Before reducing your price… analyze your market with some simple questions, then enjoy the proper rent you require to thrive.

Here we go again… it’s the end of summer, nothing is renting, and the go-to move for landlords is… lowering prices. This is NOT going to fill your corporate rental.

If it’s end of summer in New Orleans, your phone calls have slowed; perhaps even stopped. That’s because no one is coming. Period. There’s no demand because there’s no demand, and the first thing I see landlords and agents doing is lowering the prices.

Does it work? NO. You may attract a tenant, eventually, but the tenant you are used to serving in the corporate rental market is not shopping price. “Cheap” rentals are not your competition – hotels and Airbnb units are the ONLY competition that matters, and when you lower the price, you do not create a single extra person seeking housing – you simply put yourself in competition with lesser properties that cannot compete with the amenities provided by the higher end corporate leasing market. You also cheapen your rental history should you decide to sell your unit and use that as a selling benefit.

Don’t do that! Before lowering your price, ask yourself the following:

Who is my ideal tenant, and who is competing with me for his stay?

Your ideal client is seeking furnished housing with all the linens, housewares and utlities included – along with parking, if it’s available. He/she usually owns a home themselves, so they take care of your property like a homeowner – not a tenant.

He/she has a housing allowance. The housing allowance is based on other short term rentals or an extended stay in a hotel. Period. That’s your competition, and the only competition that matters.

There are less expensive places out there, but we are not those places. We are corporate housing landlords who understand all the unique needs of our guests, have experience hosting mid term stays, and we win in every comparison to the other options.

Hotels: Hotels with a mini kitchen, a suite, parking and daily maid service will cost no less than $100 per night, if the accomodations are even remotely well-appointed. That’s $3000 per month for a “studio” equivilant to your one bedroom condo or apartment. It’s all in one room, even if there’s a living room area. There’s maid service – the hotel wins that comparison. But living like a local? No. Enjoying a neighborhood? No. Cooking like home? No. Meeting neighbors and feeling like you’re home? No. Doing laundry in your room while you work or binge a show? No.

Plain and simple, it’s a longer stay in a hotel environment, and it’s definitely a travel vibe. It will be a convenient, but very limiting, stay in a sterile environment that will not seem at all like settling into a “home-away-from-home.” It’s what you do on a business trip, and it gets tiresome very quickly. That’s why corporate housing even exists. Most people who travel to work for months at a time want something more, and their company is paying for it. The housing allowance is based on the cost of extended stay hotels.

The second choice your tenant will have is to find an AirBnB unit available for a longer stay. It’s probably much more like the experience he/she wants, but if it’s booked on a platform for vacation stays… it’s going to cost 30% more than the hotel because of the booking fees, the cleaning fees, and all the little things that add up quickly when booking through a third party app.

How is reducing your price going to attract more tenants… if there are no tenants?

Unfortunately, the dead time, caused by many variables this year, creates panic in landlords and causes illogical solutions to catch on. One landlord lowers his price, so three others lower theirs to compete. Yet no one is getting any inquiries, so exactly who are you competing with, and for which tenants? There are none.

So the landlord lowers his price AGAIN, and everyone else follows suit.

I’m banging my head against the wall, because WHY?? If no one is demanding property, why are you reducing your price? When demand comes back – and it always does – will you realize you didn’t create this by having lower prices? You just gave away your profits for invisible reasons, and now the market is full of underpriced inventory, and landlords now suffer for months with these agreements until scarcity pulls prices back up where they belong.

There are better ways to attract tenants when demand is scarce.

If, during a dry spell, a random inquiry comes through for your property, make sure you’re prepared with the correct price. You can advertise a low price, but make it applicable only to stays of one year or longer. Those are rare in this niche, and you can structure your pricing according to length of stay, creating tiers of rent which are higher for a shorter stay, and less for each additional month of the lease. That justifies what you need to ask for the more typical 1-3 month tenancy.

You can also negotiate privately, if you are truly desperate to get your property rented. It’s important to remember: if no one is calling, it’s not the price, it’s lack of demand. If someone calls, you can always negotiate. Don’t do the “scared thing” and reduce your price to an empty audience.

Can you use this time to get some deferred maintenance done?

When the market is busy, we are churning one guest after another, with rarely a moment to take a thorough inventory of supplies, examine worn housewares and aging bedding, touch up the chipped paint, deep clean curtains and carpets…

This time, as painful as it can be, can be the only time you’ll have to make your unit top-notch again for the next wave of film industry crew, travel nurses, medical patients, or whatever brings corporate leases your way.

Would it make sense to bite the bullet and rejuvenate your valuable property while you have a moment to get in there and really put it in order?

Owning property in NOLA is very expensive. You will not win by becoming a discount landlord.

My final thoughts on this are tempered with the realization that our costs in New Orleans for landlords are absolutely out of control over the past few years. I feel this in my soul, and I have struggled with everyone else through the recent hikes in insurance, taxes, interest rates, HOA assessments and the huge drop in visitors to the city for political and societal reasons.

It hasn’t been easy.

We are now looking forward to the return of Hollywood South, and this is the time to get your price structure in line with the film industry housing allowances, and work harder to attract the tenants corporate leasing was designed for.

You’ve got the next year or so to get your property in peak condition, finesse your marketing to target only the best of corporate leasing clients, and decide whether you want to be in that number of landlords who reap the benefits of the boom soon to come.

Take a serious look at the budget for owning your property. Assess the competition for the tenant you want. Stop looking at “rental property” prices, and set your standards higher to appeal to professionals with housing allowances who will treat your property like they do their own home.

Let’s get back on track, stop chasing invisible and non-existent price arguments when there’s no demand.

If serving this market is your goal, it’s time to design your strategy. Ask for help if you need some guidance. We’ve been leasing to your ideal tenant for over 15 years, and we can help, advise, advertise and/or manage your property for the best results.

GOOD TIMES ARE NEAR AGAIN!

Anne Beck, Broker and Host

504-812-4702 for assistance with your furnished rental