Updated November 14, 2022.
Deciding to lower your rental rate as a property owner is a big deal. Do you think your real estate investments in the Columbia rental market are priced too high, and this is causing you to miss out on key renters? That’s not an uncommon thought—but your chosen rental price isn't the only thing that could be deterring potential applicants.
Working with a Columbia property management company is the best way to ensure your rental rate is set at the right level. We can quickly (and professionally) run the kind of research you need to determine whether your rental price is on point—or out of line.
Let our team help you navigate what’s really behind the struggle you're facing to find renters! Consider the following tips first before you move to adjust your rental price.
Do You Think Your Rent Is Too High?
There are situations where the rent you’ve selected for your single-family homes or multi-family property is simply too high, and lowering it is the right move. Many property owners believe that if they are not getting enough attention from prospective renters on their available property, it could be due to the price point.
However, we touched on previously that this isn't always the case. Look for the following signs that your rental price may be too high.
Properties within your community are priced much lower, and you’re worried the fair market rent is lower than what you’re charging.
Properties in the area around yours are available too, and you believe you need to lower your rate to get the attention of the limited renter pool in your location.
People are visiting your rental property to see what it has to offer, but they don’t agree to a lease with you after a detailed walk-through experience.
Your marketing efforts for your rental property aren't yielding any responses at all.
When you consider these examples, it's entirely possible that you've overpriced your rental property. It's worth running these red flags by your Columbia property management team to ensure that there's a genuine pattern present rather than a gut assumption.
For example, you may have a scenario in which you think your property is priced too high based on the above factors we listed. However, what might really be happening is that your property may not be living up to the expectations of potential renters.
- Your marketing may not be on point and reaching your desired and target renter—and that’s costing you money.
- Your rental property may not offer the features, maintenance responsiveness, or expected amenities that other properties in the area offer. That can be discouraging to applicants.
- Your lease terms may not be ideal or appealing to future renters when it comes to the fees you charge.
It may not just be the price—or be the price at all!
Now, Consider What Happens if Your Rent Is Too Low
Setting the right rental property rate is a crucial goal for property owners in the Columbia area. Yet, it is possible to set your rate too low—not just too high. A too-low rental rate may be just as detrimental to your long-term income as overpricing your rental property can be! Consider a few reasons why this may be the case.
'Too Low' Isn’t Attracting Discerning Renters
In the Columbia rental market, there are plenty of renters looking for properties. They do not always want to choose the least expensive lease. That isn't to say they don’t want to save money, but many assume that a lower price means reduced quality. If you set the rate too low, you’re excluding renters who would pay more for a high-quality unit like yours!
You’re Losing Profits
Another big concern with a too-low rental rate is that you’re putting yourself at risk of losing money. If you aren't getting enough cash flow to handle maintenance and repairs, pay taxes, and cover your mortgage payments, that rent price is hurting you as a property owner. There is rarely a benefit or a need to have a rate that is this low.
This reality is important to know since many property owners often shy away from price points they consider too expensive for the market. As an expert in Columbia property management services, we consistently see DIY investors underpricing their investment properties. A full cash flow and operating expense report can help you to determine the right price point for your property when you couple it with extensive market research.
If You Need to Raise Your Rate, Don't Rush
Here’s another factor you need to balance as you work to get your rental price just right: increasing your rental price too quickly. There are perfectly good reasons that may force you to increase what you’re charging for rent. Yet, increasing the asking rate for your rental properties too quickly during an active lease can lead to numerous pitfalls.
- Without the right research, a spike in your rental price can make it too hard to find new renters
- Rapidly rising rental rates can push existing renters away and lead to turnover
- You may run into rent increase rules, causing legal trouble.
Finding the right balance is important in every situation. It may seem like an impossible challenge, but it doesn’t have to be! As the experts, we typically recommend that property owners stay between three and five percent when it comes to a rental price raise. Low and slow wins the race, in this case!
Make It Easier on Yourself—and Save Money!
It might seem counterintuitive at first, but working with an expert Columbia property management company can actually save you money when it comes to your rental rate! Not only do our Rent Estate™ Advisors help you find your ideal 'bullseye price' with solid rental research, but we also help you place high-quality renters happy to pay your new rental rate!
Let Renters Warehouse BW Metro deal with collecting rent, the rent rates and increases, so you don’t have to deal with the extreme expense and hassle of resident turnover! The best way to get started is with our research into the Columbia rental market—for FREE. Get your rental price analysis now!