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Is Getting the Highest Market Rent in San Diego Best for Your Investment?

Is Getting the Highest Market Rent in San Diego Best for Your Investment- Article Banner
May 20, 2022Propety Management

Every real estate investor we talk to and every landlord we work with wants to get as much rent as possible for their property. It’s part of increasing your short-term cash flow and your long-term return on investment (ROI). 

Rent isn’t the only thing that makes you money, however, and you’ll need to decide what you’re willing to risk in order to reach the highest possible rental value. 

RentSimpli is a full-service San Diego property management company specializing in single family homes, townhouses, condos, mobile homes, small commercial buildings and small apartments. We know how to help rental properties earn more, and it doesn’t necessarily mean charging more in rent. 

What do we mean by that?

Consistent Income vs. Vacancy Risk

First, you have to decide if you’re more interested in the highest possible monthly income or the highest possible annual income. Some owners will want to earn as much rent as possible per month. They are looking only at the rental amount as a metric for what they’re earning and whether they’re successful. 

This might make an owner keep rents high even if it means waiting longer for a tenant to lease the home. It might drive an investor towards the short-term rental market where the per-night rate is much higher. 

Long-term investors who are more interested in their annual income will be willing to sacrifice a higher rent for lower vacancy and the stability and longevity that comes with 12 months of fixed rental income.  

You’ll also have to consider what kind of tolerance you have for risk. If you’re going to wait until you find a tenant willing to pay $100 more per month than the market demands, you’re going to have to sacrifice a month or more of rental income while you look for that tenant. Do the math and you’ll quickly find that you’re losing a lot more with the higher rental amount than the lower rent and the quick move-in. 

Increase Retention and Reduce Turnover Loss 

High Qualified TenantsHigh quality tenants are going to earn more for you in the long term than less qualified tenants who are desperate to rent a home even if the price is too high. If you keep your monthly rent higher than the market rate, you’ll get applications from people who have been denied elsewhere. This gives you the rent you want, but it puts you at risk for late payments, eviction, and other financial risks. 

Think about turnover as well. Vacancy is even more expensive than turnover. A good way to lose a high performing tenant is by increasing rent dramatically at renewal time. 

Most tenants expect their rent will go up a bit every year, and you should always implement an increase if the market supports that. However, you don’t want to make unreasonable demands. Your good tenant will move out, and you’ll have to pay for turnover and maintenance and a whole new leasing process. 

We’re here to help you earn as much rent as possible, but we also know how to ensure your investment earns as much as it can. If you want to know more about what we mean, please contact us.

RentSimpli is a full-service property management company serving landlords, investors and property owners in San Diego & Riverside Counties, including La Mesa, El Cajon, Chula Vista, Santee, Rancho Bernardo, Escondido, Fallbrook, Temecula, and Murrieta.




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