One of the things that’s feared by most landlords is putting up a vacant rental property and not getting a tenant within a reasonable time. Our advice to such landlords: do not panic! You are facing an issue that’s peculiar to most landlords, so it’s no big deal. Even if you have debts piling up, they should only propel you to fix the issues rather than become apprehensive.
Chances are that you have a vacant property on your hands because you’ve set your prices higher than it should be, effectively knocking yourself out of competition for tenants. So, in this article you will learn how to beat your competitors in offers when your property is on the market. Let’s get to it!
Demand Determines Rent
Remember your high school Economics lessons on demand and supply where you were taught that higher demand drives higher prices, and lower demand equals lower prices? Yes, the same rule applies in the real estate business – as it does to all other industries.
In simple terms, seasonality affects, dictates, and drives demand. There are certain times of the year when people passionately search for and check out vacant properties, and posting rental vacancies during peak seasons will justify higher rents.
Throughout the U.S., demand for rental properties peaks during the summer, and slows during winter. That’s because packing during winter is a dreadful thing for most people, especially for those in the northern states where renters are hauling furniture through heaps of snow in freezing temperatures. Additionally, holidays fall during winter which creates time and financial obligations that make the hassles and costs associated with moving seem extra unappealing.
Because of these reasons, prices of properties rise considerably in the summer and go down in winter. If you are looking out for tenants during winter, it’s highly probable that you’ll have to settle for lower rents. To prevent this, ensure that signed leases expire in summer, and if there are current ones billed to expire in winter, negotiate an extension with your tenants to get the lease’s expiration period rolled over into a summer vacancy cycle.
Check Out Your Competition
Whenever you are deciding on what to charge as rent, you should look around to see what your competitors are offering and at what prices. In the real estate industry this is commonly referred to as checking the comps.
Factors to consider in choosing those rentals that you should use for comparison includes:
- Neighborhood: Specifically find properties located in the same part of town as yours, because prices may vary considerably in various parts of a town.
- Size: You want to check out rentals in the same category of size with yours, including number and sizes of bedrooms, bathrooms, and nearby amenities.
- New vs. old: Tenants are usually willing to pay more for spaces in new buildings, or properties that have been recently renovated, than for old ones.
Where to check out your competitors
- Online platforms: There are plenty of virtual platforms where landlords like you advertise their vacant rentals. Take special notes of the prices of those properties which go off-market more quickly than others. You can also use online rental comp tools such as www.rentometer.com.
- Physical survey: You may pose as a prospective tenant to exhaustively check out your competition’s buildings. Ask the landlords if their properties have gotten numerous offers from potential tenants.
- Consult a realtor: As professionals who know what tenants desire, they can check out your rental and give suggestions regarding price setting. Some real estate agents may also offer services to help find you qualified tenants.
Value vs. Rent
Tenants are usually willing to pay more on rent, depending on the value they are sure they’d get in return. So, if you’d like to prop your rent higher than your competitors, you should increase the value you deliver to clients. Here are ways to do that:
- Offer to pay utilities: Since you are in-the-know about the average utility charge on your properties, you can include the same in the rent – with a little addition to it for your protection.
- Furnishings and fittings: As a landlord, you may be able to make more profit on rent when you invest in making the space comfortable. In areas that are near hospitals, or where tenants may not be relocating full-time, it might make sense to offer short-term leases (3-6 months), and include living room and bedroom furniture that will be appealing and yield a higher rent.
Bottom Line
Setting your property’s rent can be challenging, but if you can take action on the tips mentioned above, you’ll have us to thank for being able to rent out your properties at a profitable price.
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