Setting the rent as a property manager who oversees a residential building is a delicate act. On one hand, you want the rent as high as is reasonable so that you can bring in as much money as possible. But, on the other hand, you don't want the high rent to scare prospective tenants away. Keeping tabs on what other buildings in the area are charging for rent can help you to assess whether you're on the right track, but if there aren't a lot of comparable properties, you'll need to look for other signs that your rent level is appropriate. Here are some indicators that could suggest you're charging too much for rent.
You Have Lots Of Vacancies
There are many potential reasons for vacancies in a residential building, but a big reason is that you're charging too much for rent. Simply put, if people view your rent as being too high for what they're getting in return upon renting a unit, they will look elsewhere for a place to live. Residential buildings should ideally have very low vacancy rates; in many cases, the property owner will give you a goal of keeping your vacancy percentage constantly below a specific figure. If that rate is often well above the goal, it's a sign that your rent is too high.
People Aren't Paying On Time
A tenant who doesn't pay his or her rent on time isn't an automatic sign that the rent is too high. For example, a tenant could be a gambling addict who lost too much money in the last month and doesn't have enough to pay the rent. However, if you're seeing a trend that people aren't able to pay their rent on time — and perhaps there are enough repeat offenders that you're having to evict tenants more than you'd like — it could be a sign that you're simply charging too much.
People Are Breaking Their Leases
Generally, you'll have specific-length leases that you require new tenants to sign. For example, you might require tenants to live in your building for a year. Tenants can break their leases — that is, move out before the lease is up — for a variety of reasons. However, this occurrence taking place on a regular basis can also suggest that they cannot afford to live in the building. Some people may prefer to take the penalty of breaking the lease, which could include losing their security deposit, in favor of moving out.
For more help, contact a group like National Property Management Group.
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