Overpricing your rental in a hot market can happen and lead to lost rent!
The Las Vegas rental market continues to be in demand as rental prices remain strong and inventory slim. For landlords, the last few years have seen appreciation unheard of in years prior. As a result, some rental prices being asked are far above other comparable rental properties. If you’ve been tempted to list your home far above other rental rates, you might end up losing money in the process! How?
There is such a thing as overpricing your property, even in a red hot market. Remember, affordability comes into play for most individuals. Even though the market is appreciating, it doesn’t mean that income’s have compensated. While the market, being made up of tenants, can absorb increases, eventually, the market tops out. And even with limited inventory, tenants will shop around to find a property at fair market rent. As a result, many properties that are severely overpriced will end up staying on the rental market for an extended period of time.
In the end, this leads to lost rent. Every day that a property stays on the market is a day of lost rent. And even if a higher price is achieved after some time, will it actually offset the amount of time the property stayed vacant compared to less of a vacancy period at a lower rental rate.
Additionally, vacant properties may attract unwanted visitors. It becomes obvious after some time that no activity at a house may mean that a property is empty. And so, experience has shows us that this can lead to vandalism and theft.
Thus, even in a hot market, pricing a property competitively allows for showings quickly and finding that quality tenant. Don’t forget, you can always increase the rent after 12 months, or whatever lease term you enact.
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