As an Orlando rental property owner or landlord, there is nothing more frightening than watching your rental property’s active days on market continue to rack up day after day, week after week, or even month after month. Your mortgage payment comes due and still no tenant. As a real estate investor or homeowner deciding to rent out your home in Orlando, one of the likely questions you’ll ask when interviewing Orlando property management companies is, “How long will it take you to rent my home?” This question is absolutely necessary to ask because as we know every day your property is vacant, you’re operating at a loss. Now some property management companies will tell you, well we can lease it in 14 days or less, guaranteed. However, even in the best market conditions, it’s honestly quite impossible to determine the exact amount of days it will take to lease your rental property.
In Central Florida or any market, you can always rent out your home as long as the price is right. A huge problem rental owners face is that their monthly expenses on the property may be more than the monthly rental rate. Unfortunately, the rental market doesn’t care about your monthly mortgage payments. But it’s much better to have the majority of the costs being covered every month by your tenant, then flipping the whole bill every month with a vacant home. To dive deeper into the vacancy cost for property owners, let take a look at the following example. Let’s say you have a $1,250 per month PITI (Principal / Interest / Taxes / Insurance), not including your utility expenses, or HOA dues. When the operating costs come due while the home is vacant, the costs fall on you.
If the market is commanding a rental rate of $1,500/mth, and your all-in costs are $1,750/mth it’s not the best strategy to start it at $1,750/mth because that’s your all-in costs. It’s better to have a quality tenant paying the majority of your expenses then covering the entire monthly expenses waiting 3 months for a needy tenant in a bind to rent it at $1,750/mth.
A great bit from Brad Larsen of RentWerx outlines below the following when considering what your vacancy time is costing you. Look at it this way, your property has a $1,500 estimated rental rate and a $1,250 per month PITI (Principal / Interest / Taxes / Insurance) mortgage, plus utility expenses. A vacancy can cost in terms of days on market:
15 Days = $750 in Lost Rent + $625 Mortgage + $100 in Utilities =$1,475
30 Days = $1,500 in Lost Rent + $1,250 Mortgage + $125 in Utilities =$2,875
45 Days = $2,250 in Lost Rent + $1,875 Mortgage + $150 in Utilities =$4,275
60 Days = $3,000 in Lost Rent + $2,500 Mortgage + $200 in Utilities =$5,700
What will a price adjustment cost on a $1,500 per month home?
- $50 per month = $600 a year
- $100 per month = $1,200 a year
- $150 per month = $1,800 a year
- $200 per month = $2,400 a year
As a rental property owner, you need to ask yourself what is best for your real estate investment? Dropping your price $100 right out of the gate and losing $1,200 broken up over 12 months, is much better than pricing your home above what the market is commanding and it costing you $2,000, $3,000, $4,000, or $5,000 dollars during the vacancy.
How can you reduce the vacancy days?
The quick answer, be aggressive with your pricing right out of the gate and be quick to adjust the rental price. Financially speaking renting your home out within the first few weeks it is on the market will make you more money in the long run. Your property manager in Orlando looks at rental prices all day long. Trust in their pricing and be quick to reduce your rental rate if you aren’t seeing traffic and applications right away. The first 7-10 days on the market are the most important to producing the most amount of traffic. Pricing too high eliminates the new rental listing buzz and you will find yourself missing out on great applicants.
Rental property not renting?
Again, in today’s market, if your home is sitting longer than 30 days. The problem is always, 99.99% strictly due to the price you are asking, any and all homes will rent, but they’ll rent at the right price. So before changing anything in your marketing strategy, or adding upgrades, simply reduce the price and you’ll see the traffic begin to flow. Trust in your Orlando property managers pricing strategy for your home. It’s an unbiased, emotionless art with data to determine the best price to list your home and the prospects with determining the accuracy.
Every day your home sits vacant you are operating at a loss. It’s better to be aggressive with your rental property pricing and if you are not seeing the traffic adjust promptly. Don’t sit around waiting for someone to bite at a price just because you need “X” dollars to cover your mortgage and expenses on the property. If you have any questions at all feel free to reach out to The Listing Real Estate Management, the best choice for Orlando Property Management.