Consequences of Over and Under Pricing your Rental

Consequences of Over and Under Pricing your Rental

Whether you are first time landlord or a property manager, determining a proper amount to charge for rent is never a simple task, however, it is one of the most important aspects of achieving success with your rental home. Overpricing a home will make it difficult to find a quality tenant and can lead to longer periods of vacancy. If you underprice your home, you can be leaving money on the table. 

Let’s take a closer look at the effects of overpricing and underpricing your home. 


There is a temptation amongst many landlords to push for the highest possible rent they can get. While this may sound like a no-braine, in the end, you are usually not netting the most money possible. The reasons for this are due to the quality of tenants and your increased vacancy rate.  

Quality of Tenants

The highest quality tenants are the ones getting the most desirable properties. What makes a property desirable to potential tenants? Cost. Accordingly, it stands to reason that the higher your property is above the average market price the smaller amount of quality tenants you will have to choose from, ultimately settling for sub-par tenants. When you settle for tenants that are borderline qualified you are more likely to run into problems during your tenancy, which will ultimately cost you money. 

Vacancy Rate

Not only are overpriced homes typically on the market longer, they are also more likely to be back on the market quicker. A tenant may settle for an overpriced home out of desperation. If they are paying more than they are comfortable with chances are they will start looking for a new home right away and move out after the first year. In addition to missing out on rents during times of vacancy you also have the added carrying costs of electricity, trash, water and gas. 


Leaving Money on the Table

This consequence her is obvious, underpricing your unit can cause you to leave money on the table. Owning rental property has many advantages, and one of them is cash flow. Whether you are using your rent money to pay off your mortgage or you are using it for your day to day life, we all want to have more of it. 

If you have any questions regarding where to price your rental, feel free to reach out to us for a free rental analysis. 

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