One of Donald Trump’s guiding principles in businessis, “To know your market,” and if you know your market, you can price your Tampa rental home accordingly.
Any home will rent if it’s priced correctly. If it’s not renting, however, then it’s most likely priced above market rent.
When pricing your Tampa rental home, four mistakes you don’t want to make:
Pricing your rental home based on the size of your mortgage
It’s understandable everyone wants their property to cash flow, but the market doesn’t care about the size of your mortgage. For instance, if there were two identical properties on the same street and one property had a bigger mortgage than the other, they’ll still rent for the same. However, a lot of landlords believe if their mortgage, interest, property taxes and insurance are X amount, estimated expenses are Y, and a property manager’s fee is Z, then the rent has to be X+Y+Z. Nevertheless, it just doesn’t work that way; you have to use the market rent.
Letting your neighbors price your property
Neighbors are very well intended, but they’re not often the best informed. In some cases, they can even have a complete conflict of interests; especially in associations. Here at Hoffman Realty, we have seen landlords whose neighbors have told them what rent they should have versus what the market rent says their price should be. For instance, 10 years ago there was a small community in Tampa where the association told owners what prices they needed to have. In this case, what could have happened is the association believed their community was so lovely they had to charge double the rent; and they did. The market, however, didn’t think anything of it and people ignored the homes. In fact, one landlord whose property remained vacant for a year didn’t rent until we priced it based on market rent. So, let this be a lesson and don’t allow your neighbors to dictate your price.
Not listening to the market
Depending on who your target renter is, you have to make sure your property is fully exposed to the market. To ensure it is, advertise on every website they are likely to go to, to search for a property like yours. If you’re already doing this, that’s great. If you’re not, you have to spend some money. After all, sometimes it takes money to make money. On the other hand, if your property is fully exposed and you’re not getting frequent showings and qualified renters, the market is telling you to adjust the price to market rent.
Becoming emotionally attached to your price
When the Tampa Bay real estate market collapsed in 2006 to 2007, market rent decreased and therefore, rental prices went down as well. Landlords who were once getting $1,500 on their unit were now only receiving $1,300 because of market rent. However, what we saw here at Hoffman Realty was many landlords were holding onto that $1,500 because they believed someone would rent it for that price once again. Don’t do this. Every five weeks your property is vacant that’s 10 percent of your annual rent. So, don’t hurt yourself, adjust the price, get the place rented and get it rented for market rent.
In short, do like Donald Trump does and listen to your market and know your market. Not making one of these four mistakes and pricing your home accordingly is the surest way to a positive cash flow.
Contact us or give us a call if we can answer any questions at (813) 875-7474.