When opting to set the weekly rental price for your listing there is 3 main levers a landlord can pull to get it down from a $20-40 price range to the exact amount to list at.
These are:
- Amount of downtime before successful applicant moves in
- Tenant quality/calibre
- Price
While obtaining all three here is possible there is always a scenario where one lever can be higher while others are lower so striking the perfect balance for landlord, potential tenant and property is the key here.
The general agreement should be that a landlord would not sacrifice prioritising tenant quality. When placing a tenant in a property to make a sacrifice there would more then likely be a short term gain for long term pain in potential arrears or damage. Robust checks and references should always be in place to ensure the security of the landlords investment.
So taking that into consideration, the landlord must opt to strike a balance between setting the rent higher to gain a larger income over setting it lower to ensure a tenant quickly moves in to avoid any downtime with a vacant property.
Each individual letting needs to be treated differently and the landlord and property manager need to be clear on what their priorities are. Are they happy to wait a little longer to ensure they get the one potential tenant come along that instantly loves the property and will definitely take it or do they want to lower the asking price a bit to allow a larger tenant pool viewing and get suitable applicants that may be sitting on the fence over the line simply by offering it at a slightly lower price point?
It is fine margins and one that needs to be ironed out with your property manager prior to listing as being on the same page is key here to manage each others expectations and ensuring the best performance of the property.
A few examples could be that a landlord is willing to lower the rent being asked to prioritise a tenant moving in within a week as the unit is empty and they know they are only renting it for 15months before they move in (i.e every empty week makes a dramatic impact on their end of year return). Or another landlord may want to set and forget with a tenant that will be there for the long run. They may set a higher rent and obtain a tenant that is in love with the property 100% and has a rental history of 5+ year tenancies.
Choose your target market and set the rent accordingly.