This happens ALL THE time when owners can check Craigslist for OTHER over priced rental properties in their area.
I met with an owner today that was convinced her property should rent for $800 or more. I explained to her that the owner two doors down was asking $650 and the comparable rents in the area were closer to $700.00. Her vacancy was extending into its third month with no bites.
To make matters worse, the neighbor upstairs was noisy and had two illegal tenants.
In my estimation, the root of the problem is an over priced property. Rents that are two high make an owner make bad decisions. Since only a few people apply due to the high price the owner gets desperate. The only tenants that apply are those with bad or questionable credit, bad or no rental reference, and income that may not qualify for the long term. Why, because good tenants shop price and can live anywhere. Bad tenants have to find an owner that has no standards.
In the end the owner will have to make a tough decision. Continue with the high rents and those problems, or lower the rents and have fewer problems and less income. But, the income may actually be higher at lower rates as it will be collected and vacancies will be filled.
Wallace S. Gibson, CPM * GIBSON MANAGEMENT GROUP, Ltd.
Central Virginia
LandlordWhisperer
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"...to be a Virginian, either by Birth, Marriage, Adoption, or even on one's Mother's side, is an Introduction to any State in the Union, a Passport to any Foreign Country, and a Benediction from the Almighty God...." Anonymous
This is so true. When you add up legal, clean-up and other expenses, low rents are much cheaper.
Will * when I take over a self-managed property, I can usually cover my cost within 6 months by increasing rent, decreasing expenses or shifting expenses to the tenant...Damn - I'm GOOD!
This is so true. Owners often think they can self manage, cut corners and basically do what they want with their rental properties but in the end it costs them money.
June * MANAGING investment properties is the HARDEST part and I am always surprised when owners do not realize this...
Very good advice! I don't do much rental, but the exact problem is there with resales too... convincing the seller that if they want to sell in today's market, their home has to be properly priced. (And your quote about being "Virginian" is fantastic!)
We see this a lot. And to compound the problem, if the property is occupied the Owner has often let the tenant in with no or very little deposit (an incentive to get them to pay high rent). Sometimes these Owners come to us to get the non-paying (so much for the higher rent) tenants OUT.
Wallace-- I have to agree with the statement of other over priced properties on craigslist. We get told about other properties asking such and such. Thanks for all you hard work and great posts!
BJ * when would-be clients tell me the rent they want, I know they are benchmarking against their mortgage payment OR seeing what other units are going for on CL
We give them the truth - they can take it or leave it. Most will hesitate and accept our advise.
When they don't Diane, I refer them to another area property manager and wish them luck...life is TOO SHORT