Landlords: Your rents are TOO LOW.

LANDLORDS! I can tell if your rent is too low without checking your market with just one question: “When you place an ad for your rental, how many inquiries do you get?”

If your answer is “TONS!,” then your rent is too low.

Here’s why that’s a big mistake both in the short term and long term:

Even if your rent is right in the middle of the market range, the challenge is that it casts a WIDE net. And a wider net means more applicants who are financially stretched. If your goal is a more RELIABLE tenant, I recommend listing your rental at the highest the market can bear. That means much FEWER renter inquiries. That seems counterintuitive but it works because financially strained rents will weed themselves out at that higher rate.

SORRY RENTERS! 

The renters who do apply will generally have stronger financials (that is, HIGHER income and BETTER credit, which means they are less likely NOT to pay their rent and risk eviction. Tenants with better credit tend to be more invested in keeping their rental history clean and their credit score high.

MYTH: Rental are NOT passive income.

Plus, tenants who are willing to pay higher rent, also EXPECT more from you. That’s GOOD! They’ll let you know when the home needs maintenance or repair. You may want to be a hands-off landlord with so-called passive income, but not knowing the condition of your rental means small repairs can turn into bigger, more expensive repairs later. 

Tenants who pay less in rent want to keep their rent low. They want to stay off your radar. They tend to keep QUIET about maintenance needs and self-repair instead, which means you might not hear about a leaky faucet for 12 months and then you have damage you could have avoided.

THREE Long-term Benefits of Higher Rent

In the long run, you’ll 1) collect higher rent for the duration of their tenancy AND 2) you’ll keep the home in better shape, which means less work to do when you’re ready to sell. PLUS, 3) if you’re selling a home that’s more likely to attract investors, you can show your rent roll PROVING higher rates than the competition, making your property more attractive than others on the market.

This is one of the biggest and most common mistake I see landlords make with their rentals and it makes it harder for me to sell for you later.