Rental Pricing Question

14 Replies

I have a new rental in Greenwood, SC, which is not renting.  I am concerned it is price.

 I could not find much in the way of comps, so I made an educated guess.  The 3 bedroom townhouses about a mile away rent for $850-$895, and my friend rented a 4 bedroom older house on this side of town for $1200. 

I have a 12 year old 3/2/1 in a good part of town though it is on the main road. The Zillow zestimate is $1018 with the upper range at $1200. The house is well done with laminate wood flooring, large master suite, standard neutral paint.  

I listed  it at $1095 which includes water, sewer, and trash service. I have received no calls.  

My question is how much of a price change should generate qualified tenant calls? Do I need to go $100 dollars or will $50 generate some interest?

It may be tough to find comps, but you really need to do a market survey of the rent.  Try to network with other landlords/property managers. Zillow rent estimates are not accurate.

What is the vacancy rate in your area? If it's high, then it is a tenant market.

How are you advertising?  Postlets is a great way to get the word out on your rental.  In some areas, Craigslist may also work, but definitely go postlets-it posts to 10 or more sites.  Make sure you have great pictures.

There may be a "rental cliff" in your area.  Over a certain amount of rent in my area, the number of people interested exponentially decreases.

The main road may be scaring people off as well.....

You state the property is on a main road. That can be a real deal killer for many potential tenants. Personally, I never buy on busy streets for that reason. I am not sure how much traffic you have on the road, but if it is generally a busy street you may have to make more concessions to get it rented. Good luck.

@Anna Buffkin , do you have any rental prices for properties closer to this house?  The condos 1 mile away might be too far to be a true comparable.  I can pick three similarly sized houses in my city in a 1-mile radius and the prices can vary from $2250 to $500 to $900.  A mile can encompass a very diverse grouping of neighborhoods.  And your friend's house "on this side of town" might also be too far removed.

Find out what the rents are for properties on the same block as your house, or on the first one or two side streets, or the street behind your back yard.  Those should give you a more accurate idea of what the rent should be for your house.

Hi Anna,

I would consider dropping the rent to $995 to get under $1000, that might just be the threshold if the numbers still work.  How much per month is water and sewer?  Are you able to make them pay that and drop the rent a proportionate amount?  Some areas won't let the tenant have certain utilities in their names.

Kelly

A busy road can have more of an impact than you might think.  I took a beating on a deal involving a busy road and that road was a major factor.

How are you advertising it?  The upside of a busy road is that a yard sign will be seen by a lot of folks.  Put up a yard sign and see if you get calls.  That will let you gauge demand.  If you get few calls, then you have a bigger problem than the price.  If you get lots of calls, do some price testing.  Tell different callers different prices and see how they react.  Ask them "What else have you looked at in this area?  How much did they want?"  If a caller seems knowledgeable and is willing to talk, ask them what they would pay.

Afternoon,

Rentometer.com and zilpy.com may provide some assistance.  It's based off other people who have gone in and added their rents to create their estimates.  It may help but it is really dependent on others who have gone in and added input.

David

I am not advertising the busy street or address just basic location.

Greenwood is not very big- 22k population in county with even less people in the surrounding counties.  Comps are hard to come by.  My husband found out a house down the street used to rent for $1000 a couple of years ago. Mine is nicer, but I am worried about a price ceiling for the area. I am thinking about going $995 or $1040.

posted on postlets for $995.

This is a lesson on knowing your market. I treated this rental like my rentals in Columbia which is an hour and a half away and in a much larger city.

I find whole number work best so I would go $1,000 or 950. I have found that houses even 50-100 over priced will get no call. The lower amount will get 30 lol. So that much of a difference could be really affecting you!

@Elizabeth Colegrove

Now that you say it, I realize my other rentals are in increments of $25.   Not sure why I keep picking odd numbers for this one. lol.

I am use to the phone ringing off the hook with 30 to 40 calls.  This is kind of weird for me.

Do signs in the front yard work? I've never had to do anything other than Craigslist before.

Signs do generate some calls, especially if you are on the main road.  Beware of rate shoppers and negotiators.  I have gotten that a lot with signs.  Some people just wanting to know the rental amount call as well.  You get the calls, which is always positive to have interest in your property.

Also, be aware you are advertising a vacant property with a sign, meaning that there may be security issues, depending on the neighborhood or how much crime an area has.

@Anna Buffkin

I understand your dilemma. I had the one too. I would get 30+ calls so I would raise it $50 for the next house. Only to have no calls. That's when I realized how much of a difference $50 made. 

Originally posted by @Jon Holdman :

...

How are you advertising it?  The upside of a busy road is that a yard sign will be seen by a lot of folks.  Put up a yard sign and see if you get calls.  That will let you gauge demand.  If you get few calls, then you have a bigger problem than the price.  If you get lots of calls, do some price testing.  Tell different callers different prices and see how they react.  Ask them "What else have you looked at in this area?  How much did they want?"  If a caller seems knowledgeable and is willing to talk, ask them what they would pay.

The sign in the yard will get calls - just don't put a dollar figure or lots of details on the sign. Just "for rent" and the phone number to call. 

Try to answer all calls from the sign so you can have a bit of conversation. The caller will want to know about the property - before you tell them, you might want to ask them what they are looking for (bedrooms and baths), and if you get that and it matches what you have, then you can ask if they have a target rent in mind. See what you can learn, and that might enlighten you as to what sort of price you need to set if you want to fill that unit. 

BTW - for how long have you posted the online ads? Do you make sure they are near the top? Are you sure your ads aren't getting "ghosted"?

I gave up on craigslist long ago.  Nothing but doctors from the UK moving to the US with their daughters and by the way my company will send you a check...  Yard signs work great for me.  No price.  Take the calls and have a conversation.  

If you're not getting any calls off your ads you need to change them.  Maybe its as simple as they're falling down in the list and not being seen.  Maybe someone is reporting them.  Maybe the rent is high enough that folks don't look too closely.

You could try a test with a significantly lower price.  There is some price where you phone will ring off the hook.  That's below market.  You can always say "oops, price is wrong in the ad."  Or not answer the calls and let them go to voice mail.  This strategy works better when your selling widgets and can afford to sell some at a loss to gauge the market.  Tougher with just the one unit to rent.  But if this is a hard-to-comp property and you're getting no responses, a more drastic test may be needed to try to generate some data.

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