It’s so important to make sure your rental property is priced strategically, as this will get it rented the quickest! Today I’m outlining some tips on how to price your rental property strategically.
1 Price it right the first time! I always get asked if we can price the rental a little higher, and then “negotiate” the price, or reduce later on if we don’t find a tenant. I don’t recommend this. You only get one opportunity to be the “new listing” on the market, and it’s not wise to use this time to feel out the market. Sure, you can reduce your price after a month or so, but at that point, people have seen your listing sitting stale, and wonder what is wrong with it. More than likely, you’re going to end up needing to reduce the price to below what you could have rented it at initially – just to generate some fresh interest.
2 Price your rental competitively. Reliable, smart tenants are going to be savvy on their research, and rarely will they bite at an overpriced listing. In fact, overpriced listings attract unqualified tenant prospects. They are trying to get into anything and everything, and willing to pay whatever just to secure a home. It’s much smarter to price your property competitively to attract the best renters so that you have a larger pool of qualified tenant prospects to choose from.
3 Don’t get hung up waiting out for a specific price. Sure, you want to get the most you can for your rental, and I want that for you as well, but is waiting it out for 60, even 90 days, worth it? Say you have a $1600 rental, but you really want to try to get $1700 – even if it takes an extra two months. You just lost out on potentially 2 months of rent at $1600, over an extra $100/month. That’s $3,200 lost to get an extra $1,200, plus mortgage costs, utilities, etc.
Is your rental overpriced? Here’s how I can usually tell within the first few days.
- No inquiries. This is the most obvious, of course. A lack of email inquiries and phone calls is the best indicator that a listing is overpriced. After 7 days, on an average rental home, we should have 20+ inquiries, easily. And of those inquiries, we should definitely have a handful of showings. If not, then a price reduction is needed asap before the listing becomes stale.
- Another big indication of an overpriced rental is the lack of qualified inquiries. We may get 20+ inquiries the first week, but if all of those are unqualified, that tells me we are overpriced as well. The unqualified prospects are the ones that jump fast on listings – just trying to get in somewhere and not worried about the price. If no one qualified is interested in the listing, and it’s not a matter of the condition of the property, then I reduce the price right away.
- Lots of inquires but no showings. This sort of combines the first two indicators that the rental is overpriced. If you have a ton of inquiries but aren’t having any showings on the property, then something is wrong. A lot of inquiries and no showings doesn’t get you anywhere, right?
It’s so important to make sure your rental is priced right. This can really cut down your vacancy costs and get you collecting rent sooner. I hope this all helps. Reach out directly if there’s anything I can help you with.