Just had this conversation with a client. Yes, it’s true. Your best rent is not usually your highest rent! I recall a scene from one of my favorite novels. The man was deciding what to offer a contractor. He said:My offer will be his “best offer”. It may not be his “highest offer”, but it will be his “best offer”.
What does this mean when it comes to renting residential properties?
You do NOT want to ask for the highest possible dollar amount for rents.
— Landlord Relief (@LandlordRelief) May 8, 2013
The reasons are:
1. The tenant will never feel that they are getting a good deal. This means that they will always feel they can get a better rent somewhere else. This means that they are always open to a move. They will always be aware of other options.
2. They will never see your property as a “long tern solution”. This means that they will never “treat it as if it were their own”.
3. They will not be inclined to do minor repairs on their own.
These are just some of the reasons why you should set your rents at the market level (or possibly even a touch lower). Tenants can be either your greatest ally or your greatest problem. Tenant turnover is your single biggest expense.