Establishing rent rates can be a stressful experience for many property owners, especially if a unit has already been sitting vacant for a while but getting the rate “just right” is key to your investment success as a property owner in Columbus. Set the rate too high, and you may risk prolonged vacancies (or attracting the wrong kind of tenant). Set it too low, and you might secure a tenant quickly but at the expense of potential income.
Whether you’re a seasoned real estate investor or new to the rental market in Franklin County, understanding factors that influence local rent rates and how to strategically price your property is essential. Below we’ll offer some insight to help you find the sweet spot when setting your rent rates.
Right Rate = Right Tenant
Before we dive into how to set rent rates on vacant properties, it’s important to first offer a word of caution when devising your pricing strategy. Some people have the idea that if they set their rates high, they’ll get “good” tenants. Unfortunately, that isn’t usually how things play out.
Here’s what we mean.
Good tenants – and by that we mean those who have strong credit scores, no criminal history, no eviction history, etc. – are looking for a deal. They’re knowledgeable about the market and have no intention of paying more for a property when they can get a similar one for less just down the block. If you price your property too high, they won’t even give you a second glance. Discerning tenants like these are going to pay the absolute minimum rent for a high-quality space that fits their budget and needs, and it’s these quality tenants that you want to stay in your property. They are residents who intend to stay a long time, take good care of the place, and pay their rent on time.
Conversely, the people who are willing to pay more can become bad tenants. Why? Because they 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 Rent Rates the Right Way
Instead of pricing high and risking bad tenants, set your asking rent at a fair market price – or even slightly below – to target the high-quality applicants you want. First, conduct a market analysis to find comparable properties in your neighborhood and then price your rent accordingly so you are in line with the competition. In doing so, you’re more likely to secure a good tenant who is also likely to extend their lease for years to come and take good care of the property while living there.
And if you did happen to secure a resident who agrees to pay a slightly higher market rate, don’t be surprised if they catch wind that they’re overpaying and, as soon as they’re able, they’ll be shopping around for a new place to live at a better price.
If you have questions about the Columbus market and setting rent rates on your properties, we’re here to help. Get in touch with our team at RL Property Management anytime to learn more about owning or managing single-family and multi-family rental properties in Franklin County.
