Is it ever appropriate to lower the rent on your rental property? If you're struggling to find or keep tenants, there's an excellent chance your rent might be too high for the area.
Before you drop the price, it's good to understand how the best rental price works in your favor. Even when you live in Chesapeake, it can be tough to know the rental price that works best for your property. Setting the right rental price involves more than deciding on a number you'd like to charge your tenants.
How can lowering the rent help you make more money? Here's why it might be a good idea—and how to do it.
What Happens When the Rent Is Too High?
Struggling to find new tenants is one of your first tips that the rent might be too high. Renters are smart: they know how much they should pay for your Chesapeake rental property.
Renters shop around for the right property to fit their needs at the right price for the area. If your property's rent is higher than other comparable properties, renters won't bother applying to live in your rental.
If you're losing tenants when it's time to renew the lease, it's possible that you increased the rent too much for the new lease term. Tenants can tolerate small increases over time; a significant jump in price will cause your tenants to look for a new home.
You want to find quality tenants who can afford your property and find that the price matches the value of your home. If you're not familiar with the area or the current rental market, you'll struggle to settle on your "bullseye rental price."
You're Losing Money!
It's easy to think that it's okay to have an empty property while waiting to find a tenant who will pay the rental price that you want. If you feel your property is worth that much, you don't want to lower the rent and lose money. Right?
It's a logical thought—but it's incorrect. The longer your property sits empty, the more money you lose. While you wait, things get expensive for you:
- You pay all property-related expenses: While your property sits vacant, you're responsible for all property costs. However, some of those expenses transfer to your tenant when they move into your property. Until then, your property has to stay in tip-top shape to attract the right tenant. You'll pay the bills, including utilities, upkeep, and lawn care.
- You're not generating any income: While you pay the bills, you're not getting a monthly rent check from tenants. Not having monthly rental income delays your timeline for generating long-term wealth.
Even if you didn’t originally purchase your Chesapeake property with the intent to develop a real estate empire, the longer the property loses money, the further you are from generating the passive income you seek.
How Do You Find the Right Rental Rate?
How do you know the right rental price? If it's not ideal to pick the amount you want, you need some guidance to arrive at the perfect price.
- Start with a rental analysis: Whether you live near your Chesapeake investment property or not, you need to look at the market from a rental perspective. Rental market analysis tells you about other rental properties in the area and helps you understand how your rental compares.
- Consider your goals: What are your long-term financial goals? How does your rental property fit into your plan? Don't rely entirely on how much you want to earn from your property—but it's essential to factor in the maximum income you can generate to support your financial goals.
- Remember your expenses: Your monthly rental income should cover all rental property-related expenses, plus leave you with some profit. Make sure your rental price generates income after expenses!
The right rental price is less of a "decision" and more of a strategic process. Let the information guide you to the right price!
Seek Property Management in Chesapeake When It's Time to Adjust the Rent
Where do you get the research you need? An expert property manager in Chesapeake has it all! When we help you review the rental market information and run the numbers, we'll guide you to the right rental price.
At Renters Warehouse Hampton Roads, we have our boots on the ground in Southeast Virginia. We know the area, and we have the research and expertise you need to select the right rental price. The market drives the rent that brings you the best tenants for your property: if your current rate is too high, we'll help you lower it and market your property to attract more potential renters.
Your peace of mind is important! We want you to make the most money you can from your rental property—without worrying about losing money on a vacant rental. Our team of experts knows what tenants look for when managing rental property in Chesapeake. Let's get started on helping your investment property reach its maximum potential: get in touch with us!