It’s sizzling out there.
We’re not talking about the weather, necessarily, but we are talking about the Gardena rental market. There is high demand for attractive, well-maintained rental properties in the right neighborhoods. Tenants are looking for smart-home technology and energy efficiency. They want parking. They want outdoor space. They’re looking for a home that might also be an office if they’re working remotely.
If you have such a property for rent, you’re in a pretty strong position. You’re likely to find a good tenant quickly, and if you’re willing and able to provide an exceptional rental experience, you’re likely to retain that resident.
What should you be charging for rent?
We’re talking about competitive rental prices and how to know whether you’re asking for the right amount of rent. It’s not always easy to know. You don’t want to price your home too high because that might leave you with a vacant property for too long. But you don’t want to price your home too low because that could leave you below market rent. Don’t leave money on the table.
As professional property managers in Gardena, we have a pretty good understanding of the market. We know the tenants and what they’re looking for. We know what the competing properties are and what they have to offer.
Here’s how we recommend you go about setting competitive rental prices in a market like this.
Commit to a Competitive Rental Price
To effectively rent out your property quickly and to good tenants, your rental price has to be competitive.
For property managers, this is common sense, but it can come with some resistance, especially if you’re a new landlord or unfamiliar with the local market. Maybe you have your own idea about how much your property is worth. It’s possible you feel like you need to make a certain amount in order to meet your mortgage responsibilities and other expenses.
Profitability is important. You’re renting out a home because you want to earn money through short-term rental income and long-term appreciation. We always work with owners to price for profit. It’s simply important to balance that with a commitment to accuracy and competitiveness. The right pricing matters because it attracts quality tenants. The right price attracts the right tenants quickly, reducing vacancy periods.
Competitive rental pricing also helps you to maximize ROI. The right rental value ensures you achieve the highest possible income while staying fair and reasonable. You want to ensure your rental property remains relevant on the Gardena rental market. By pricing your property appropriately, you can stay ahead of competitors in a crowded and fast-moving market.
Get to Know What Similar Homes are Renting for in your Neighborhood
The right pricing starts with a thorough analysis of the local rental market.
Smart landlords will look at properties similar to theirs in size, location, and amenities. You cannot compare your one-bedroom studio apartment to a three-bedroom single-family home. Make sure you’re using an accurate set of comparable properties. What are they renting for? How long have they been on the market?
A lot of landlords will use websites like Zillow or Realtor.com to find an estimate of average rents but also consider factors like views, proximity to public transport, and neighborhood popularity. These online rental sites can be a helpful starting point, but with this hot Gardena rental market moving as quickly as it is, the data can sometimes be outdated and unreliable by the time you encounter it.
Research might include reaching out to a property manager. We have some pretty accurate data thanks to our technology and our own daily work in the market. We can tell you what other landlords charging for similar units. We can also tell you whether those properties are fully rented or whether they have vacancies that are slow to rent.
Considering property condition is also important as you’re comparing your properties to others. There might be a home that’s listed at a rent that’s higher than other properties. That property could have upgrades that justify the higher rent.
Being informed helps you avoid overpricing, which can deter tenants, or underpricing, which can leave money on the table.
Factor in Supply and Demand Dynamics
Hot rental markets are often defined by high demand and limited supply. However, understanding the micro-trends in your region is key to pricing strategically. Continue to monitor local listings and assess the ongoing market conditions. If units in your area are being snatched up within days, it’s a sign demand is high, and you may price more aggressively. It’s also a good idea to understand how seasonality impacts competitive pricing. Rental demand often spikes during summer or near the beginning of academic semesters. Adjust your pricing to reflect these trends.
What Are Your Property’s Unique Selling Points?
There has to be something special about your property that others on the market simply do not have. What makes your property stand out? Is it the proximity to well-trafficked shopping centers? Recently updated appliances? A spacious backyard perfect for pets?
It may seem like your property is just like every other property on the Gardena rental market, but we would hazard a guess that there’s something that makes it different and more desirable. Highlighting your property’s strengths can justify higher pricing compared to competitors. You’ll remain competitive with your rental value, but you’ll also give tenants a good reason to consider paying more for your property.
Here are some examples of features and amenities that might justify a higher rental price for your Gardena property:
- Newly renovated kitchens or bathrooms. If you have new flooring or new appliances or a walk-in shower or a garden tub, highlight these things in your listing and your rental property marketing. You’ll attract tenants to your property quickly, and the higher rent will make sense.
- Smart home features like keyless entry or thermostats. These things are becoming more and more important to tenants in Gardena. They like fresh paint and new floors, but they really find value in video doorbells, smart thermostats, or keyless entry systems.
- On-site amenities like a pool, parking, or gym. Whether you’re renting out a property in a well-outfitted building or an HOA that offers these things, they can immediately raise the rent that your tenants will be willing to pay.
- Pet-friendly policies. Allowing pets is a great way to earn more money on your property. Not only will vacancy and turnover losses be lower, but you’ll also be able to collect a pet fee and/or pet rent.
Remember to market these benefits effectively in your listings to attract tenants willing to pay a bit more for added value.
California’s Rent Control Policies
Even a hot rental market is likely to be cooled down by rent control laws.
Rent control affects your Gardena rental property, even if it’s exempt from the limits that rent control laws impose. You’re still competing with properties that are beholden to those limits.
The Tenant Protection Act of 2019 (AB 1482) limits annual rent increases to 5%, plus the local inflation rate, or a maximum of 10%, whichever is lower.
Here’s how rent control affects competitive pricing strategies and what you can do to stay ahead:
1.Limited Flexibility in Responding to Market Trends
Without rent control, landlords have the flexibility to adjust rents in response to changes in market demand. For example, during high-demand periods in key rental markets like Gardena, rental prices typically increase to match market value. But with annual limits on rent increases, landlords may miss opportunities to align their rents with the real-time market. You can focus on maintaining high occupancy rates and offering added value to your tenants, such as upgrades or extra services like valet trash collection, to make the most of your earning potential without overstepping regulatory guidelines.
2.Reduced Incentive to Invest in Property Upgrades
With rent caps in place, many landlords hesitate to invest significantly in property renovations, knowing they may not be able to recoup the cost through rent increases within a short period. This can make it more challenging to remain competitive with newer properties in the area. If this is something you find yourself hesitating to do, we can recommend that you shift your focus to affordable upgrades with a high return on investment, such as energy-efficient appliances or minor kitchen renovations. Highlight these updates as selling points in your marketing to stay competitive.
3. Potential Impact on Long-Term Profitability
For investors managing multi-family housing or other large rental portfolios, the inability to scale rents quickly can make long-term profitability more difficult, especially as operating costs like labor and materials rise. Carefully track all expenses and be proactive in negotiating contracts with service providers to reduce costs. Consider diversifying your investment strategy to include properties exempt from rent control as part of a balanced portfolio.
Ensuring your rental values are competitive, even while it seems like the Gardena rental market will allow you to charge anything and still find good tenants, indicates that you’re a smart investor who understands the long-term impact of attracting, placing, and retaining good tenants.
We’re always happy to help landlords with pricing. Please contact us at Real Property Management Choice.
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