RENTAL PROPERTY – STRIKE THE RIGHT DEAL

In our day to day business activities, bargaining is one phenomenon which one encounters every other hour, so why isolate the rental properties from such an acknowledged trend? I mean let that be personal relationships, business affairs or leisurely activities none can be settled without striking the right note. You want your kid to behave, bribe him with a toy and see the difference. But of course don’t expect the same impact with just a candy. The reason is simple, every thing has a price tag to it and your strategy is successful if you can price it right. Overpricing or under pricing kills the essence of the deal itself. The purpose is to make the maximum and so be it, after all that is exactly the reason you are dealing for. 

The Price – Determining Factors

Let us consider a situation to clearly establish the pricing mechanism that comes into play while we are referring to the rental properties. Suppose your wife likes a dress in a showroom. Now it is up to you to decide if you want to buy it for her or not? At the first instance you will have a look at the dress. It’s beautiful, move on to step two, check the price tag. 

This same rule applies to rental properties while you put them for rent. Tenant begins the thinking process by analyzing the property. This includes not only the property’s construction but also takes the availability of basic amenities like water, electricity, etc into account. The external environment also plays an influential role. If all are in order the interested tenant comes up with the query.

The price tag on the dress is $ 50. Uh! Forget it! That is too much to even consider. Move on, check the next one. This is exactly what will happen if you overprice is it beyond a reasonable limit. Alright let’s change the price, how about $ 40. That’s still expensive, but let a good salesman show off the dress to you. You are tempted just by the way he markets the product. This is exactly the role of a good marketing and advertising strategy. Advertise in the right newspaper and the right section and you can charge slightly more than similar properties, though not advertised. 

A third very crucial factor that now comes to play is the buyer’s or rather tenant’s capacity to pay. If he can’t afford an expensive dress than don’t cut the price just because you think it is overpriced. There could be another tenant who can afford and is willing to pay the mentioned rent for the rental property. So at times more than offering a discount, it is better to sit back wait for the right customer.

The accessories of the dress also make quite a difference when you price it. The accessories in case of rental property could be the local factors like job opportunities. Economic boost and increasing living conditions can help you quote a better price for the rental property than otherwise. How about paying more for a branded product? The same dress could be available for just half the price in a local store, but a brand name helps you charge more. The reputation pays and so does the society where your rental property is matters. A high society accommodation can promise a higher rent, just ask for it.

Watch competition is the next rule that demands consideration. If an equally good dress, designed by another known designer is displayed just next to your one at half the price than you can just forget about making a deal struck. If the rents in your locality of similar properties are at the other extreme end, than it is time that you give your rental strategy a serious thought. Either create a unique selling proposition, which let us consider is not possible, or charge a competitive price. The rule is easy to understand. If the demand is too high i.e. you are receiving too many interested calls than increase the rent and alternatively if none approach you reconsider your prices. 

Recap

To make money out of any business proposition it extremely important to price and package your product right. The rent you charge for a rental property should be carefully set and the determining factors appropriately studied. The rent of a rental property and the factors associated can be presented as:

Rent (rental property) = f {Tenant’s Capacity to pay, location, facilities (basic amenities), condition of the property, local factors (job opportunities, whether), advertising and marketing, competition}.

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