score down. Sometimes they have high utilization rates on their credit cards. Or they have a lot of collections. Perhaps it's old medical bills. Find out why.

Most people outside of the east/west coast who have credit scores of 700 plus buy, not rent. At least long-term.

People with a 500 credit score have bad credit. To them, what's there to lose by not following the lease since they already have trashed credit and collections? Other than being evicted, of course. Even then, evictions could have brought their score down too.

Robert Brubaker · Answer

Most Property owners miss the reality that Tenants

in general see rental as a "Business Deal" !

Too much away from the" going rate" they

see  a turn-off!  Too much Security Deposit

up-front- same thing!, If you look at what is

required of your applicants and the market

you draw from.  eg if you are looking for FLS

totalling$ 2400.00 and thats a full month's

average income- thats a problem! If there

is a problem with the area -what is offered

that makes your property usefull to live in!

look at these factors-you may see your problem

I agree Fico score does'nt  tell you much.History.,

references and indications of Stability

mean the most! Interview and The Showing,

and establish what they get from the rental

( space,near family,job,condition over present

rental circumstances will firm up"-who-is who!"

Best for Success!

Bienes Raices · Answer

As for the credit, I keep hearing that score does not matter, but then why have virtually all of the problems I've had with renters (late pay, not following rules of lease) so far been with people with scores below 600?

Drop the rent to get tenant?

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