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!
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