The US rental vacancy rate is sitting at just over 6%.
You never want to be part of this small but significant statistic. When your rental is vacant, you're losing money. Many factors contribute to rental vacancies, but one of the most prominent is incorrect rental property pricing.
To understand how much you should charge for your rental, you must perform a rental valuation. In today's post, we'll look at some rental pricing misconceptions to help you get a better sense of how to price your units. Keep reading, debunk property myths, and make your real estate more lucrative.
1. You Can Set Any Price
One of the most common rental market myths in Nashville is that landlords can set any price they see fit. Setting your rental rates without performing a thorough rental valuation can only end in disaster.
A rental valuation involves looking at a variety of factors to help you determine rent prices that are in line with the market you're in. You'll look at other similar rentals in your neighborhood, as well as the unique amenities that your rental has.
All of it combines to give you a strong indication of the most sensible rent price to maximize rental income.
2. You Can Raise Rent as You Please
Tennessee has very few restrictions on landlords, which isn't very tenant-friendly. Many landlords take this as a sign that they can raise rent as much as they please year-over-year. While this may seem enticing for your bottom line, it's not always an intelligent business decision.
Just like when you set your initial rental price, you should take market conditions into account when considering raising it. If you raise your rent beyond what's affordable for your tenant, they'll leave for something more affordable.
3. Attractive Property Means High Rent
You may have a gorgeous property inside and out, but that doesn't necessarily mean you can capitalize on it. If you look at real estate pricing facts, the most common one you'll see is that location is everything.
Setting a rental price that's completely out of step with other properties in your neighborhood will give you high vacancy rates.
4. Low Rent Attracts Tenants
Rental market myths aren't always about landlords setting rent too high. There are plenty of landlords who think that setting low rental rates will guarantee tenants, lower vacancy rates, and keep ROI high if not maximized.
While setting competitive rental rates in an expensive market will certainly attract tenants, it won't necessarily secure amazing tenants. You may end up having more turnover, which will lose you money in the short and long term. If you're going to set low rental rates, make tenant screening a major priority.
Perform Rental Valuation Every Time
These are a few of the many property pricing misconceptions and a few property pricing truths sprinkled in. What all Nashville landlords must understand is how important a rental valuation is. Failing to do it will leave you in the dark on pricing and create more troubles than you need.
If you need help pricing your rental, hiring property management is a great idea. PMI Greater Nashville is Music City's best property management service and part of the top property management group in the country. To get a free rental analysis, contact us today.
