When to lower rent to get more interest?

Question

Hi there! I currently have 2 apartments that I just finished renovating. The apartments look beautiful, clean with very nice upgrades. The location is great and the rents in the area really vary. Im about.04 miles from Providence College. A few blocks closer to PC the rents are higher and I am sort of on the cusp of the end of the college rental area to the beginning of a different neighborhood. So the rents really vary. I posted my first floor apartment 21 days ago and have had NO applications. I posted the 3rd floor apartment and almost no interest. Its def. not the apartment itself, they are in excellent condition. My realtor got professional pics done and they look great online. I just dont know why its not renting. The other apartments in the area are also in good condition and are much more expensive then what im asking. I decided to lower it up to 125-150 dollars (from 2300 to 2150) and (2100 to 1975). I saw the drop on zillow and just panicked. I feel like i made a huge mistake. Please advise. What are we doing wrong? Or should I just leave it now at this reduced price. Am i panicking too soon. I understand its winter but 3 weeks and no application is concerning. what do you think? Please help. Yes Im a newbie.

Gladys Cepeda · Answer

Thank you so much for your reply. You made some really important points. I appreciate your definition of "market rent"- i certainly dont want a high turnover and want to make sure this gets rented sooner rather than later. Curious to see hoe this plays out. Appreciate your time.

Denise Supplee · Answer

Hello Gladys, I am sorry you are dealing with this. It can be very frustrating. If you are priced correctly by location, I am wondering if you need more advertising. Where have you placed ads? Additionally, less is sometimes more... maybe less in the description and less pictures to peak more interest. I see that all the time in my markets. Do you allow pets? That is also a great way to evoke interest and even increase the rent amount. Just a thought. Best of luck to you!

Abdul Malik · Answer

Hi Gladys

You can ask your realtor for apartments that were listed and filled within the past couple of months.  Try to find a comparable that is close to your apartments in terms of # rooms, finishes, flooring, appliances etc.  If you find a couple that closely aligns with your apartments, you can adjust the rent rate accordingly.

You mentioned you posted the listing online.  How many websites have you posted your listings?  If it is only a couple, you may need to syndicate to more websites.  Also, market the property on social media with in various real estate groups, if you haven't done so already.

You may want to consider promotions such as waving the application fee, or half off first month's rent, etc.

I hope you get them rented out soon!  Good luck!

John Morgan · Answer

If I can’t find anyone within a week or two I lower the rent $100. And I’m usually $150 or more below market rent when I first list them. I want my properties rented out right away vs sitting vacant for a month or two. We currently have an over supply of multi family in most areas. But building permits are WAY down so we’ll have a shortage of housing in a couple years. Just plan on rents softening for the next couple years, especially MF. But it’ll pick up in a couple years and you’ll see market rent come way up and continue to rise 2-5%/year starting around 2027.

Kevin Sobilo · Answer

@Gladys Cepeda, a few thoughts:

1. You mention being on the cusp of a college rental area. This is the middle of a semester. If you are targeting college renters wouldn't you have timed the rental to be in between semesters.

2. This is the off season for long term rentals. We are still in winter as spring weather has not quite arrived. So, demand is usually slower in cold weather markets.

3. Pricing is a whole other topic. There is a tendency to focus on the rental price when that doesn't solely determine what ends up in your pocket!

If you were to look at comparable rental listings, you might hope to rent yours for something near to the more expensive comps. That's human nature. However, if you studied these listings over time you might find they sit vacant on the market longer, get reduced in price, AND TURN OVER MORE OFTEN!

Vacancy/Turnover is EXPENSIVE! Figure out what you put in your pocket if you rent for top dollar and the place turns over every year and sits vacant 3 months versus if you reduce the price 10% and it only turns over every 3 years sitting vacant only 6 weeks.

My point is that when you try to determine "market rent", you need to determine what your approach to pricing is and understand how it will affect vacancy/turnover. My personal definition of market rent is the price where I can READILY attract a GOOD QUALIFIED tenant and also KEEP that tenant AT LEAST 2 years. So, my goal is to exceed 2 years on average between turnovers because that is what I budget for when I set money aside for turnover/vacancy.

Gladys Cepeda · Answer

OR should I ask my realtor to just lower it $50.00 for now to see if it makes a difference. This will be my 3rd month paying a pretty hefty mortgage and NOW im getting worried. Is it worth waiting for a rent that I want, or just get this baby rented and raise the rent next year. Thank you in advance for any input.