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Property Management Blog

Published on Saturday, April 1, 2017

How to Maximize Revenue While Minimizing Vacancy in Real Estate

One of the most important components to owning investment property is pricing your rental appropriately so that you maximize revenue while minimizing vacancy. Determining what to rent a property for can be somewhat of a science when trying to optimize your ROI. You will want to employ several different techniques and strategies when determining the right amount to charge for rent:

Shop Around

One of the most accurate and easiest ways to figure out what the market will bear in rents is by checking out the area.

This requires a little leg work on your part, but is going to give you the most realistic look at what you are facing. You can often find rental signs in the area posted with rental amounts, number of bedrooms and other details about the property. Calling these landlords and getting info on what they have for rent and what they are charging is a great way to get a feel for market.

The newspaper or online classifieds is another excellent way to check out what is available for rent in that area, Not only do you want to see what others are charging, you want to see how long it stays listed at that price. If properties are renting quickly at certain prices, you know that there may be room to price slightly higher.

Talk to a Property Manager

You might consider contacting a local property management company that you know has a large number of properties in your area.

If you don’t want to talk to them, you can always search through available properties on their website. I’ve found that many management companies price their properties at the high end of the market. You can typically use their pricing as a guide with the understanding that you may need to price yours slightly lower to be competitive.

Ask Your Vacating Tenant

While you don’t want to rely on this as a long term determination of rents, nor do you want to use it exclusively when making your decision, asking your vacating tenant whether they believe the property is priced right can be informative at the least. They may have information that could help you in your determination.

Price Slightly Higher

Another strategy is to price your rent slightly higher than what you think the market will bear.

After two weeks or so, you’ll know whether or not your price is realistic. I’ve done this in the past and have sometimes been pleasantly surprised to rent my property at a price higher than anticipated.

However, if after several days there is no response or poor response, drop the price. The right price is typically going to cause multiple potential tenants to seek you out.

Compare Apples to Apples

When comparing the comps on your rental property regarding rental rates, make sure that you are comparing property that really fits.

You don’t want to compare your single family three bedroom rental home to a three bedroom apartment in a nearby complex. This isn’t going to give you an accurate way of discerning appropriate rental rates for your property. Find property that is truly similar to your property if you are going to use it for comparison.

Talk to a Leasing Agent

You might want to take the time to reach out to a leasing agent in the area.

Leasing agents typically have a good handle on rental rates and neighborhood dynamics. You might be surprised what you can learn from someone that has experience leasing in your area.

Don’t Forget About Upward Trends

Take the time to consider how long you have been renting the property at the same rate.

If you have had a long term tenant in the property, you may not have adjusted rents along the way. In general, rents have increased over the last several years … even as much as 8% per year in some areas. You may want to simply make this adjustment and see how the rental applications go. Many times it is through trial and error that you hit the right number for tenant applications.

When you are facing a new vacancy you want to prepare well in advance for determining the next rent rate. As soon as you know you are going to have a property become available, start doing your homework to price the rental correctly in the market. Waiting until the tenant is out is not the time to begin your research.

Being as prepared as possible, even in something as simple as rental pricing, is one of the key components to your ultimate success.

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Author: Web Master

Categories: Property Management




Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.


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