Landlord Rental Philosophies: Pricing, Tenant Quality, Occupancy, Cash Flow
Have you ever wondered why certain shops, apartments, etc., seem to stay empty longer than similar ones, which may be owned by different owners/owners? Different owners seem to have different philosophies, perspectives, and points of view, when it comes to key components, including: pricing; quality of tenure; occupancy rates; and general cash flow requirements and priorities. While there is no such thing as a one-size-fits-all way to manage a particular property, this article will attempt to consider, examine, review, and briefly discuss some of the options/approaches, including pros and cons. and other considerations.
1. Prices: Whenever a property, whether residential or commercial, is available/vacant, many decisions must be made by the specific owner as to how best to proceed. Perhaps one of the key considerations is price. It seems that many landlords, especially those who own commercial buildings/stores, decide to ask for the highest price they think they can afford. Because of this, we often see higher turnover in some places than others. What is often confusing is why they don’t realize, or seem to not care, that each month it remains vacant, meaning it takes many months, if not longer, to make up that loss of rental income. Some believe that it is important to proceed in this way, because it will set the level of future rents, and while this may perhaps be true, it will only be true if they do not experience constant turnover and prolonged periods of vacancy! This is even more true when it comes to residential properties. My wife and I own several residential units and we are pleased that we have among the lowest turnover and vacancy rates. We would rather price these units more conservatively and lower and maintain high quality dependent tenants!
two. Holding quality: One of the most expensive parts of owning real estate is every time we need to find a new tenant. Doing so often requires additional fees, marketing expenses, maintenance/repairs/renovations, and time/trouble! If you find reliable tenants, doesn’t it make sense to try to find common ground and a meeting of minds to keep them?
3. Occupation: Those who maximize their occupancy rates often enjoy far less stress and hassle. Carefully considering the above two factors is an important factor, in your best interest!
Four. Cash Flow: Owning an income property produces the least amount of stress, strain and hassle, and generally the best results, when there is the best possible focus on maintaining the necessary cash flow, to cover monthly expenses, etc.
Owning can be extremely profitable or a nightmare. Focus on the big picture, don’t be greedy, expensive and quality tenants, etc., and you’ll maximize your chances in the long run.
