If you're a South Jersey landlord, you've probably thought a lot about your pricing recently.
After all, the boom times are over, as rents across the state continue to fall in 2024, with South Jersey rents remaining much more sluggish than pricier communities in the North. Demand is dropping, but that doesn't mean you need to take a loss on your portfolio.
With a strategic approach to rental valuation, you can offer attractive rents while still enjoying a healthy return on investment. With that in mind, here are the most pervasive myths around rental property pricing that we wish would disappear.
Myth: Rental Valuation Should Be Tied to Property Values
This is one of those myths that just won't die, and it's continuing to negatively impact rental income and tenant outcomes across the country. While the value of a property will play a role in rent calculation, this is far from the only thing to consider.
Yes, property type, square footage, and amenities matter. However, the rental market operates on a different logic to the wider real estate market. Demand is influenced by location in a very different way.
A low-value home in one area can easily demand a high rental income in another. It all depends on the needs of prospective tenants. Always look beyond property pricing when setting your rates.
Myth: Rent Increases Always Lead to Turnover
Countless landlords are losing out because they are too scared to raise the rent. However, it is not correct that any raise will automatically drive your current tenants out.
Tenants know that rent will rise periodically due to factors like inflation and market demand. If you communicate transparently with your tenants and set reasonable increases, a happy tenant will likely be more responsive than you fear and will renew the lease.
Myth: Lower Rent Attracts Long-Term Tenants
There is a common misconception that lower rents are always worth it, as they are more likely to bring in long-term tenants and reduce churn. However, this is not always the case.
If you undercut the market by too much, potential long-term, high-value tenants may question why the rent is so low. They may even worry that your listing is a rental scam. Perception is everything and rates that are too low will raise suspicion and keep away some of your best potential tenants.
Myth: Negotiation Means Desperation
It is always a mistake to assume that a current or potential tenant is negotiating from a place of weakness. They are looking out for their best interests and may negotiate whenever they think it is reasonable to do so.
Don't risk jeopardizing positive landlord-tenant relations with a bad-faith approach to rent negotiation. If you're unsure, you should absolutely consult with your property manager, who can negotiate on your behalf.
Get the Right Rent for Your South Jersey Property
Rental valuation is always a delicate game. However, with the right approach and information, you can strike that fine balance to attract the right tenants and generate strong returns. For this, we can help.
At SoJay Property Management, we have extensive experience helping South Jersey landlords get the most from their properties. You can even conduct a Free Rental Analysis at our site to see how much you could be earning.
