Rent too low... or so I was told today.

[Roy N.]

Like many of you, I am use to potential tenants telling me the rent is high and trying to negotiate it down - with many of our international students, this exchange is just part of the process as culturally you haggle over everything.

We have a building we acquired a little more than a year ago where the rents were well below market, but the building is in good condition overall.  As units come vacant we are ratcheting the rent up to the market median.   We have an apartment in this building coming vacant at the end of September (the tenant gave notice late, so we have made a deal on October's rent).   We have a few things we would like to do to the apartment and should have it turned around for mid October.   Last week we posted an "advanced" on-line listing (at one site only) for the apartment indicating it would be available for the latter part of October (or November 01).  We had a dozen e-mail inquires and a another 4-6 phone calls.  Today I showed it four times and have two applications in hand - both of which are strong.  We should be leased-up by mid-week.

While we are priced at the market median, this immediate area (2-blocks) where this building sits has become an increasingly desirable location (Walkscore of 88), so many apartments are priced higher (80th percentile) than ours.   When leaving the building today, I bumped into the fellow who owns a very nice building just down the street.  He had seen our listing and told me our price is too low and became a little irritated when I told him it has likely filled on the first set of showings.   

I'm guessing he really doesn't care if we leave $50-75/mth on the table and he doesn't have a vacancy competing with us at the moment ... so I was a little puzzled by his reaction.   Perhaps he sees us as a weight holding down the crazy ascent rents in these few blocks have been on over the past 12 - 18 months?   It is the first time, I've had anyone - let alone another landlord - show concern that our rents are too low.

[Jon Klaus]

Originally posted by @Chris G.:

Why are you giving away money?

 It could be argued that renting at or above market is giving away more money than renting below market. Potential advantages to below market rent:

Fewer vacancies

Less time vacant between tenants 

Can choose from a larger applicant pool, therefore higher quality tenants

More self sufficient tenants

Longer tenancies

Less turnover/make ready