Rent too low?

Question

So my old tenant is finally moving out and I am dealing with the turnover right now.  I thought I'd get a jump and start advertising when the place is not even ready yet, thinking I'd schedule the showings a week out.

I've been getting 8 - 10 calls/inquiries per day for the last 6 days.  I've stopped picking up the phone because everyone wants to see the place ASAP.  Someone wanted to pay for the rental application without even seeing the place.  I know this is hot rental market but didn't expect this kind of craziness.

This leads me to wonder, have I set the rent too low?  Any advice as to what I should do or if I should do anything at all would be appreciated.  Thanks.

Rizwan Halim · Answer

Great advice guys.  Thanks, and I'll keep the rent as is and focus on a quality tenant instead for the long term.

Suzie B. · Answer

We use Smartmove because you can choose to have them pay the fee themselves online and it is a softer pull on their credit.  We require each adult, anyone 18 or older, expecting to live in the property to do one.  We also do checks online for sex offenders as well.  Usually by the time we get to the credit and background check, we are pretty sure what it will say.  We try and let prospective tenants know that we are big on and communication, and most will let us know if there is something on their credit/background check they are expecting us to be concerned about.

I agree with Michaela in that it's ok to be a little bit lower on rent than others in your area.  If you get a good tenant, you want then to stay as long as possible.  Turnover always costs you something ... Clean up, lost rent, repairs.  If they don't find a lot of places are cheaper than yours, they are more likely to stay around longer.  It can truly be a balance.

Michaela G. · Answer

@Rizwan Halim

But that's not such a bad thing. You'll have a lot of competition and can hopefully find a great tenant, who might stay for a long time.

I believe if you're always on the upper end of market rates, you'll more likely have turn-over quicker. If you're lower, people might stay longer, because they can see the value they're getting.

Having a new tenant every year and then a few week empty or even a month, may cost you more than the different in rent.

Ultimately, of course, we'd all like to get top of the market rents, with yearly increases and tenants that stay for years and years ;-)

Mike Franco · Answer

I bet you did set it low.

many many years ago, my rent was significantly below market and I got a ton of prospects.

Account Closed · Answer

Suzie,

What website do you used for credit and background check

Joe Gore

Suzie B. · Answer

We just send them our normal application and ask them to fill in what they are comfortable with.  We do typically ask them to at least fill in employment & reason for moving.  Most people don't have a problem with that if they are serious about the move.   If after a tour they want to move forward, we ask them to complete the rest of the application and we get them set up to do a credit and background check through an online site we use.

I know some here don't agree with doin any kind of application prior to showing a property.  We just had too many no-shows and people who would show up and try and talk us into doing section 8 housing for them & believe me they were ready to help you do it too... Paperwork in hand to show us how to apply!

I have thought about making a pre-application form asking for fewer details, but haven't had the time.

Rizwan Halim · Answer

Suzie, thanks for the great advice.  What do you do for a pre-screening application?

Suzie B. · Answer

You might do what you can to do a market analysis as far as pricing goes.  If it's been awhile since you've had a vacancy, it's always a good idea.  Craigslist isn't a good indicator as there are more scam posts at low rates than there are true ads (at least in my area).  We often call landlords when we see for rent signs in the neighborhoods we have rentals in just to stay on top of the market.

If you've found you are asking too little, let those that you already talked to know that you made an error in your pricing on that unit and you apologize for the inconvenience.  If it's your only rental, no way they need to know that.

If you've got that many interested parties, you might consider asking them to do a pre-screening application.  We do that for all of our properties to cut down on no-shows which was wasting way too much of our time.  It really makes people decide how interested they really are.  Do you want to give someone much information about you if you are just window shopping?  Most who aren't that interested never send it back.