Just Below Fair Market Rent

Just Below Fair Market Rent

Huntington Beach, CA · Member since 2014 · 105 posts · 23 votes

If you know what the fair market rent is, how would you price your rental so that its just below fair market rent? Would you determine that as a percentage of the fair market price, or are you just subtracting $X dollars from the fair market price?

I want to price my rental below the fair market price to reduce how long it stays vacant and to attract enough qualified applicants so I can pick and choose the best possible tenant. 

At the same time, I don't want to leave too much money on the table by pricing it too low. Sometimes, I have this nagging feeling that I could have asked for more money.

If I priced it significantly lower than fair market price, I could accomplish those goals. But, if I priced it higher but below fair market rate, I could still accomplish those goals while keeping more money for myself. 

Let's say I determined the fair market rent should be $2800. I've checked Craigslist, called landlords, MLS, etc.. And, I know with certainty that's what the comps have rented out for.

What would you price it so it'd be just below fair market rent and still accomplish my goals?

$2795 would be below fair market prices, but that price difference doesn't seem significant enough to make a difference.

If I priced it at $2500, 10% below fair market price, then it seems I'm leaving too much money on the table.

I'm looking for that sweet spot, that just noticeable difference, where a qualified applicant would view that as just enough to notice it was cheaper than the comps but without giving away the store at that price. 

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  • Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    The reason most properties stay vacant for any length of time is due to their location and curb appeal and of course the tenant pool, but that would fall under the location scenario as well.

    You are only hurting yourself by not charging the market rate for your area.  You most likely will get a lot of people calling and stopping by to take a look at the rental, but in the end you are only wasting your own time and money, because most applicants  probably won't qualify.  

    Make that home APPEALING!  GREAT CURB APPEAL!  Make the people driving down your neighborhood that are on  the way to see another rental, put on their brakes to stop and see yours!   Make it charming, cute as a button, clean and neat just beckening them to come on in !

    Being a landlord is all about people management, having a good reputation, (word of mouth, recommendations by your other tenants) says a lot.  No need to lower your rents in order to entice someone to rent from you.

    With that said and done, during the winter months, it does help to offer an incentive.  People are already nice and cozy in the home they live in now.  They don't want to move around Thanksgiving or Christmas, but will be looking again the first of the year.  So at this time you could offer a Thanksgiving Special, or a Christmas Special, but never lower your rents below market value.  You only hurt yourself. 

    Nancy Neville 

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