Why pricing your rental property correctly is so critical.

 

 

One of the most critical aspects of leasing a rental property is pricing it correctly.  Too low, then you revenue is not what it could be.  But an overpriced Orlando rental property can cause far worse situations.

 

How much does a simple air conditioning service cost?  Say $75.  How much does a 45 day vacancy cost an owner of a property that should lease at $1400/mo?   $2100!  A vacancy is the normally the biggest expense a landlord faces.  Keep the vacancy rate down by advertising at the correct market rate.  This is a better way to increase revenue and keep your rental property in good condition.

 

1.  Every week that a property sits vacant, you could have adjusted the price 2% down and made the same amount of money.  Over a 5 week period you could have adjusted the price by 10%.   Example

        *Landlord A lists a rental home in Windermere on May 1st for $1500 per month.  Landlord A leases the rental home in Windermere on July 1st at $1500 per month.

        *Landlord B lists a rental home across the street from Landlord A on May 1st for $1400 per month.  Landlord B leases the home on June 1st at $1400 per month.

        Which Landlord made more money on his Windermere rental home?  If you said Landlord B, you were correct.  While Landlord B collected $1400 during June, Landlord A sat vacant.

 

2.  Vacant properties can at times, not be safe.  1.  Vandalism.  2.  A potential water leak in the property could go unattended for a few days and could be disastrous. 

 

3.  Example:  An Orlando home sits vacant.  Who pays for the utilities?  The owner.  Who pays for the lawn or pool to be maintained?  The owner.  Not only are you not having revenue coming in, but you must keep the property in proper rental ready condition.  If the property had been leased, the tenant would be responsible for the utilities, lawn and pool care.

 

4. Most importantly, the “bad tenant” will rent an overpriced property.  A well qualified tenant will take the cheaper property because they can.  Any owner would rather have the well qualified tenant right?  Example:  Both types of tenants view 2 different Winter Garden homes, 1 home at $1500/mo, the other at $1400/mo.  For the sake of the example, both tenants want the home listed at $1400/mo.  Which one will the landlord choose?  Of course, the well qualified tenant.  Now the overpriced property’s landlord is stuck with a “bad tenant” because all of the good tenants go to the cheaper properties.

 

5.  If you get stuck with a “bad tenant” now……what will it be like a year from now when you want to show the property with this tenant living in the property?   It will not show as well because of the condition of the carpet or paint and you will be forced to drop the price.  Or even worse, wait til this “bad tenant” moves out and then start advertising, guaranteeing a vacancy.  Another words, over pricing your property now, will overall make you less money and could affect how much you get for the property in the future.

 

Don’t be afraid to adjust the price in order to reduce your vacancy rate on your rental property.  For more tips like this, give our property management office a call today for a FREE rental analysis of your Orlando, Kissimmee, Winter Garden, Winter Park or Windermere rental property.

 

 

Here at Orlando Realty & Property Management our motto is “We Treat Your Home Like it is Our Own.“  We rent, sell and manage homes, townhomes, and condos in Orlando, Oviedo, Winter Park, Winter Garden, Windermere, Kissimmee, and other areas of Central Florida.  Go to our site, http://www.407rentals.com or give us a call today at 407-641-5049.  

 

 

 

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