I’ve been in hundreds of apartment buildings in 40 years, and here’s the report:
A lot of apartments offered for rent aren’t even clean.
I’m not talking about whether they have quartz countertops, stainless steel appliances or luxury vinyl plank flooring.
I’m talking about clean.
Then let’s walk outside.
There are weeds in the landscaping. Bushes are overgrown and need trimming. Peeling paint. Dirty siding. And a parking lot that looks like a refugee from a bombing campaign.
Let’s go back inside to bask in the glow of apartment only grade finishes. Carpet in landlord brown. Wears like iron. Looks like hell.
Plastic panel tub surrounds that you would never see in an owner-occupied home.
Light fixtures that are either mismatched or twenty years out of date.
Laminate countertops in great condition but from a color scheme that screams 1990s. Those tops go nicely with the Euro laminate cabinets that were apartment grade only 30 years ago.
I suppose if you’re going to market junk like that, then the rent really is too high.
But there really isn’t such a thing as a price that’s too high. There’s only a price that’s too high for the value you’re offering.
A $2,000 apartment can be a bargain. A $1,200 apartment can be overpriced. It depends on what the renter gets for the money.
When vacancies increase, price is the easiest lever for an apartment owner to pull. Lower the rent $50. Offer a month free. Throw in parking.
Sometimes that’s exactly what you should do.
But before I give away $600 a year with a $50 monthly rent reduction, I’d like to know whether I can improve the other side of the equation.
Renters Buy the Whole Property
Owners tend to think about value in terms of square footage, bedroom count and amenities.
Renters experience the entire product. Curb appeal comes first. None of these things are revolutionary. That’s the point.
You don’t necessarily need a $25,000 apartment renovation to increase value. Sometimes you need fresh paint, a pressure washer, landscape attention, some asphalt patch and somebody who cares enough to notice what’s wrong.
The Rent Cut Isn’t Free
Suppose an apartment rents for $1,500 per month.
Cut the rent $100 and you’ve given away $1,200 during the first year. Do that across 20 apartments and you’ve reduced potential annual revenue by $24,000.
What could you fix for $24,000?
There is another problem with cutting the rent. You haven’t fixed anything. The bushes still need trimming. The parking lot is still a mess. The apartment is still dirty. It’s a formula for a slow decline.
None of this means you can ignore the market. If comparable apartments rent for $1,400 and yours is $1,800 with nothing meaningful to justify the difference, the market is going to teach you a lesson.
But don’t confuse price with value.
One of the most expensive mistakes in property management is assuming the customer rejected your price when they may have rejected your product.
Before lowering the rent, walk the property the way a prospective tenant would.
Better yet, have somebody else do it. Owners have a remarkable ability to stop seeing their own weeds.
Then ask yourself a different question.
Not, “How much do I need to lower the rent?”
Ask, “What do I need to do to make this apartment worth the rent?”
Reality Face Punch: Before you decide your price is too high, make sure your value isn’t too low.