3 Reasons Lowering Your Investment Property Rent Might Actually Make Sense

De Lucia Group |

3 Reasons to Lower Rent | November 2021

3 Reasons Lowering Your Investment Property Rent Might Actually Make Sense

For most property owners and investors, bringing in the highest possible rental rate for your property seems like a no-brainer - and in most cases it is! In rental markets where inventory is slim and there are plenty of potential tenants, you will be able to charge a higher rent for your investment property. However, in some rental markets, it might make sense to lower your rental rate to improve your overall property management business. Here are three reasons charging a lower rental rate for your investment property might make sense.

1. ​To Find the Perfect Tenant

Finding a "perfect" tenant is every landlord's dream. A tenant that pays their rent on time does not cause any damage and does not have many day-to-day needs certainly makes your property management tasks a lot easier. If a tenant with a great application and glowing references requests a discount on the rental rate, it may make sense to accept it. The small reduction in rent will pay for itself when the tenant is reliable and easy to deal with. If an ideal tenant approaches you about your property requesting a slightly reduced rent, it is certainly worth considering.

2. To Rent Your Property Faster

If you are not in a hot rental market and your investment property has been available for a few weeks or months without any interest, it might be a good idea to reduce your rental rate. Reducing the rate may get new parties interested in your property that could not afford it previously or were not interested at the higher rate. Renting your property immediately at a lower rate will ultimately increase your returns compared to leaving your property unrented at a higher rate. Start by slowly reducing your rental amount by 200 or 400 Rand. Sometimes just a small reduction will entice some interest, you may be surprised.

3. To Sign a Longer Lease

If a tenant is willing to sign a longer lease at a lower rental rate, it might be a worthwhile move. A longer lease guarantees you will have an occupied investment property for a longer period of time. If a tenant is willing to sign a three-year lease, you will be avoiding two tenant turnover processes reducing your property management workload. This will also reduce the risk of having your property sit vacant while you wait for the next interested tenant. A longer lease will give you stability and peace of mind about future planning for your investment property.

Being knowledgeable on your local rental market ensures you are charging the correct amount for rent on your properties. While aiming for the highest amount someone is willing to pay is often the goal, there are scenarios where charging a lower amount will make sense. Work with your property management team to discuss the best approach for your investment properties.

To discuss your property management strategy or to locate your next investment property, contact our team at De Lucia Group. With over 40 years of experience in comprehensive property services, we are confident in our abilities to serve you and your properties!

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