Staying firm with rent rates or adjusting them due to Pandemic
Hello All,
I’m posting here to get another perspective on a current rental property in Fairfax, Va. I am a somewhat new investor. Pre covid, rents did 3k monthly essentially 1k per bedroom for college students at George Mason University. Currently I don’t have any renters due to a recent renovation but it was placed on the market 45 days ago and I’ve had to drop my price essentially 50 dollars a week. Not going below 2500. Currently My wife and I just eat the cost with no problem. However, we keep getting offers for renters for 2400 with a 18 month lease. 1800 difference over the term of the contract. I’m looking to see if it’s worth holding firm at my rate or dropping it based on the economy at this time. The mortgage on the property is about 2200 and the PM takes 7.9%. Essentially right below that 2400. However, if anything goes wrong in the house, I would need to come out of pocket resulting in a loss. Is the 100 difference worth the risk.
thank you
@Dexter Bowling Jr tough situation, but holding out for another 100 bucks a month seems like stepping over a dollar to pick up a dime. Your missing out on roughly $80 per day in rent. $1800 "lost" over 18 months is nothing considering you'll "lose" $2400 in the next month if you dont fill the vacancy.
I would try to get the tenant to sign for $2400 per month for 10 months if you feel that you can fill the unit mid-August next year. That way your not locked so long on $2400 Otherwise do the 18 months. Then you would be up in March. Then try $3k per month again.
Im not familiar with turnover with students but this is what I'd do for non-students. Hope this helps!
Thank yuo @Isaac Pepper, I really appreciate your perspective on this one as it is unique. We were able to sucecssfully meet in the middle for 2450 and the tenants moved in yesterday. Thanks again!
Originally posted by @Dexter Bowling Jr:Hello All,
I’m posting here to get another perspective on a current rental property in Fairfax, Va. I am a somewhat new investor. Pre covid, rents did 3k monthly essentially 1k per bedroom for college students at George Mason University. Currently I don’t have any renters due to a recent renovation but it was placed on the market 45 days ago and I’ve had to drop my price essentially 50 dollars a week. Not going below 2500. Currently My wife and I just eat the cost with no problem. However, we keep getting offers for renters for 2400 with a 18 month lease. 1800 difference over the term of the contract. I’m looking to see if it’s worth holding firm at my rate or dropping it based on the economy at this time. The mortgage on the property is about 2200 and the PM takes 7.9%. Essentially right below that 2400. However, if anything goes wrong in the house, I would need to come out of pocket resulting in a loss. Is the 100 difference worth the risk.
thank you
Campus rentals can be tough, especially during this time. Up here in Ohio when I rent for OSU I have to put my rentals out there about 8 months in advance to find people for the following year. Is that the same with your place?
@Steven Foster Wilson, Not at the moment (at least from my experience). I was previously living in this specific residence and them moved out into a bigger place and turned it into a rental. I'm sure some other investors in the area have similar processes to yours.
#3 Managing Your Property Contributor
I was about to post this, but saw that you did just this.
It is costing you to have it vacant. You are losing $2500 a month when it is vacant. Talk to the people making the offer and see if they will meet you half way at $2450 or do $2400 until July and then $2500 after that.
Originally posted by @Dexter Bowling Jr:@Steven Foster Wilson, Not at the moment (at least from my experience). I was previously living in this specific residence and them moved out into a bigger place and turned it into a rental. I'm sure some other investors in the area have similar processes to yours.
Go based off demand. If no one is looking into renting then I would lower the price. But look into campus housing cycles. The ideal time for lease dates is August through August (beginning of school year) Try renting out your place for August and see how much interest you gauge.
@Theresa Harris, @Steven Foster WilsonThank you both for sharing your insights. With the Uncertanty behind COVID it brings a lot of situations that are outside of the norm. However, I'm still looking forward to the next rental opportunity I'll be able to capitalize on.
Hello @Derek Bowling Jr., I just saw all communications, and I agree with Isaac, I am glad you were able to meet in a common ground and tenant already moved in. Another thing is why the 7.9% for PM it’s an odd percentage, I never seen...got curious.
Best regards,
Izabel