When it comes to setting rents: Your “best rent” is not your “highest rent”

apartmentforrentJust 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.

 

 

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.