Pricing the rent is one of the crucial decisions that landlords need to make. They need to find the perfect rate that will let them gain profit, and at the same time, not overcharge the tenants. Once the price is higher than usual, it might discourage some renters. Finding tenants will become difficult and will take longer.
On the other hand, if the landlord decides on a lower price, he might find it hard to keep up with the expenses. The advantage is finding a renter immediately. But if the rate is just right, it is a win-win situation for both parties. However, there are some misconceptions about rental pricing.
• Misconception No. 1: Landlords can increase the rental rate whenever they want.
I’ve mentioned countless times that the rental rate is a vital aspect of this business. Landlords must keep in mind that everyone has a set budget. Although some new landlords might not consider this and will think it is okay to raise the rent whenever they feel like it.
Contrary to what they believe in, raising the rental price is not that easy. There are existing laws that regulate the proper process of increasing rent. During the lease period, the landlord cannot raise the rental price. If there is a need to do so, the tenants must be notified 30-60 days before its effectivity.
• Misconception No. 2: The best person to know the property’s market value is the landlord.
Because the landlord invested in a property, it is normal for them to think that it has a high value. But they’re not the best person to decide this. They need to consult a professional to determine the real rental value.
Leasing agents and appraisers can help assess the property for its value through comparative research using the different characteristics of the unit. They are experts in knowing the usual price range for certain property types.
• Misconception No. 3: Landlords can charge as much as they want.
We all know that the main reason people get into this business is that the money is good. It is normal for landlords to make the most of their investment. But it does not mean that they can charge for a lot.
Finding the correct price means taking some things into account. For example, is the property located near hospitals, schools, and restaurants? Does the property have amenities that are not available in other rental places?
• Misconception No. 4: The rental rate can increase if the landlord finds out that the tenant can afford it.
During the tenant screening, you are likely to come across the applicant’s monthly income to include in your report. Some landlords might find this as an opportunity to change the rental price.
If this happens, the tenant may change his mind about renting. So instead of finishing up a deal, you would have to find a new renter to agree on the terms. It will cause the property to remain vacant for an extended time.
So before you post the property listing on Padleads, make sure that the landlord has decided on the rental price. Because once it is out on the market and is syndicated to other websites, applicants will start to come in.
A single thing such as the rental price can make or break a deal. If the landlord wants his business to succeed, he must consider all aspects, including his tenants’ preference.