With all the vacant properties for sale in the greater San Jose area, the rental market has certainly seen a surge in renters. Consequently, when homeowners read the real estate section of the
Mercury News, and see that there has been a 10% increase in rents, they tend to get an inflated vision of their homes' rent potential. The most difficult hurdle is imparting to an owner the reality of the market. While Sunnyvale rents may be up 12%, South San Jose may only be up 5%. Luckily (or unluckily) in the rental market there is no mls. Therefore, no DOM or CDOM, which allows for us to test the market at any price and gauge the response we are getting to our marketing.
What I often tell our clients is that we need to price the property aggressively, and by that I mean weekly reductions of $100. The idea behind this is that lost rent can never be recovered. Take a property priced at $2,400 that has been vacant over a month. The property is likely to have been rented for $2,200 or even $2,300. But since the property has sat vacant, they have already lost the $2,200 rent in the vacancy alone, which averages out to $183.33 a month. Its simple opportunity cost at work.
Brad Bonnifield is Broker/Property Manager for
Cornerstone Property Management in San Jose.
