Will a Lower Deposit Help Rent a Property?

By
Property Manager with HomePointe Property Management, CRMC 00691121

This question normally comes up when a client wants to attain a higher than market rent.  They figure that they may be able to attain the higher rent by making the initial move in costs cheaper. 

I think there is some merit to this argument.  But, I would use some caution here as most qualified people expect to pay a security deposit and have those funds saved up.  The people you might interest with a higher rent and lower deposit may be the unqualifed ones!

The best solution to a vacancy problem is to follow these guidlelines:

1. Make sure the property is in good, clean condition.  Paint the place for example.

2.  Make any improvements that are desired by tenants.  For example, if you live in a hot or cold climate, provide central heat and air. 

3.  Set the rent based on local market conditions.  Compare your asking rent to the competition.  Consider setting your rent just a bit lower than the competition.  Keep an eye on the response and what your competition does.  Answer your phone and return all calls. 

4.  Set the deposit to meet the competition.  Be reasonable.

5.  Market your property in several internet sites, use a sign, and use the newspaper if your experience shows that it works.

That is it.  Now put this in play and get your property rented!

Posted by

Robert A. Machado, CPM, MPM

HomePointe Property Management

Sacramento, Yolo, El Dorado, and Placer Counties

We manage residential and commercial property.

916-429-1205 x 105

rmachado@HomePointe.com

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Dan Edward Phillips 06/27/2010 06:33 PM
Topic:
ActiveRain Community
Groups:
Property Management
Property Managers
National Association of Residential Property Managers (NARPM®)
Rental Agents and The Single Family Rental Market
Tags:
marketing a vacancy

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Rainer
115,674
Jason Watton
Realty One Group of Scottsdale, AZ - Scottsdale, AZ
Realtor - Scottsdale Arizona Homes for Sale

Good suggestions Robert.  Craigslist is the Rental Bible in our marketplace.  I also always tend to lease my properties 5-10% below the competition rather than risk 1-2 months vacancy.  The dollars tend to work out better in the end and I get my pick of the potential renters as well!

Jun 24, 2010 06:41 PM #1
Rainer
133,351
Bryan Watkins
LRA Real Estate Group - Mesa, AZ

nice post. Some people are now thankful to get a rental in the Phoenix area, since the houses they were renting were foreclosed out from under them.

Jun 24, 2010 07:27 PM #2
Rainmaker
1,263,696
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

I would qualify them and then take the deposit in installments.  I have done this with success.  

Jun 24, 2010 11:40 PM #3
Rainmaker
811,688
Dan Edward Phillips
Dan Edward Phillips - Eureka, CA
Realtor and Broker/Owner

Very good suggestions, I will pass it on to my clients who do their own property managemment, they will enjoy the post!

Jun 25, 2010 01:03 AM #4
Rainmaker
421,409
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

I'm still a fan of a good security deposit.   We are seeing a strong leasing market, so we are fortunate to be able to get them. 

Love the suggestions of making sure the property is in good condition, it makes for better tenants.

All the best, Michelle

Jun 25, 2010 01:30 PM #5
Rainmaker
254,482
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Michelle,  Big security deposits are best, but sometimes a high securiity deposit can create a longer vacancy.  Best to include that amount in your marketing effort so you don't extend a vacancy.  Thanks for your comments.

Jun 27, 2010 04:14 AM #6
Rainmaker
2,191,432
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I used to take my deposits in installments, too. Plus, I'd allow pets when other landlords wouldn't. Then I'd get a pet deposit as well.

Jun 28, 2010 04:38 AM #7
Rainmaker
254,482
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Allowing pets is a very good strategy.  You will be able to rent your property quicker, for a higher rent, and pets really do not do much damage most of the time. 

I still have issues with a bigger deposit paid over time.  If a mistake is made, collecting those extra payments with a less than secure tenant could be embarrising for a property manager.  My take.

Jun 28, 2010 06:50 AM #8
Rainer
10,743
Cindy Doup
Re/Max Real Estate Professionals - Columbus, IN

Hi Robert..... I have had a lot of success with the tenant paying half of the deposit when they move in, and then pay the remainder of the deposit within the first 60 days of move-in.  What I do is take the remainder of the deposit owed and divide it by how they will be paying rent (weekly, biweekly or monthly) and add that amount to the rent.  So if they rented for $500 per month and paid weekly $125, I would add $31.25 to each week to get the deposit paid.  Works great for me, and the tenants like it too.... I tell them that I will work with them on the deposit so they can get the utilities turned on in their name before I hand over the keys.....

Jul 09, 2010 04:35 PM #9
Rainmaker
1,128,457
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

We have had very little success with allowing tenants to pay a deposit in installments.  The court only considers unpaid rent for the 3 day notice so there is little that can be done if the deposit payment agreement is not kept.

Jul 12, 2010 02:31 PM #10
Rainmaker
254,482
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Ocean View, I could not agree more.

Jul 13, 2010 01:09 PM #11
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Rainmaker
254,482

Robert Machado

CPM MPM - Property Manager and Property Management
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