Hey there—so, my mind has been on rentals these days. I’ve been thinking about a time when two of my rental properties were vacant at the same time.
Not good. :-/
One was a lease option where the tenant-buyer chose not to purchase the property. He’d lived there for 7 years and was the perfect tenant. (Hated to see him go.)
The second property was just a straight rental.
After reviewing these properties, I think I figured out my mistake…
It seems I made the same error on both—I was attempting to be too aggressive on the price of the rent. And because of it, they both stood empty for a little too long for my comfort.
Hindsight is 20/20, though. And we learn from our mistakes. (Hopefully.)
See, I’m reminding myself that I always get burned when I try to push the rents too high.
By trying to make an extra $100 bucks on the monthly rent, I lost at least 2 full months of rent when one of the properties sat empty. Not worth it, folks.
As far as I’m concerned, there’s no need to be super aggressive in what you’re asking for rent.
Here’s an example of what I mean…
Let’s say average rents in an area are $900-$1,000. Well, Mistake Maker Joe would have wanted to ask $995. The tippy-top of the range.
The rental sits empty, making me super nervous. And costing me money!
Had I priced is at $895, I’d probably have gotten a good tenant in right away and avoided sleepless nights.
My point is, I lost $1,790 (2 month’s rent at $895) while it was vacant because I overpriced it, trying to make a few extra bucks each month.
Boy, I was wrong. But, that’s another lesson of fail, forward, fast. 🙂
And sure, while landlording can be frustrating at times, I still believe that buy & hold is a necessary part of building long-term wealth in real estate investing.
So give it a go, but please(!) price your rents right. Make sure you have money set aside to cover vacancies and get solid rentals with quality tenants.
Here’s my main takeaway all neat and tidy: It’s important to have a good property in a good neighborhood, with rents priced it to match other rentals in that area.