Why pricing a rental property correctly is so critical

Author: Jay Myers

One of the most critical aspects of leasing a rental property is pricing it correctly. Too low, then you revenue is not what it could be. But an overpriced rental property can cause far worse situations.

How much does a simple air conditioning service cost? Say $75. How much does a 45 day vacancy cost an owner of a property that should lease at $1400/mo? $2100! A vacancy is normally the biggest expense a landlord faces. Keep the vacancy rate down by advertising at the correct market rate. This is a better way to increase revenue and keep your rental property in good condition.

1. Every week that a property sits vacant, you could have adjusted the price 2% down and made the same amount of money. Over a 5 week period you could have adjusted the price by 10%. Example
*Landlord A lists a rental home on May 1st for $1500 per month. Landlord A leases the rental home on July 1st at $1500 per month.
*Landlord B lists a rental home across the street from Landlord A on May 1st for $1400 per month. Landlord B leases the home on June 1st at $1400 per month.

Which Landlord made more money on his rental home? If you said Landlord B, you were correct. While Landlord B collected $1400 during June, Landlord A sat vacant.

2. Vacant properties can at times, not be safe. 1. Vandalism. 2. A potential water leak in the property could go unattended for a few days and could be disastrous.

3. Example: A rental home sits vacant. Who pays for the utilities? The owner. Who pays for the lawn or pool to be maintained? The owner. Not only are you not having revenue coming in, but you must keep the property in proper rental ready condition. If the property had been leased, the tenant would be responsible for the utilities, lawn and pool care.

4. Most importantly, the "bad tenant" will rent an overpriced property. A well qualified tenant will take the cheaper property because they can. Any owner would rather have the well qualified tenant, right? Example: Both types of tenants view 2 different homes, 1 home at $1500/mo, the other at $1400/mo. For the sake of the example, both tenants want the home listed at $1400/mo. Which one will the landlord choose? Of course, the well qualified tenant. Now the overpriced property's landlord is stuck with a "bad tenant" because all of the good tenants go to the cheaper properties.

5. If you get stuck with a "bad tenant" now..what will it be like a year from now when you want to show the property with this tenant living in the property? It will not show as well because of the condition of the carpet or paint and you will be forced to drop the price. Or even worse, wait til this "bad tenant" moves out and then start advertising, guaranteeing a vacancy. In other words, over pricing your property now, will overall make you less money and could affect how much you get for the property in the future.

About Jay Myers.
I bought my first investment property in 1999 and have enjoyed real estate as a job and a hobby ever since. I now own many investment properties, and through owning these units has helped me understand the shoes that many of our owners are in.
Most agents never sold anything before they became an agent. In sales since 1997, I have really worked hard to develop skills to negotiate the best possible deal for both my clients. I believe this set of skills along with listening to our customers has and will greatly assist in our client's needs.
I enjoy being the Director of Property Management and the manager of our team because of the daily challenges this position entails, each day is definitely different. I think we put together a great team, we all atleast a few things in common.....work hard, get the job done right and listen to our clients and customers in order to improve our services.
Thanks again for choosing Orlando Realty & Property Management by Keller Williams Realty at the Parks as your Central Florida real estate source, and we look forward to working hard for you and with you..........We appreciate your business!

Find out more about property management services

Featured Property Manager Of The Week - New Bedford Management Corp.

New Bedford Management Corp. - New York, NY


In business since 1985, New Bedford Management is based in New York city and has a proven track record of providing hands-on boutique style management services supported by a staff of in-house professionals. Specializing in cooperatives and condominiums, New Bedford recognizes the unique concerns of the homeowner community and its elected representatives, the board of directors. We are therefore able to provide you with a custom tailored service plan to meet your needs at a reasonable cost.

New Bedford Management has an aggressive, pre-emptive management style to fix small problems before they become large and expensive ones. We take great pride in our work. The board and owners will know that New Bedford will always be there when you need us.All phone calls are responded to same day and our emergency response is immediate.



Services INCLUDED in monthly fee
Collect and deposit rent.
Complete computerization of deposits and disbursements to produce balance sheets at any time and year-end account summary.
Bookkeeping. (Regular bill payments and checking account maintenance)
Advertise for, screen and place new tenants.
Handle apartment registrations, lease renewals, rent increase and all tenant related issues.
Coordinate repairs and maintenance.
Provide detailed monthly summary of all the above.
Available for 24 hours/7day emergency service.

New Bedford Management Corp will remind you why you invested in real estate in the first place. We'll help you reduce your involvement and increase your return leaving you to enjoy your investment.


Find more New York Property Management Companies

Trading Services For Rent

Author: Lambert Munz

Asking a tenant or allowing them to perform maintenance for reduced rent is big trouble.

Suppose a tenant falls off a ladder cleaning gutters. The landlord and property manager are subject to possible liability for injury suffered by the tenant. Especially, if you have indicated that gutter cleaning is a tenant responsibility.

There was a case of a tenant trying to repair a window air conditioner and suffered an electrical shock that it knocked him to the ground and tore two fingers off his hand. The window air conditioner was installed by a former tenant.

The result was a law suit and the court found that:
1) The former tenant was not qualified to install the unit
2) no inspection was made to insure proper installation
3) The unit was improperly installed electrically
4) the improper installation caused the unit to malfunction.

The result was the tenant prevailed over the landlord.

In California, the tenant would have been considered to be the employee of the owner, since the owner had hired the tenant to do the work and paid him through reduced rent. Because the owner does not have worker's compensation insurance on this employee, the owner is subject to legal sanctions from the state.

Cutting the lawn and maintaining of the landscaping for the unit occupied is not considered employment as they are keeping the property maintained similar to vacuuming the carpet and keeping the house clean. If it is a duplex and they are maintain the yard of the neighbor this could be interpreted as being an employee of the owner.

Bottom line is don't allow your tenants to do maintenance work other than some minor items like changing washers in a faucet. First there is a liability problem and second they may not have the proper skills to do the work. The result being in work that was improperly done and has to be redone by an experienced professional or allows someone to get injured.

My name is Lambert Munz and I have been licensed as a Real Estate Broker for 44 years with the CA Department of Real Estate. I currently am President of Arbour Real Estate Management, Inc. Background was as a commercial broker. Currently a property manager and have been for 27 years. We offer residential and commercial management services. I hold two designations - RMP Residential Management Professional and MPM Master Property Manager. Awarded by NARPM National Association of Residential Managers. Past President of NARPM Sacramento chapter. My services are available in Sacramento, California.

Property management services

Featured Property Manager of the Week - Coxe Property Management & Leasing

Coxe Property Management and Leasing - New Orleans, Louisiana

Coxe Property Management and Leasing is a full service Real Estate Management firm that specializes in residential property management in the New Orleans area. Since my primary focus is Management and leasing of your rental property I am 100% dedicated to your property. The services that I provide are as follows:

• Real Estate Management
• Collection of rents on a monthly basis
• Providing all maintenance and leasing services to you.

When major expenses to occur, I consult with the owner first before I spend any monies, unless it is an emergency. If you wish for me to use your contractors or carpenters, I will do so acting as your eyes and ears. If all you wish is for me to lease the units I do provide that service as well.

Unlike the large property management companies, Broker/Owner David Coxe manages and leases every apartment himself - not just looking for that one time commission. Coxe looks for a long-term business relationships with you and your tenants. Coxe promises to do his best to find only the best qualified people who can afford to live in your apartments but also those who will take of it.

Learn more about Coxe Property Management and Leasing

Find more Louisiana property management companies

Featured Property Manager of the Week - RE/MAX Elite HomeInvest Time

RE/MAX Elite-HomeInvest Time - Phoenix, Arizona

At RE/MAX Elite, Homeinvest Time, our focus is making your Arizona Investment Property profitable for you. We specialize in the buying and selling, leasing and managing of your single family home. We offer over 25 years of combined experience and knowledge. Our Property Management services include the following and so much more!

Effective Advertising and Internet Marketing
- Multiple Listing Service

Complete Tenant Screening
- Credit History and Criminal Background Checks
- Rental and Employment Histories
- Banking and Personal References

Property Inspections
- Move-In
- Move-Out
- Periodic Interior and Exterior

Monthly Rent Collection
- Aggressive Approach to Delinquencies
- Prompt Evictions When Needed

Tenant Communication
- Lease Renewals
- Maintenance Requests
- Warranty Repairs

Owner Communication
- Promptly Returned Emails and Phone Messages
- Easy to Read Monthly Online Accounting Statements
- Annual 1099’s

Competitive Fees
- No Hidden Costs
- FREE Advertising

Find more Phoenix, Arizona property management companies

Featured Property Manager of the Week - Ashoka Lion consulting

Ashoka Lion Consulting - Houston, Texas

Ashoka Lion was formed in 2006 by Jay Raman and Sachin Nair to capitalize on a real estate market that was global. Real estate is a global asset that powered by the Internet has become a world wide market. By capitalizing on their experience as investors and business education, they saw a market that demanded a high level of transparency and honesty.

The company has grown by leaps and bounds over the past 3 years, and we have passed these improvements to our investors. Over past three years, we have increased our effort to utilize technological innovation to provide investors and associations various tools to meet those goals. In addition to the improvements in technology, we have hired strong team members to help us deliver our property management mission to our clients. Ashoka Lion consulting manages residential properties as well as community associations in the Houston, Texas area.

Find more Houston, Texas property management companies

Licensing and Expertise Are Not the Same

Author: Lambert Munz

Frankly, the real estate licensing system in California is outdated. Sales agents, property managers, mortgage brokers, and business brokers all have the same license. There are two licenses, 1) Agent Licenses and 2) Broker's Licenses. Other than that, all of the above-mentioned categories have the same license, whether an agent or broker.

The license indicates only one thing and that is these individuals are legal to practice real estate in different categories, but does not indicate their expertise. The license is weighted toward residential sales because that is the group holding the majority of licenses.
I strongly feel (with many others in the business) that each practice should be licensed separately. This way, a licensee would receive some education regarding each type of business category they have chosen.

The Department of Real Estate even states in its real estate reference book that "a licensee should not offer services to the public unless they have received training in that category"
Before hiring anyone to serve you, ask to see their license. I have been asked twice in 44 years for evidence of my license.

Secondly, you should check the agent/broker's evidence of expertise. Do they hold a designation in the field they are practicing? For example, NARPM (National Association of Residential Property Managers) offers two individual designations: RMP (Residential Management Professional) and MPM (Master Property Manager).


Generally, the public doesn't know what these designations mean and that is the purpose of this article. They are indicators that the person earning a designation has disciplined him/herself to commit to advanced training in their industry. It costs a lot of money and time. Besides the cost of the courses, most courses are held in another town (time away, travel, hotel, meals, etc). It means contributing to the industry by serving as an officer of a chapter or a committee - and attending local or national conventions.
Shouldn't these be the people you want handling your business?

Don't shop only by the fees charged, but more importantly the person's training and experience. Those that have the lowest fees usually have to ask for the lowest fees because they have nothing else to offer.

My name is Lambert Munz and I have been licensed as a Real Estate Broker for 44 years with the CA Department of Real Estate. I currently am President of Arbour Real Estate Management, Inc.. Background was as a commercial broker. Currently a property manager and have been for 27 years. We offer residential and commercial management services.

I hold two designations - RMP Residential Management Professional and MPM Master Property Manager. Awarded by NARPM National Association of Residential Managers.
Past President of NARPM Sacramento chapter.

Learn more about property management services

Correctly Pricing Your Rental

One of the first things an owner must determine when renting his property is the lease price of the rental. Often, owners base this amount on their costs plus profit rather than an analysis of the market. As a result, they typically price it incorrectly. While the costs associated with the property are a factor, they are not what ultimately determines the rental amount. Rather, the market determines what the property is worth at any given time. In this current economic environment, this is especially true. A common statement from owners usually goes something like this: “My mortgage, taxes, and insurance on the property total $1,000 a month. I need to get at least $1,100 to cover my expenses plus a little extra for a rainy day fund or profit.” Well, that is great if the market is willing to pay that amount for the property, but it isn’t normally the case. Worse yet, what if the market is willing to pay $1,500 a month for the property that the owner just priced at $1,100?

An owner can cut himself short by calculating the lease price based on cost alone in 2 different ways.
First, he could sit on a vacancy for a long time before finally reducing the property to the market rate and getting it leased. For example, if he priced the property at $1,100 and it sat vacant for 4 months before he determined it should be priced at $1,000 per month, he has just spent $4,400 of his own money to find out that he can only get $1,000 a month maximum for the property. Even if he found someone who was willing to pay $1,100 a month for the property, it will take him 44 months to recover the cost of the money he paid out waiting for that tenant willing to pay the “over market” rate.
Second, if the same property is worth $1,500 a month in the market and the owner has decided to price it at $1,100 a month because of his cost plus formula of pricing, he will probably rent it right away but will also give up $4,800 difference on a year’s lease that he could have had in his pocket.
The correct strategy to price a rental property comes from analyzing the market to determine what similar or identical properties within the area have closed at in the last 3-6 months. Anything longer than 6 months back does not reflect the current market. Additionally, you should not use other properties that are available for lease to determine a rental price. While you do want to be aware of what is currently on the market, the prices for available properties varies wildly and do not reflect what tenants are willing to pay for a rental property. Rather, these prices only reflect what owners want to get for their properties and may or may not be realistic. Frequently, I hear owners say they get on the Internet and check out Criagslist or other advertising venues and determine their pricing based on what they find. This doesn’t work because it doesn’t tell them what actually leased. It only tells them what a variety of owners want for their rentals based on whatever correct or incorrect formula they came up with. It also will not tell them if these advertised properties ever lease or at what price they finally went for.

The best avenue to determine your rental price will always come from the closed property market.
When I have a property that is new to our company, or one that is coming up for lease after a tenant move-out, I first determine the important features of the property including number of bedrooms and bathrooms, square footage, presence of a garage and/or basement (finished or unfinished), recent updates, lot size, property type (ranch, bungalow, colonial, house or condo, etc.), and overall curb appeal. I take those features and plug them into my various searches to see what very similar or identical properties in the same area as mine have closed at in the last 3 to 6 months. I also use a variety of sources to search including the MLS and our extensive in-house database. Once I have all of the similar or identical closed properties narrowed down, I plug my property into the mix and see where it falls. I will adjust slightly up or down depending on any extraordinary features of my property or the comparisons and determine what the property should rent for. Typically, many owners do not have the time or access to the sources a professional property manager has to do the comps and thus find themselves either “winging it” or relying on the review of websites used to advertise vacancies when determining a rental price. The bottom line is, tenants don’t care what an owner’s costs are, whether or not he owes too much for the property, or whatever his problems may or may not be. They are looking for a nice place to lease that they can call home at what is a reasonable price for the area. And they will pay what the market rate is, every time.

Author: Service Specialties, Inc.
Service Specialties, Inc.. located in Mt. Clemens, Michigan was founded in 1981 and is owned and operated by Catherine Bott (President). Service Specialties, Inc. has managed thousands of properties over the years. Our services currently cover single-family homes, multi-units of varying sizes, apartment communities, office, retail, and industrial buildings as part of our portfolio of properties.With over 25 years of experience and expertise in the management and real estate business, we are able to provide our clients with programs that exceed their expectations, maximize the value of their investment, and present information that gives them a thorough understanding of their financial position in their properties. Our Mission Statement Provide first class property management services to our Owners and Tenants so that our clients' property values are safeguarded and enhanced.