Rental Basics in Las Vegas>Question Details

Marla H., Renter in Omaha, NE

When is it time to lower the asking price for a rental?

Asked by Marla H., Omaha, NE Thu May 24, 2012

Have a 4 year old highly upgraded 3,000 sq. ft. single-story 3 br/3 bth home office that I have been trying to get rented for the past 6 weeks in the Silverado Ranch area. Even though we priced it competitively at $2100/mth, we've had multiple people almost expecting us to rent it out for $1200-$1500/mth. While we may be receptive to negotiating a bit, we are not willing to come down this much. What gives?

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23
Barbara’s answer
As a tenant I will tell you that some of the information is good advice. However I find that changing the ad every few days and changing the price to draw a tenant is a TURN OFF. I see this on CL as I am looking for a place to rent (sorry not in your area) and when I call and the ad does not reflect the actual price, I will look elsewhere AND I stay away from the Management Co who is listing this way.

Sorry guys many of the property management companies I have contacted are flaky and could care less about the tenant OR the owner. I say poster if you comp your area and lower the price, you can rent your house. I don't know if a property management co is in your best interest for what they charge you and how well they take care of your home.
0 votes Thank Flag Link Sun Jun 3, 2012
Hello Marla,

The answer is simple. If your home has not leased within 10 days of hitting the market, it is priced too high. The market has spoken and you need to lower the price. you will never recover the lost weeks and or months of revenue because you held out for a higher rental price.

Example: Lets say you decide you have to get $2100 per month for your home (which in my opinion is way too high...but you don't really want to hear that). You have gone 6 weeks and no renter. Now you are wiling to lower the rent. Lets say you decide to lower it to $1900 and it takes another 2 or 3 weeks. I believe one of 2 things will happen; either you will find that you need to lower the rent yet again, or you will end up renting to someone who was turned down by other landlords for various reasons including: 1) multiple families who will move in put an unusual amount of wear and tear on the home, 2) has bad credit, 3) has bad income history. Either way, it is likely going to cost you big either when they move out, or you are forced to evict them. However it happens, you are going to lose more money. Now, lets looks at the three plus months that the home went vacant without getting rent...rent that you will not recover. If you do get $1,900 after 2 months of vacancy, but if you rented at $1500 per month and it rented with a week of hitting the market, you would get $1500 times 12 (minus one week), which equals $17625 for the 51 weeks. $1,900 times 9 months totals $17,100. Additionally, based on experience, one of two things will happen; either the tenant will discover that they are paying several hundred dollars over market and try to renegotiate or break the lease, or you will have nothing but problems from the overpaying tenant (remember there is likely a reason why someone is willing to pay several hundreds over market...none of reasons are good for you).

There are enough rentals in the market, and tenants are savvy enough to know what market rents are, and will not pay over market rents unless they have a good reason..none of which as I said, are good for you.

My recommendation is to trust your property manager, get $25 under market, lease within a few days, and look at great cash flows from rent received by grateful, good credit, and long term tenants.

Best of luck, and thanks for reading.
2 votes Thank Flag Link Thu May 24, 2012
Hi Maria,

Your price is too high. You need to get that price down quickly. We won't repeat the value of lost income, because Steve Matthews has already done an excellent job. Read his response very carefully, because he is telling it like it is, in no-nonsense dollars and cents language

Don't be emotionally wedded to a price. You get more money by renting lower and having the property always rented, than renting too high and suffering vacancy losses you will never recover.

Good luck in getting your property rented.

Regards,
Mike Pristow, Donna Hodge & Associates
Keller Williams Realty
702-604-1001
1 vote Thank Flag Link Tue Jun 5, 2012
You can really tell the real estate agents from the experienced real estate investors by their economic theory to the "rental" market price, and the "home selling": market price.
The independant professional property management companies that have been around for awhile know the difference. And their fees are miniscule compared to the value of having my properties fully rented and fully maintained, worryfree for over a decade.

The right professional management company will get this rented at the right price, which does not necessarily mean the lowest price.

David Cooper Investor with a Buyers Agent License at Since 1917 Realty 702-499-7037
0 votes Thank Flag Link Tue Jun 5, 2012
Thank you Mike Pristow for the compliment. For your kindness toward a fellow Realtor (and competitor), you deserve a thumbs up. The answer to this question really is pretty straight forward isn't it? The law of supply and demand is clearly in play when it comes to our mature and savvy rental market in Las Vegas. Ask too much, and your property won't rent, OR you "Buy" a bad tenant. Ask market rents and the Rental Universe is in balance, and so is your bank account.

I would love to hear back from Marla, how she has done with renting the home, and whether she is using a property manager. Unlike several others who have posted here, I do not think that it is "Critical" to have a property manager. But for many, managing a property is just not a good thing to do, and they would benefit from an unemotional independent 3rd party to advertise, show, rent, collect, and evict (if necessary). I hate to do all of those, so I would not be a good Landlord, and would definitely benefit from using a property manager. The fees kill me, but that is fodder for a different subject and post.

Also, Silverado Ranch is a nice area, but unless the home is in a luxury pocket that I am unaware of, $2100 way overshot the market. But I do wish her well. We need our investors to feel warm and fuzzy about investing in Vegas. The sooner the home is rented for a good rate of return for her, the sooner she can gush about her great investment to her friends.

Best wishes to Marla, and thanks for reading.

Steve Matthews
Prudential Americana
702-491-4663
steve@reovegas.com
0 votes Thank Flag Link Tue Jun 5, 2012
Hi. Did not use a property manager. Within an hour of posting this question, I lowered the price on my Craigslist advt only to $1995/mth to test out the response. Within a day, I had two qualified showings and both submitted applications. One was for a two year lease and we verified references and background and received all their deposits and rent within a few days. House did not sit vacant at all. I think it is absolutely insane to suggest because of supply and demand that a relatively new highly upgraded 3,000 sq ft one story home currently valued at about $285,000 should only rent for $1300-$1500 a month because people only care about the 3 bedroons and not the luxxury. Both parties we showed the house to shared with us that they had been looking in the $1700-$1800 range and were very dissappointed in what they saw. They were both estatic to be able to live in such a beautiful home and were happy to pay the price we were asking.
Flag Wed Jun 6, 2012
thnaks for the compliment on my age. But, I have a partner at my agency a whole lot younger than me with just a few years experience that knows the rental business takes many other skills that just being an agent. That's why there is a Nevada license for real estate property managers.


David Cooper 702-499-7037
0 votes Thank Flag Link Tue Jun 5, 2012
Thank you David, for the correction. I am not as experienced as you! And expect that at your age, you have seen it all!
I do add to my previous post that amount of serious inquires, in my modest option, will help determine if your pricing is correct.
0 votes Thank Flag Link Tue Jun 5, 2012
I as an experience investor and owner of rental properties here in Las Vegas, there is absolutely no relationship to the number of phone calls and your success in renting the property. I can guantee you a bunch of phone calls from Craigs List, and very unqulaified prospects
A professional property manager has a constant flow of rental contacts. The good ones filter out the qualified ones and then bring to them the proper home for what they are qualified for.


DAVID COOPER Investor with Buyers Agent License at Since 1917 Realty 702-499-7037
For the latest Las Vegas News follow us on FACEBOOK http://www.facebook.com/davidcooper
0 votes Thank Flag Link Tue Jun 5, 2012
The amount of calls will determine if your pricing is too high or low! Great question! Raina Musser
0 votes Thank Flag Link Tue Jun 5, 2012
Do you have a property management company? Six weeks is just to long, sounds like the marketing (and not just CraigsList) is NOT working


DAVID COOPER Investor with Buyers Agent License at Since 1917 Realty 702-499-7037
For the latest Las Vegas News follow us on FACEBOOK http://www.facebook.com/davidcooper
Ask me question on Twitter http://www.twitter.com/lasvegaswinner -
0 votes Thank Flag Link Thu May 31, 2012
Thanks to everyone for your comments and advice. Within an hour after positing this question, I lowered the asking price on my Craigslist posting only to $1995/mth to see if it would make a difference and test out the new price. Within 12 hours, I had 6 inquiries, 2 showings. Both showings resulted in applications at asking price. New tenants signed 2 year lease and are moving in 3 days after we move out. Perfect timing. I believe getting the price under $2,000 made all the difference.
Flag Sat Jun 2, 2012
Obviously the market is telling you that you're asking too much, I don't know the Las Vegas market, but do know that if you've not gotten it rented though you've had multiple showings you've only got two choices. Hang tough for your price and absorb the vacant weeks or lower your price some.
0 votes Thank Flag Link Thu May 31, 2012
Did you get your property rented yet?
0 votes Thank Flag Link Wed May 30, 2012
Probably when your listing is not having any showings, or if after it has been shown several times you are not getting any interest. Over priced is always a possibility!...Good luck....
0 votes Thank Flag Link Fri May 25, 2012
If you property has been listed for 6 weeks and is not renting than either you are not marketiung it properly or it is overpriced. We have a strong rental market in LV and you should not have a problem finding a tenant. We found tenants for 12 rental properties this month alone. If you would like to discuss using our services please let me know. You can email me directly or fill out this property management contact form: http://lvrealestatehelp.weebly.com/property-management--rent…

Best Regards,
Robert Adams
Broker/Salesman
LVrealestateHELP Team at
Rothwell Gornt Companies
C:702-349-9175
O:702-932-8813
F:702-932-8826
RobertAdams@LVrealestateHELP.com
http://www.LVrealestateHELP.com
0 votes Thank Flag Link Fri May 25, 2012
Hi, your best bet is to hire a reputable Property Management Company. They take care of everything for you....price evaluation, listing,and management.... and saves you the hassle. I am happy to recommend Management One Group. They have done a fantastic job for a lot of my clients.
Lorena Petersen
LorenaP@RealtyOneLV.com
0 votes Thank Flag Link Thu May 24, 2012
Oh! Dear Martha. You need a professional property management company yesterday. I learned my lesson many years ago that owners and renters have a different view of the value of the property. My management company seems to price it right the first time, and get a tennant within 2 to 3 weeks.

If I can't factor in the management fee as an expense and still get positive cash flow, I will NOT be a landlord.


David Cooper Investor and Buyers Agent Licensed at Since 1917 Realty 702-499-7037
0 votes Thank Flag Link Thu May 24, 2012
Marla,

Your Property Manager should be able to offer you analysis showing the other similar rentals in the area. Once informed you have to decide whether it makes sense to list at your asking price and what you can afford to based on your monthly carrying cost. Once the facts are put together you have to weigh whether holding out for a little more rent makes sense if you lose another months income. So, in the case of a $600 difference to your monthly rent you would be losing $7200 for the year, which is pretty substantial. However, If you lower your rate a couple of hundred dollars and can get a tenant it may make sense to get them in for $300 less per month because your difference is $3100 for the year but every month you don't rent is a loss of how much you didn't take from an interested tenant? If you need help feel free to contact me by clicking the photo to the right of this dialog.
0 votes Thank Flag Link Thu May 24, 2012
Hi Marla,

I can offer you a free rental comparable on your rental property. To find out what price your property should be renting for. I would need the address of your property to give you accurate figures. Do you have the property listed for rent in our Local MLS? My Company also offers property management services if this is something that you would be interested in? We could help you get your property rented out.

Contact me with your property information so we can get started on this.

Best regards,

Chris Harrison
Barrett & Co., Inc.
2885 S. Jones Blvd
Las Vegas, NV 89146
(702) 592-9510 ph
Chris.Harrison@msn.com
0 votes Thank Flag Link Thu May 24, 2012
Hello Marla! I liked Steve's answer below. I personally would offer two weeks free with a 12 month lease.. I also lower my rental rates every week until it's leased. I hope you are on Craig's List and are comparing rental rates and you relist it ever 3-4 days changing the ad and price. Keep in mind that on a house that big, a property manager might be a good idea. Our friend's had a house in Mountain's Edge, decorator decorated, 4000 sqft for $2100 vacant for months and leased it for $1800. Comparing just Silverado might not be the answer but the first answer of $1300 is insane. $2100 obviously isn't doable. If you'd like a property manager I trust with my clients to talk with, give me a call. He also does "rent to own" and gets top rent. Most people treat the house like their own and then move on which is a strategy also. Tough decisions from Nebraska. Best of Luck, Kurt 702.656.1818
0 votes Thank Flag Link Thu May 24, 2012
When you review your rental comps be sure to look at what they actually rented for (not what they're asking) and how many days they were on the market before finding a tenant. That way you have the whole story. Obviously knowing what your competition is asking for & how many comparable homes are listed will help too. Of course marketing is always key. You want to get the most exposure possible to increase your odds of finding tenants. I'm not sure if you're using a property manager or not, but if you're not you have to keep in mind that most tenants these days are scared to rent from owners directly because they're worried about the property going into foreclosure and not being informed. Since so many tenants have been scammed in recent years by this, tenants are very guarded and often avoid dealing directly with owners.

Try not to get too discourage by low-ball offers on the rent, that's fairly common. I'm sure you'll eventually get a fair market rent. Just do a little more research the rental market in the area and make adjustments as needed. Good luck.
0 votes Thank Flag Link Thu May 24, 2012
Hi Marla,

The going rate in the Silverado Ranch area is closer to $1500.00 to $1700.00 a month. Th longer you keep it vacant the less your return. Get it down to $1,750 and see if see if you can get some bites. You're just too high and you need to adjust quicker rather than later. you're helping other investors to rent their properties rather than the other way around.
0 votes Thank Flag Link Thu May 24, 2012
You say it's priced competitively. How did you determine that? If other similar properties are renting for that, then, yes, that's a competitive price. (Maybe not an overly attractive price, since you've been trying without success for 6 weeks.)

However, I did plug in your Zip Code (89123) into Rentometer.com (http://www.rentometer.com) and it's also suggesting you're asking way too much. It's suggesting about $1,300. Now, that's just a rough approximation. Check it and the comps out for yourself. Or contact a Realtor who can check the MLS and tell you what similar properties have rented for.

Hope that helps.
Web Reference: http://www.rentometer.com
0 votes Thank Flag Link Thu May 24, 2012
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
It depends on a variety of factors including comparables of current inventory and recently (last six months) rented homes. It is costly to have a vacant home versus generating some income, but don't drop so much significantly. You can try offering a different incentive such as 2nd month free on 12 months lease to entice potential renters. I am available to help you list your home and get it leased as soon as possible. http://www.mylasvegasrealestateaccess.com - Rakeisha, Realtor
0 votes Thank Flag Link Thu May 24, 2012
Thanks. We determined price by looking at what other single story 3000 sq. ft homes are renting for, as well as the rent estimate on zillow.com. That website seems to be pretty accurate.
Flag Thu May 24, 2012
Thanks. We currently have it on MLS.
Flag Thu May 24, 2012
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