How to price a rental house, and what waiting costs

Consider Marcus, a composite owner in Taylors. His mortgage payment was $1,700, so he asked $1,800 in rent. After two weeks of showings and no applications, he reduced the price to $1,725. The home eventually leased after nine vacant weeks for $1,650.

Nine vacant weeks represent about $3,400 in forgone rent at $1,650 a month. The extra $150 he originally sought would take nearly two years to recover that amount, even if collected every month. The point is the cost of waiting, not that any asking price guarantees a quick lease.

Your loan and renovation budget determine what the property costs you. Comparable homes, condition and tenant demand influence what someone will pay to live there. Start with realistic rent, then see whether it covers the costs of your house and loan.

At renewal, the same market gives the tenant alternatives. Compare a possible increase with the cost of a vacancy and a turn (the work of preparing and leasing the home again). Chapter 14 puts those choices side by side.

You control the presentation, maintenance, response time and asking price. Change what the evidence supports, and record what happened so the next decision is better informed.

Review the listing after the first two weeks, sooner if the response is clearly weak. Look at photographs, reach, showing access, competing homes, application requirements, price and condition. Traffic and applications are clues; no single pattern proves the cause.

Keep the vacancy arithmetic nearby. A week without rent on this example costs about $380. An extra $50 a month is $600 a year, so three additional vacant weeks can cost more than a full year of that increase.