Setting rent and when to lower it

[Jodi Slocum]

We've finally gotten possession of our first rental home after closing in March with an agreement for the owner to stay until May 30.

We put it up for rent last Friday for 1200. It seemed kind of high to me when we set it, but there were 3 other properties in the area that were comparable that were 1100 to 1200 so we went with what others seemed to be getting. The one for 1100 was not updated, old brown paneling and such...but it did have a garage where ours does not. Our is also completely remodeled on the inside.

We've gotten what seems to me quite a few inquiries, probably about 25 + phone calls. We've had about 10 people out to look at it in the week we've had it up. We've had 2 sets of people take applications, but I don't expect to get them back. It's been over 3 days since we've heard from either of them.

Some feedback we have gotten is the lack of garage. Other factors would be that most of the people coming out don't "need" a 4 bedroom, so it's hard to compete with the prices of 3 bedrooms being around 900 - 975 around here. Everyone that comes out loves the house, that it's an older house but new inside. It was built in 1940, and has a lot of curb appeal.

Our mortgage is 350 including taxes, insurance and such so we have some wiggle room....but we are also allowing for a larger repair allowance than most since we expect to have higher repair costs due to the age of the house and some things we know will need to be fixed/replace in the next few years.

So my question is when you are setting your initial rent on a home, how long do you leave it before you lower it to find the sweet spot? I am leaning towards lowering it 50 - 100 since we haven't had any serious prospects in a week. My husband is leaning towards sitting on it a little longer.

Thanks for any input!

Jodi

[Arjun K.]

Am curious to hear what other more experienced landlords say.

My amateurish thought processis you have had a lot of showings in peak season, but not a single applicant. That isn't a good sign for what should be a fairly commodity rental.. if you leave it at current price but it takes 3 weeks to lease, that is $1100 mont * 75% of 1 month vacancy = $825 of lost rent, or ~$70 over the course of the year. Also, you may only get less desirable applicants when they do come. Assuming nothing is wrong with the marketing, I would perhpas wait another week to gauge market interest (its only been 1 week, so no need to panic -- also how long were the comps on the market?), and then if no traction at all... drop by $100 to get it rented and you can perhaps be moer picky with tenant quality (reducing some of your maintenance / vacancy budget). I wouldn't wait too late to drop, or only drop it by $25 since you will have property for longer days-on-market, which may be a red flag to folks.. and small price adjustments may not move the needle.

Curious what others say.