Started marketing with rent probably too low | What now?

[Severin Sadjina]

Hi folks!

Severin, the nerd from Norway here, and I could use some input...

Short version:

Looks like I set the rent I ask for to get my first deal* rented out too low (about 10% under market) by accident. But I already started my marketing campaign and talked to a few potential tenants. Shall I raise the price now? If so, how can I explain? Do I even need to?

Long version:

I just closed on my first deal* and already started marketing for tenants. I've talked to a few potential candidates over the last two weeks, and I started a relatively comprehensive online marketing campaign (Facebook & promotion & Instagram, online rent portals, even giving away gift cards for referrals). I also expect a fresh influx of new and eager students next week when they know whether they've been admitted to our local university or not. So far so good!

I started out asking for 7.250,- Norwegian crowns (NOK) (which is about 885$), and I actually thought that was pushing it. But the location of my property is great (right in the city center), it has a very high standard (built in 2013), and includes heating (important in Norway, as you may imagine), cable TV, and internet with the rent.

So to live out my inner nerd and double-check the price point, I looked at all other comparable rentals out on the market at the moment**, fearing that I may have to lower my rent and miss out on some cash flow.

Well, turns out that I am actually underpricing myself, and that the market would suggest 7.950,- NOK (about 970$). The math is actually very clear on that.**

So the question now is: What do I do? Change all the ads? Explain to the people I already talked to that I raised, and why? Keep as is and miss out on cash flow? I am a little worried I may risk vacancy also (I am not sure how high the demand for high standard studio apartments is...).

So yeah, any input is greatly appreciated! Cheers :)

*) A 270 square feet studio apartment, with a very high standard, right in the city center. Asking price was 1.1 million Norwegian crowns (134.000$), I got it for 1.01 million (124.000$), and I believe it is actually worth closer to 1.2 million (147.000$).

**) Multivariate linear regression, taking into account living area, location, standard, amenities, and which floor it is on. Standard deviation of predictions is only 300NOK (37$), as in, this is a very good model.