Downside to posting a rental high and then dropping if no-go?

12 Replies

I have the rare luxury of 60 days notice on a unit, and was wondering if renters think an ad up for a while is stale and undesirable? My most recently vacancy this winter was hard to fill and I'm not sure why. I originally asked $80 more, and backed down when it didn't rent. It kinda hurt my confidence in pricing, this is considered a hot area. May 1st is a better season and I was figuring to up the rent a couple of hundred from the current $1750 based on what the HUD 2br FMR has gone up in my city since the last lease, but with enough time to back off if unsuccessful at getting a tenant at that price point. Thoughts?

I like to keep very close tabs on market rent all the time, not wait until I have a vacancy.

I have a spreadsheet with all the rentals in my target neighborhood with a lot of data, including rent and deposit amounts.  I can use that data to see what has rented in the few blocks near the property, what that bedroom count is renting for in that area, what the $/square footage is, etc.  It takes 20 minutes once a week to mine and record the data.  You can even visit properties listed for rent to compare.

I would not use the HUD amounts, I would look at for rent ads. The HUD data has noise and time lag in it.

I see rental listings that are too high and sit forever, ones that start too high and get lowered, I think it all works.  It may not be your price that is preventing applications, especially if you get plenty of phone calls.  Try to get prospective people to talk about what they are looking in a place and try to gauge how your policies differ from other local landlords.

@Johann Jells :

 Winter is slower when it comes to renting. Yes I would start a little high given you have time. If you drop price you will likely have a different crowd looking at property 30 days later.

If you're concerned about vacancy @Johann Jells , I suggest starting at or below market rent.

I ran into this last year as it is in my leases for 90 day notices for new rentals.  I feel that showing early at least in my area isn’t a good thing.  Most people that look for a place to rent need just that. Somewhere soon 1-2 weeks of where they could move in.  I don’t think the average person plans and also they wouldn’t be looking if it weren’t in the ball park of what they could afford.  I still use the 90 days to see if the current tenant is going to renew their lease options or not. However, I now only start advertising and showing in the last 4 weeks.

a problem with getting someone to take the high-rent is it typically there more desperate they may actually be higher Financial Risk counterintuitive. They will certainly be shorter stay. I use Zillow rental and I actually look at the ads I price my rental $5 lower so I'm below the even Mark 1400 I'll price it at 1395 I want a tenant to move in and literally never move out.

A lot of good points here. Only thing I could add is; Sometimes markets swings due to seasons or other factors. We roll rents down by $100 if we want to move them faster. If a unit is vacant for 1 month, what’s the lost rents for that month average out to over 12 months? That’s your discount to insure you don’t lose 2 months rent..  sometimes odd things happen in 3’s. Bad season, weather, and a flood of units on the market, your only choice is to wait, or keep discounting till it moves.

@Johann Jells One thing I liked doing was listing a little high and then offering to reduce the rent. This way, good tenants feel like they're getting a deal, making the apartment all the more attractive. 

Personally, I never want a property to be vacant for more than a couple of days so I make sure I am priced right and the property smell fresh and clean

Look at is this way. From an income perspective, who comes out better on a year lease:

The landlord who rents his property for top dollar at $1200 and secures a tenant in 45 days or

The landlord who found a tenant in a couple of days at $1100 per month?

@Johann Jells starting high on rent and coming down isn't the same as selling a home. If a house sits on market, the listing gets stale and multiple price drops can create a stink on the property. Rental properties are different. Zillow is the only place that tracks rents. If you repost on Craigslist, nobody even knows it was higher before. I have actually even seen the same house listed multiple times on Craigslist with different prices. Not sure what the theory is behind that, but there is no mechanism to stop it.

Thanks all.  I've always subscribed to "lower the price rather than lose a month", and I can often not even have a single month of vacancy between tenants unless I have to do some work in the unit. My last listing I got more than a couple of people inquiring for the next month. It seemed weird, like do they really expect me to hold the unit vacant for them? But some of them were from out of town, some had not given their current landlord notice yet. I've always used a 30 day notice, I didn't see any upside to more, since most people are looking for the end of that month. Why do 60?

I was wondering if the stale thing was applicable since my last listing was so difficult, but I listed it before move-out in Dec, dropped it $90 in late Jan and didn't rent it till last week, move in the 15th. I'm not used to that.

I find pricing here very difficult, it's not like in a suburb where the houses are all more or less the same. Here, a 2br apt can be 700 ft in a 140 year old walkup rowhouse with no washer, DW, A/C or parking, or a 1500 ft unit in a brand new hi rise dripping with amenities.  Diving into the listings to find truly comparable is a lot of work.

Originally posted by @Johann Jells :

Thanks all.  I've always subscribed to "lower the price rather than lose a month", and I can often not even have a single month of vacancy between tenants unless I have to do some work in the unit. My last listing I got more than a couple of people inquiring for the next month. It seemed weird, like do they really expect me to hold the unit vacant for them? But some of them were from out of town, some had not given their current landlord notice yet. I've always used a 30 day notice, I didn't see any upside to more, since most people are looking for the end of that month. Why do 60?

I was wondering if the stale thing was applicable since my last listing was so difficult, but I listed it before move-out in Dec, dropped it $90 in late Jan and didn't rent it till last week, move in the 15th. I'm not used to that.

I find pricing here very difficult, it's not like in a suburb where the houses are all more or less the same. Here, a 2br apt can be 700 ft in a 140 year old walkup rowhouse with no washer, DW, A/C or parking, or a 1500 ft unit in a brand new hi rise dripping with amenities.  Diving into the listings to find truly comparable is a lot of work.

Trying to rent a place at the end of December is horrible. People are thinking about Christmas and new years, broke from the holidays. Who wants to move in the snow and cold weather. I don't think it was price as much as time of year that was your issue.

@Johann Jells Could be just a seasonal thing. Usually, units are harder to fill during winter versus spring or summer. 

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