Today's market is not the same as previous years! Get Informed!

[Jennifer Lyles]

On a daily basis I get questions from investors/property owners about the rental rate for their rental property. I just wanted to share a few things to help educate newer investors! 

I frequently hear that someone purchased a new property because their real estate agent told them they could get X amount for rent, when in fact, the market comps don't support that amount. Now we have a problem! If we price the home based on what they thought they could get for it, it will sit for weeks/months. If we price it for what the comps show, then they are typically coming out of pocket every month. 

I am here to tell you ways to avoid this from happening!

1. Reach out to a LOCAL property manager that knows the rental market BEFORE you go under contract! We pull comps all day long and are very educated on market demands and pricing. Real estate agents tend to want to make a sale and they are not as experienced with the rental market as they are the sales market. If you ask for a CMA from a local PM, you will be able to make sure the numbers make sense before you buy!

2. Having a vacancy costs money! An overpriced rental can result in longer vacancies, ultimately costing more than slightly lowering the rent. If your PM is recommending a reduction of $100 on a $2000 a month rental property but you don't want to lose that money every month. If the reduction helps the property rent in less than a month, then you have only lost $1200 over a 12 month period of time. If you didn't do the reduction and let it sit vacant for another month or possibly longer, you've lost $2000+.

3. Renters today have more options and properties that are competitively priced to get leased faster! They are being offered discounted rent, free gym memberships, free cable, etc. Ask your PM how to come up with some strategic incentives...possibly listing high and reducing every 7-10 days until it's rented, offer a move in special, a gift card, future rent credit, etc. 

4. Trust your PM! Most of us get paid a percentage of the rent so a reduction is not benefitting them financially. Vacancies hurt all parties involved! You can adjust the rental rate at the renewal or the next lease up and possibly make up the loss the following year!

I hope this information helps! Good luck!