Below market rent to attract good tenants? BAD idea!

I saw a lot of new landlords trying to put below market rent in hope of attracting good tenants? It's actually a bad idea, why?

1. Below market rent makes your property suspicious. Renters may think there is something wrong with your house and some of them won't even bother checking.

2. Below market rent will definitely attract renters who otherwise can't afford higher rent, especially in desirable neighborhood.

3. Less money in pocket for maintenance. In a long run, deferred maintenance will make your property lose value in BIG way.

4. Below market rent makes your property and properties in your neighborhood less valuable. By lowering your rent by $50 bucks a month, it's $570 loss a year given 5% vacancy. In an area where CAP is 6%, you just made your house $9500 less in value. Think $9500 is small money? If you have 10 units, your asset decreases by $95000! In such tight market, if you try to refinance or open a credit line but hit LTV limit, you will regret a lot by not renting at market price.

Unless there is very high vacancy, I will always try to rent at market rent or slightly above market rent for well maintained unit. I never had problem filling in the unit in short period of time. The key is to well advertise your unit by well taken pictures, detailed descriptions, features, but definitely not by lower price!

所有跟帖： 

• DING! -va_landlord- ♂ (166 bytes) () 07/18/2008 postreply 12:43:44

• Very good point -4008- ♂ (0 bytes) () 07/18/2008 postreply 13:26:38

• If the rent is within market price, but at low end -MiHuPig- ♀ (299 bytes) () 07/18/2008 postreply 13:27:57

• :) good question. Not to lower price? wait for deflation. -山高月小- ♂ (0 bytes) () 07/18/2008 postreply 13:40:47

• $75 is a lot of money for rent. -cultuslake- ♂ (185 bytes) () 07/18/2008 postreply 14:01:58

• Is $75 a lot for a $3000 rent -MiHuPig- ♀ (182 bytes) () 07/18/2008 postreply 14:14:29

• there are many ways to attract good renters, not necessarily mon -montavista- ♀ (1822 bytes) () 07/18/2008 postreply 14:43:29

• very helpful thank you for posting -vcvc- ♂ (0 bytes) () 07/18/2008 postreply 15:04:35

• thank you for your helpful advices! -MiHuPig- ♀ (111 bytes) () 07/18/2008 postreply 15:14:04

• If $3,000 is the average rent, then $2,925 is -cultuslake- ♂ (220 bytes) () 07/18/2008 postreply 18:24:17

• Good point. I never believe in lower than market rent. -cultuslake- ♂ (432 bytes) () 07/18/2008 postreply 13:42:51

• my own real life experience -冉冉- ♀ (773 bytes) () 07/18/2008 postreply 20:10:57

• disagrre -hmo- ♂ (219 bytes) () 07/19/2008 postreply 07:13:26