You know, the investor who brags about how high their rents are?
They must be smarter than everyone else (insert sarcasm).
Something that has been on my mind a lot lately are the investors who feel the need to over exaggerate the success of their rentals. They just loooove to brag about how much rent they are getting and how smart they are. It’s like some crazy high that I can’t relate to, but so many investors are addicted to.
A while back I was speaking with a client of mine who at the time had a vacant home that we were trying to rent. The owner happened to stop by and run into another investor who owned a home across the street. As I’m sure they were talking about their rentals, this particular investor claimed he recently rented his home for $1800 in 2 days! Problem with this statement is after I had done
my market research, I recommended that we try and rent our home at $1500. My client immediately called me to inform me of the super investor across the street who got $1800, and then started to question me as to why we were only going for $1500?
This is not my first rodeo, and I’ve been around a little bit. So I got the address to the “$1800” home and went to trusty ol’ Zillow to see if I could find. Just as I suspected, the home had been listed for 3 weeks (not 2 days), and at a list price of $1475 (not $1800). Thank you Zillow for not removing such valuable info! I jumped right back on the phone to inform my client of the information that I had found so I could bring him back down to reality.
I don’t know why this particular investor felt the need to go straight peacock mode and lie about his investment. There are investors all over the place that portray the same behavior and I’m constantly taking those calls of “I heard the property next door rented for _____.” Then I have to pull the data, and explain why this mystery number is likely a lie.
Here is the reality, establishing a rent price is not that difficult. It is a supply and demand problem, taking into consideration what your direct competition is doing at that moment. How does your property stack up against what is available? How many comparable properties are available? That’s it folks, based on that you should be able to position your rent price pretty accurately. And let me ask you this, if there are 4 homes in the area, all comparable to yours in the range of $1400-1500, what makes you think someone will pay $1800 for yours? You are correct, they won’t. So when I hear the outlier stories of absurd rent amounts, I instantly know that some investor feels the need to peacock (I like that term, it’s funny) and over exaggerate how smart he or she is.
So can we just be honest with each other? Just owning a rental is cool, so no need to go down Exaggeration Lane.