Because you GOTTA rent your home
Many of our homeowners are in the landlording business because they have to be, not because they want to be. They are not investors-types that are planning and saving for out-of-pocket costs that result from marketing the home, repairs, preventative maintenance and of course regular updating to stay competitive. They aren’t thinking about the long-term investment opportunities that may result from a rental property. So getting those owners to make regular changes to their asking price can be harder than dieting over the holidays!
Price reductions are key to getting rented – even small ones
Many owners struggle with reducing their rental asking price, even when faced with dismal interest. Every week, we report to our owners how their marketing plan is going both digitally and the feedback from any showings. Owners can be stubborn when their home fails to attract interest at the advertised rate – AKA their “desired” price. We market homes prior to vacancy, but once a home is vacant, owners holding out for a specific price results in a daily loss that adds up very quickly. Experiencing vacancy loss can be a daunting prospect, but it’s even more frightening when you calculate it by the day!! Keep reading!
What if the rent doesn’t cover your monthly expenses?
Some owners can’t fathom accepting a rental price that doesn’t meet their mortgage payment needs and other monthly costs like insurance, HOA/COA dues, repair costs and of course, the services of a property manager – EVEN an awesome one. All owners want their rent price to cover all of their expenses which doesn’t always equal what the housing market will allow on any given year.
Vacancy loss occurs when your home sits vacant
Failing to reduce your monthly asking price to procure a tenant more quickly can add up to a much greater YEARLY loss for owners. A home priced at $2,000 a month loses approximately $66 a day. This does not include advertising costs, lawn maintenance and utilities. That brings your loss up to about $76 per day. WOWZERS! Check this chart out: Vacancy Loss Charted
Price changes increase interest and freshen up search engines
We encourage our owners to lower pricing at least $25 a week to increase interest, refresh listings and hopefully procure more interested parties to go visit the home and hopefully fall in love with it. There is no guarantee, but by lowering the price, you will usually see that interest increases significantly! Ideally you want to see several showings a week. Remember your home is only worth what prospective tenants shopping at that moment are willing to pay for it, not what you “need” it to be. This is why markets fluctuate from year to year.
Do the math on vacancy loss
When owners are unable to decide how to move forward with a new marketing plan (AKA rent reductions) I find it helps to bring the DAILY loss to their attention. Many people don’t realize how quickly it adds up until they see it in black and white. In addition to losing money by not having a renter, homes that sit vacant can develop maintenance issues which also cost $$$. It’s better to have a well-qualified tenant that pays less rent than you were hoping for than to leave your home vacant. Even though your loss may be tax deductible, savvy owners lower price regularly to snag a good tenant and avoid it. Invest your tax deductions elsewhere, like on preventative maintenance or updating your home. Those things ADD value.
That’s all I have today, now think it over and drop that price a bit so we can get a qualified tenant in your home!
Mary – PROperty Manager for Stephanie Clark and Team