A little landlord story for you:
I was told that running your property at low rent would decrease stress, and increase longevity of your property because you will get tenants that are unwilling to leave due to the low rent. I have found the opposite, and I have gone through quite a few tenants to figure this out.
When you offer someone a killer deal, rarely do you get the killer client, its not the person that you are hoping to get to buy your product. You end up getting the low end bargin hunter "chip on thier sholder" entitiled buyer. Nay sayers will argue that rent is different than other products, I disagree, I've seen it across many difffernt things. I just happen to have personal expierence with renting at well below market costs hoping to make up the difference in long term stable tenants that take care of the place.
Let's get into the psychology (at least my version of it) John Doe looking for a place to rent, can afford about $1200, thus they are not wealthy, are not going to be the type of person looking at the lofts downton, but also are not looking for the economy apartment in a shady part of town. So even when they see a unit in the area they are looking for at $900 they pass it right up because the property clearly is a piece of shit! They don't even look. Where as the person that can afford $700 per month and needs to live in the economhy apartment on the bad side of town sees a $900 place in a way nicer neighborhood and does everything they can to get into it! Said person then gets the place because they are eager to get the good deal, and sell themselves as so appriciative of the great deal and you give it to them. Not two months later do the tenatns feel entitled because they are "moving up in the world" do they start asking/demanding for upgrades/improvements fixes to the place that should only rent for $1200 anyway! The tentants now bleive that because they are in the nicer neighborhood their place should be nicer, cleaner, fresh paint, fresh carpet, hardwood floors. Railings they break need to be fixed immediatly, screens they tear need to be replaced. Yes I have had all of this happen and on many occastions, it took me WAY to long to realize, I'll be the first to admit!
I did finally realize and changed my prices to be $50 less than the highest comparable. My evictions went throught he floor, and my maintenece costs went down signifacantly as well. And let me tell you, stress is a lot less when you have an additional $300 to throw at an issue every month! It was very interesting that by adjusting my price higher created a better situation for everyone. Including my tenants. I am no longer "bringing the neighborhood down" by giving the entitled class a place to stay but instead giving a nice place for the working class to call home.
Price your product for the clients you want and the clients you want will pay your price.
I was told that running your property at low rent would decrease stress, and increase longevity of your property because you will get tenants that are unwilling to leave due to the low rent. I have found the opposite, and I have gone through quite a few tenants to figure this out.
When you offer someone a killer deal, rarely do you get the killer client, its not the person that you are hoping to get to buy your product. You end up getting the low end bargin hunter "chip on thier sholder" entitiled buyer. Nay sayers will argue that rent is different than other products, I disagree, I've seen it across many difffernt things. I just happen to have personal expierence with renting at well below market costs hoping to make up the difference in long term stable tenants that take care of the place.
Let's get into the psychology (at least my version of it) John Doe looking for a place to rent, can afford about $1200, thus they are not wealthy, are not going to be the type of person looking at the lofts downton, but also are not looking for the economy apartment in a shady part of town. So even when they see a unit in the area they are looking for at $900 they pass it right up because the property clearly is a piece of shit! They don't even look. Where as the person that can afford $700 per month and needs to live in the economhy apartment on the bad side of town sees a $900 place in a way nicer neighborhood and does everything they can to get into it! Said person then gets the place because they are eager to get the good deal, and sell themselves as so appriciative of the great deal and you give it to them. Not two months later do the tenatns feel entitled because they are "moving up in the world" do they start asking/demanding for upgrades/improvements fixes to the place that should only rent for $1200 anyway! The tentants now bleive that because they are in the nicer neighborhood their place should be nicer, cleaner, fresh paint, fresh carpet, hardwood floors. Railings they break need to be fixed immediatly, screens they tear need to be replaced. Yes I have had all of this happen and on many occastions, it took me WAY to long to realize, I'll be the first to admit!
I did finally realize and changed my prices to be $50 less than the highest comparable. My evictions went throught he floor, and my maintenece costs went down signifacantly as well. And let me tell you, stress is a lot less when you have an additional $300 to throw at an issue every month! It was very interesting that by adjusting my price higher created a better situation for everyone. Including my tenants. I am no longer "bringing the neighborhood down" by giving the entitled class a place to stay but instead giving a nice place for the working class to call home.
Price your product for the clients you want and the clients you want will pay your price.
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