Are you a landlord and having a hard time renting your Palos Verdes Real Estate

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How’s the home rental market in Palos Verdes CA?
(Do you know the secret strategy?)

One of my clients asked me today about the rental market. He’s having a hard time finding tenants and keeping tenants and wanted my advice on how to lower his vacancy costs and get better tenants.

My advise for him is a bit counter intuitive but it really does make sense … Here’s an excerpt of the email I sent him. Follow along and you will “get it”…

But for the SFR Market … values are stable and in fact there is some strength being shown in pricing (see chart below or attached). Also given the number of leased homes in the last 12 months and the number of active properties on the market for lease now, there are 56 days of unleased inventory on the market. In other words, at the pace it took to lease a home brought to market in the last year, it would take 56 days to deplete the current level of available homes assuming no other properties were listed.

This tells us that when calculating expenses, one should factor in a vacancy rate of at LEAST 2 months worth of rent.

THIS IS MOST IMPORTANT: The median leased price of a home on the Peninsula in the last 12 months was $3,800/mo. So if you’re figuring now on 2 months worth of rent for expenses on a vacancy factor … that’s $7,600. So let’s say “fair market value” for your property was $3800/mo. Wouldn’t it be more wise to LIST the property at $3650/mo ($150/mo LESS than fair market) in order to get it rented FASTER and gather a greater number of QUALITY applicants from which you can choose the best? So you lose $150/mo. X12 months, that’s $1800. But if you could rent the property in 30 days or less because of the lower rent instead of the 60 days calculated by the absorption rate, YOU ARE STILL AHEAD by $2000 (3800-1800 = $2,000_

This is the mistake most landlords make. They ask TOO MUCH or they ask what they think is fair and it takes TOO LONG to find a tenant and the one that applies is often not the best. Instead, ask less and get more! With a lower than market rent, you will rent it faster, get more applicants, and have the luxury of picking a good one.