Denver’s trend of rent hikes is old news, but perhaps what you didn’t know is that Denver ranks #3 for price cuts on rentals! According to a study done by Trulia, Denver came in number three in the nation with 18.5% of rental units in the Denver, Aurora, and Lakewood areas as having had to reduce their advertised price before the unit rented, which is up from 16.3% last year.
The National Stats on Price Cuts
Denver came in 3rd just behind San Jose at 20.1% and San Francisco at 19.8%. Trulia’s study analyzed 100 metro areas nationwide to generate the report. The collected data showed that,
nationally, nearly one in ten units had to reduce before renting and about 83% of the markets included in the study reported a large share of price cuts for rentals in the last year.
Let’s Make it Relevant
So what does that mean for you as an owner of a Denver rental? Two things come to mind, and we’ll divide it based on if your home is vacant or currently leased.
For vacant homes currently being advertised, it means you need to be realistic with your pricing. Don’t let all the talk of historically high rents disillusion you into thinking that means you can get
hundreds more than you did last year. Start smart and be prepared to reduce your price if your property isn’t generating any interest. In our experience, if a property isn’t getting any traffic after a week of advertising, it’s usually a good indication the unit is priced too high. Let the experts in Real Property Management Colorado Leasing Team help you figure out that sweet spot for starting out and generate a game plan for reducing if no one’s expressing any real interest.
If your home is currently rented and you’re debating what to charge for the new year, there are a few things to consider before you decide to cut ties and start from scratch just to try and get a higher rate. Currently on average, we’re seeing rental rates for properties that are renewing with current tenants increasing around 4.1%, while owners who decide to let their tenant go and start over only see increases of about 2.7%. During the first quarter of 2017, we saw rates for lease renewals increase on average at about 4.5% while new leases only saw a 3.1% increase. So rather than scaring off your current tenant to try and hike up the rent, you may end up earning more by negotiating a smaller increase to keep your tenant instead.