Rental applicants are discerning and want to ensure that they’re paying a fair market value for the unit they lease. If you notice that your rental property is sitting vacant for longer than a few weeks, do some analysis to see what could be keeping them away. It may be that your fees are out of line with the market expectations.
Do Certain Fees Keep Tenants Away?
Rental fees do not go unnoticed by tenants. Examples of fees that property managers sometimes include in their lease agreements are application fees, pet fees, a resident benefit package, and some even include a lease renewal fee that is charged to the tenant.
In the apartment industry, fees like lease signing admin fees, pet fees, and late fees are all very normal and residents expect them. That said, there’s a balance when it comes to setting fees.
How to Find the Sweet Spot When It Comes to Setting Fees
The majority of applicants expect at least some fees when leasing a rental property. If you choose not to include any fees and rather set your market rent higher, it’s very likely that your unit will lease slower because the resident is going to assume that you’re going to include those fees anyway.
When the resident goes to compare your offer to other properties in the market, they’re not going to properly discount for those fees, so your offer will seem out of line with market expectations. In short, you do have to include fees if you want to stay competitive.
On the flip side, if you’re egregious with fees, you’re going to leave a bad taste in the resident’s mouth. It makes them feel like you’re ripping them off, especially if you don’t disclose them upfront.
To find the sweet spot with fees, you have to land somewhere in the middle. Residents expect some fees, but you can’t overdo it. Setting your fees right will help you fill your units faster, and you’re more likely to have a better renewal rate if the resident doesn’t feel like you’re yanking them around with fees.
To hear more frm us about how to reduce vacancies in your rental properties, watch our webinar replay on the topic where we discuss several strategies for reducing vacancy and helping you become more successful with your property investment.