Ask any property owner and they’ll know the feeling. Stress levels start to rise, anxiety creeps in, and they may even start to question their investment strategy altogether.
This is what can happen when a rental unit sits vacant for too long.
But a vacancy should be no cause for concern. Depending on your market, it’s normal to experience a 6-8 percent vacancy rate on a given property. That said, if you feel like you’re beginning to cross that threshold, rather than panic, it may be time to reevaluate what you’re charging for rent.
Proceed with Caution
A word of caution when setting rent rates, however. Some people think they should set the rates high in order to get “good” tenants. Unfortunately, that isn’t always how things play out.
The people who are great tenants on paper – those who have strong credit scores, no criminal history, no eviction history, etc – are looking for a deal. They’re knowledgeable and they have no intention of paying more for a property when they can get a similar one for less just down the block.
Discerning tenants are going to pay the absolute minimum rent for a high-quality space that fits their budget and needs. This is the kind of resident you want to stay in your property. Ones who intend to stay a long time, take good care of the place and pay rent on time.
The people who are willing to pay more can become bad tenants. These are the people who may have a criminal history or an eviction on their record, and 90 percent of landlords won’t rent to them at all. They may be willing to pay almost whatever it takes just to sign a lease and be done with it. It’s nearly certain that if you’re asking way above market rate, you risk only getting bad applications.
How to Set Fair Market Rates
Setting your asking rent at a fair market price or even slightly below will help get you the high-quality applicants you’re looking for. Moreover, once they move in, they’re more likely to stick around because they trust that they’re paying a fair price.
If you happened to secure a resident who agrees to pay a slightly higher market rate, they’re going to catch wind that they’re overpaying and, as soon as they’re able, they’ll be back out and shopping around for a better place to live at a better price.
If you have questions about the Columbus market, we’re here to help. Get in touch with us at RL Property Management anytime to learn more about owning or managing single-family and multi-family rental properties in Franklin County.