They have numerous sources of market research at their fingertips, so a quick scroll through what is available enables quick judgement to be made about whether a property represents good value.
This also touches on the important issue of good advertising which will be covered in a later blog. In short, tenants know when a property is priced above the market, whether searching the internet or inspecting the property and comparing it to others they have seen.
In a static market this can affect your ability to lease the property quickly. Remember, every week of vacancy loses the landlord about 2% of their potential annual income, so letting the property quickly and minimising vacancy is very important.
Most landlords have to cover mortgage repayments when the rent is not coming in.
Equally, pricing the property below a realistic level means missing out on the best possible annual return.
This is why being in tune with the current market conditions is vital, as it enables your property to hit the market at a lettable figure from the start. (It is also important to remember that market conditions can change very quickly in the fast moving rental market).
If you do the maths, it is easy to see how quickly an incorrect pricing strategy can damage your annual return.
Reasonable pricing as the tenancy continues will also help you in achieving 52 weeks rent a year and avoiding the pitfalls of high tenancy turnover, such as lost rent, increased costs for letting, advertising and lawn mowing which all accrue when properties are vacant.
Remember, if you are looking for genuine market expertise in the management of your rental property talk to one of Barry Plant's Property Managers today.