Landlords know tenants are their chief source of income. The biggest mistake you can make, then, is overpricing your rental property and chasing off prospective tenants.
If inventory is low and demand is high, landlords can often get away with listing their properties at top market price. If other comparable properties are listing between $,1800-$2,000 per month, for example, pricing yours at $2,000 is an option. However, some landlords fall into the trap of believing their property is a cut above the rest. Going way beyond top market price is a major risk, and 99% of the time it doesn’t pay off. Here’s what you stand to lose by overpricing your rental property and refusing to follow the market.
What Are the Risks of Overpricing Your Rental Property?
It Will Sit on the Market
The longer you allow your property to sit, the more money you’ll lose. Think of it this way. Perhaps your $2,400 per month property sits vacant for 2 months. That’s a total loss of $400 per month spread over 12 months. Ultimately, the best way to avoid significant losses is to keep your property occupied. This means pricing it correctly and using the local market as a guide.
Your Tenants Will Notice the Property is Overpriced
When tenants are paying top dollar, they expect their home to be move-in ready, in great condition, and presented as advertised. Overpricing your rental property and not providing tenants with what they expect will lead to tenant dissatisfaction. Unfortunately, unhappy tenants don’t make conscientious tenants. Tenants who are willing to overpay aren’t necessarily the most qualified, either. You don’t want to be faced with lease violations, frequent late payments or property damage.
How Can You Avoid It?
Understand that the Market Dictates the Price
Overpricing your rental property isn’t going to work out in the end. You need to be sure to compare the price of your property with similar properties in the same area. This is the best and only way to guarantee a steady stream of tenants and thus a stable income.
Be Realistic about Your Property
You might think your property is the most attractive on the market, but you still shouldn’t overprice it. Most renters are concerned with finding an affordable home in their price range. The cost of living is high today, you won’t be able to attract tenants if your property is the most expensive option. Examine other similar properties in your area and take a hard look at your own. The market always dictates rental prices.
Here are our final words of advice: to remain in business for a long time, landlords need to be realistic and abide by the market.
Choose All County Denver Metro for Expert Property Management Services
Looking for a top-notch property management company? All County Denver Metro Property Management is here to give property owners confidence in the quality of their tenants and the security of their property through knowledgeable and trustworthy property management services. From managing tenant relationships to pricing rent to lease enforcement, we look forward to working with you to see how your investment can be a long-term, stress-free asset. For a complimentary quote or further information about overpricing your rental property, call us today at (720) 575-6100.