How Long Would You Let a Finished BRRRR Sit Empty Before Dropping the Rent?

Question

Say the rehab is done and you think the house should rent for $2,000. Two weeks go by. A few showings, no solid applicants.

Then another week. At some point, holding out for that extra $100–$150 a month starts costing more than just filling the place.

How long do you usually wait before cutting the rent? I’d hate to drop it too quickly, but watching a finished house sit empty would probably bother me even more.

Jay Hinrichs · Answer

to me it would depend on RISK of being broken into and stripped..

I tend to hold out for not highest dollar BEST applicant with 680 FICO or better

which I can do with the locations my very few rentals are in.. But if your in an area were 680 ficos buy homes and dont rent.. then it comes down to price most all the time.

And your right just work the math miss one month waiting for 100 bucks a month and U end up renting it for less any way take you long time to make it up.. best to rent it and worry about higher rent when the market allows.. its a soft rental market in many parts of the country right now.

Bruce Woodruff · Answer

Like @Jay Hinrichs said, it should be more about the exact tenant than the $$....

A bad tenant is far worse than a month or two of lost rent.

Just my $.02.....

Jimmy Lieu · Answer

Great question, Ali! I usually wouldn’t let it sit too long if I’m getting showings but no solid applications. That’s normally the market telling you something about the price. After about 2–3 weeks, I’d take another look at the comps and consider dropping it $50–$100 rather than waiting another month hoping to get an extra $100–$150. A $2,000 rental sitting vacant for another month costs $2,000, which can take a long time to make back even if you eventually get the higher rent. I’d rather price it correctly, get a good tenant in, and start collecting rent than chase the absolute highest number. Happy to connect and answer any questions you have!

Adam Tafel · Answer

Depends on the rental market. In the Twin Cities a property priced unit should not sit for longer than a month, but there are outliers. A higher-end SF home might take 2-3 months, while affordable 2/1 units can rent in a weekend. Know the market so you don't drop too quickly.

Caleb Brown · Answer

Depends on the area and time of the year. Generally if it sits for 3-4 weeks you should do an adjustment. Some areas have higher supply so it'll take longer.

Victor Patel · Answer

I’d be much quicker to adjust the rent than let a finished property sit vacant for several weeks.

If you’re asking $2,000 and the true market rent is closer to $1,900, holding out for that extra $100 costs you pretty quickly. One month of vacancy is $2,000 gone. It would take 20 months of collecting an extra $100/month just to make that back.

My rule of thumb would be to watch the activity, not just the number of days. If you’re getting a lot of inquiries but no applications, there may be another issue with the property or screening criteria. If you’re barely getting inquiries or showings, the market is usually telling you the price is too high.

After about 10–14 days with weak activity, I’d seriously reevaluate the rent and comps. By three weeks, I’d probably make an adjustment unless I had a very good reason not to.

I’d rather rent slightly below the absolute maximum to a strong tenant than chase top-dollar rent and lose a month of income. Vacancy is one of the most expensive expenses in this business, even though it never shows up as a repair bill.

Richard F. · Answer

Your premise is that the rehab is "done". Define "done". What is the product you are offering? Safe, Clean (completely), and fully Functional? Reasonable (for the market) quality finishes and appearance? What about the marketing photos an ad copy? Great composition; clearly tells the story of the "home" in an appealing manner? What are roadblocks to viewing or renting the unit? Difficult or slow scheduling for viewing; excessive cost; emphasis on a score vs. less restrictive criteria (while still ensuring screening will be effective). How effectively did you evaluate the market to determine your asking rent?

If you have high confidence that all of the above are good, then, depending on time of year, local market, and traffic, I would make a reduction initially at 10 days to 2 weeks. You need to pay attention to remarks and objections made while showing the unit, and re-evaluate if you need to make changes to any of the above. There are definitely slow periods, typically from mid October through mid April that are slowest in virtually all LTR markets. This applies even more for higher bedroom counts. Studios and one bedrooms should move pretty well almost anytime, but "families" will not usually "choose" to move during the school year.

Your comment about "no solid applicants" is directly affected by what you are offering, where it is located, and how they are being screened.

Chris Seveney · Answer

First question is the location. We like to get our units rented quickly but more importantly, getting a good tenant in is critical. We preach this to our property managers all the time that they need to do a very good and thorough job when evaluating the tenants.

You mention two weeks, and it went on begining of month, I would not lower it until september-ish as people looking probably need something for september or october and are reviewing options.

How Long Would You Let a Finished BRRRR Sit Empty Before Dropping the Rent?

How Long Would You Let a Finished BRRRR Sit Empty Before Dropping the Rent?

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