Renting for less than fair market

[Vicki Gleitz]

In February, my son will be renting out the 3/1 house he bought in September. Ultimately,in a few years, this house will be one of many of homes in an Autistic intentional community within an already existing community, but in the meantime it will be a regular rental.

He would like to rent the house for less than fair market value.  He is thinking renting it for about $500 a month with the tenants paying for all utilities except for the security system and trash pick-up. [ which are not actually utilities] These, along with insurance and taxes, will cost my son about $182 a month. 

The home has been renovated [actually, we are still working on it]and the roof, plumbing, electrical etc. are all in good condition.

Do you think he can rent it out at this price and not lose money?

[CK Hwang]

@Vicki Gleitz , there is a correct logic to your thinking about renting below market. But just out of interest, if $500 is below market what is market value? If it's just slightly below market value, I find it a good strategy, but i would hand over the cost of garbage and security to the tenant

Currently I've got 2 properties that are being rented slightly below market. However, one of the properties that we used to rent at market price, didn't turn out so great. The tenant didn't really take care of the house figuring if they were paying that much, that everything should be dealt with and so they didn't take care of the house. After the lease expired, we dropped it slightly below market and had a much wider pool of tenants to choose from, so we basically upped the level of scrutiny to pick the best tenant from the applicants and so far it has worked out really really well.