If you want to shorten your days on the market and have a more attractive offer don’t charge last month’s rent. The risk to reward is simply not worth it.
Why You Should Not Charge Last Month’s Rent…
Duration of video – 3mins
Summary
This video discusses the reasons why the company does not charge for the last month’s rent when renting out properties. It explains that not charging the last month’s rent makes the overall rental offer more attractive and competitive in the market. The video also highlights the high cost of living in Miami, where rent prices have increased significantly faster than income growth, making it difficult for many applicants to qualify based on their income and credit scores. The key takeaway is that by not charging the last month’s rent, the company can attract higher-quality tenants and position their rental properties more effectively.
Sections
00:00:52 Reasons for not charging last month’s rent
We do not believe in asking for the last month’s rent when finding tenants for rental properties. This is because it makes the overall rental offer more attractive and competitive in the market. Tenants consider factors like location, price, and move-in costs when comparing properties. By not charging the last month’s rent, the move-in cost is lower, making the company’s offer more appealing. Additionally, tenants are still liable for the last month’s rent regardless of whether it is collected upfront or at the end of the lease.
00:01:30 Cost of living in Miami
The cost of living in Miami has increased significantly, with rent prices rising much faster than income growth. Based on the national median household income of $75,000, Miami residents spend almost 50% of their income on rent payments, which is significantly higher than the ideal of 33%. Rent prices have increased by 134.9% since 1999, while income growth has been only 76.8% during the same period. This disparity has accelerated in recent years, leading to many applicants not qualifying for rentals due to insufficient income and credit issues.
Action Items
- 00:02:43 Do not charge the last month’s rent when renting out properties to make the overall rental offer more attractive and competitive in the market.
- 00:02:15 Consider the high cost of living in Miami and the disparity between rent prices and income growth when evaluating rental applicants and setting rental rates.
Transcript
Roel van de Ven 00:00
So why don’t we charge for last month’s rent? I get asked this question all the time. And it’s pretty simple, there’s a few reasons why we don’t believe in asking for the last month’s rent when it comes to finding a tenant for a rental property.
Roel van de Ven 00:12
When you’re looking at a rental property, you’re really offering a product, right? A total offer. When tenants are looking at different things, there’s a few things that they consider. Obviously cosmetics, location where it’s located, the property, right?
Roel van de Ven 00:25
The price, so what is the price point? But also the move -in cost. And the move -in cost is really important when they’re comparing different properties. So that overall package or offer that you’re giving out in the market is really important to be able to move your property much faster and for a more competitive price.
Roel van de Ven 00:41
Going back into the move -in cost, when we’re asking for the last month’s rent, they’re still going to be liable. So there’s no real benefit of asking for last month’s rent because the tenant is still liable no matter what.
Roel van de Ven 00:52
Whether we collect it upfront or whether we’re gonna collect it at the end, it really is the same thing. Another important thing is you cannot take the last month’s rent and use it for security deposit.
Roel van de Ven 01:04
So that’s also really important. It can only be used for rent. So that’s why the reason, the risk and reward really doesn’t benefit that much. And the reward obviously is to being able to get a much more attractive offer out there in the market.
Roel van de Ven 01:16
And managing over 10 ,000 across the US as key renter. We have experienced this and we find that to be the most effective way to position your property. Another thing that I want touch base on very briefly is the cost of living in Miami.
Roel van de Ven 01:30
Miami prices have gone up significantly and the affordability for how much people are earning versus how much the properties are actually, those numbers really are surprising. I mean, we look at the number here, income to rent ratio based on the national medium household income of $75 ,000.
Roel van de Ven 01:48
Miami is far in the red at almost 50%. 50% of your income goes towards rent payments. That is significant because typically when you wanna look at a quality applicant, you would wanna see at least 33% or a third of your income going towards housing.
Roel van de Ven 02:05
That’s the ideal. That’s what we’re looking for. Most people are not able to afford that within Miami right now. Another statistic that I wanna show you here is the increase of the rent versus income.
Roel van de Ven 02:15
Rent has increased 134 .9% while we look here at 76 .8% the income growth since 1999. So you can see that it’s further and further apart and especially in the last few years, this has accelerated and that’s a really, really big problem because the applications that we see coming in now, a lot of them just don’t qualify in terms of the income and a lot of them as well, credit issues are starting to arise as people can’t afford to live.
Roel van de Ven 02:43
So that’s a really big issue that we’re seeing. If you are able to give a better offer, AKA don’t charge the last month’s rent, for me it makes total sense and that’s how you attract a quality tenant.