What price can I get for my rental property?
We are asked this question often and our standard answer is what the market will pay for it.
Many owners who seek out our services advise they need a specific rental amount for the rental to make a profit and won’t rent below that amount. This is a difficult process for a landlord, or their agent to manage.
The market will dictate the amount of rent a tenant is willing to pay for the rental property. During covid, sales increased and a number of rental properties were removed from the rental market in BC which increased the rental rates to higher levels. To combat the market the Provincial and Federal Governments have made some changes which are affecting the rental market. The increased interest rates have slowed the sales market, meaning more products are reducing the selling prices of newly completed developments and owners are bringing those products to the rental market instead of selling upon completion. The Provincial Government introduced a ban on short term rentals which takes effect May 1st, 2024. A number of properties have entered the selling market and the long term rental market.
What effects are these situations having on the rental market?.
The increase in the number of rental properties has created a market where there is more supply than there is product. We are seeing more properties being vacant after a tenant moves out and taking multiple months to find the right tenant for the property. This is causing downward pressure on the rates for rental properties. When a landlord indicates they need a specific price they are limiting themselves to the number of tenants who can afford the property. Anytime you put a restriction on the property you are limiting potential rental prospects.
What many landlords fail to understand is that if you are demanding a rental amount of $3000 per month and you won’t rent it for $2900, it will take 30 months to make up that $100 difference in rent. Landlords fear the option of putting a tenant in the property who stays for many years and they are not able to move them out of the property. Most tenants stay in properties less than five years. The Residential Tenancy Act also allows for annual rent increases and tenants don’t like to move if they don’t need to, so small increases annually could bring that to $3000 in a few years. Owning an investment rental property should be a long term perspective not an annual financial evaluation. If you look at the annual costs of owning and managing a rental property most of the time they are not positive.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
