How Trying to Make $100 Cost $3,000!

I recently helped a client of mine purchase a single family home for a rental.  It was a brand new home in a great school district, and should have rented out immediately.  When we were evaluating the home before the purchase, we based our return on a rent of $1500 per month.  

Once we started advertising the property, however, the owner requested that we bump the price to $1600 (against my recommendation).  Needless to say, the property sat for 3-4 weeks before he considered lowering the price, and then we incrementally brought it down to $1500.  By the time the tenant will move in, he will have a total of 2 months of vacancy at $1500 per month ($1500 x 2 months = $3,000).  

The moral of the story is don't try to out price the market.  That $100 a month, which would be $1200 per year, cost $3000.  At first thought, $100 a month seems like more money.  However, time is what really costs money.  Every day this rental home is vacant cost the owner $50.  That can add up to $100 pretty quickly!

To check out homes for sale in Edmond and the Oklahoma City area, visit www.edmondandokc.com