Rental Price Strategy: How to Set the Maximum Competitive Rent in Los Angeles (Without Causing Vacancy)

How can you set the highest possible rent for your Los Angeles property, without triggering a long vacancy?

It’s quite a conundrum.

In a rental market as competitive and diverse as Los Angeles, it’s important to have a solid strategy for determining rental prices. Here are some key insights to help you set the maximum competitive rent for your property without causing vacancy.

Strategic Summary: Research market rents. Compare your property to others on the market. Consider location and desirability. Remember that rent control impacts how you raise the rent, not where you set it. Vacancy is really only a risk when the property is overpriced for the market.

Understand the Market Dynamics in LA

Before you even think about setting a rent price, it’s essential to understand the broader rental market in Los Angeles. The city is massive, with different neighborhoods having varying levels of demand and rent prices. For example, rents in West Hollywood or Santa Monica tend to be much higher than those in less trendy areas like South LA or parts of the Valley.

To gauge where your property stands, you should research comparable listings. Look at similar properties (same size, number of bedrooms, amenities) in your neighborhood and nearby areas. Compare your property to others that are available for rent. You can use websites like Zillow, Rent.com, Apartments.com, or Realtor.com to get a sense of what other landlords are charging, but for really reliable data, talk to a property manager. We have insights that aren’t as accessible as those public websites, but can help with pricing a property accurately.

In certain neighborhoods, the demand for rental properties may be so high that you can push the rent up a little bit without worrying about vacancies. However, in areas with a higher vacancy rate, you’ll need to be more strategic and price competitively. This is an important factor to consider. Rental pricing is hyper-local, especially in LA.

Consider the Amenities and Features of Your Property

Do you offer smart home tech? Energy-efficient appliances?

The rent you can charge will largely depend on the quality and uniqueness of your property. Tenants are looking for modern amenities like stainless steel appliances, hardwood floors, and in-unit laundry. When they choose an apartment in a building, they’re likely looking for a pool, gym, or parking included. These features add value and can justify a higher rent.

Here’s a breakdown of how different factors can affect your pricing strategy:

• Upgrades and Renovations. If you’ve recently renovated or upgraded the property, you can justify higher rents compared to similar units that have not been updated in a while. If you’ve added smart-home features or remodeled the kitchen or bathroom, it may increase the value of the property in the eyes of potential tenants.
• Amenities. If your building offers luxury amenities like a rooftop deck, fitness center, or concierge service, you can charge more. On the flip side, if you don’t offer amenities like parking or laundry, your rent should be priced accordingly.
• Pet Policy. Many renters in Los Angeles have pets. If you allow pets, you could potentially charge $25 to $100 per month in pet rent, depending on your property. However, consider the costs and potential risks associated with allowing pets (damage to the property, allergies, etc.) before deciding to raise rent for this reason.
• View and Location. Properties with scenic views or close proximity to major employment centers, public transport, or high-demand neighborhoods (like Downtown LA or Venice Beach) can bring in higher rental values due to their location and desirability.

Let’s Not Forget About Rent Control Laws and Regulations in Los Angeles

Los Angeles has rent control laws that limit how much you can increase rent for existing tenants. It’s crucial to stay updated on these laws, as they impact your pricing strategy. What you need to know:

• Rent Stabilization Ordinance (RSO). If your property is subject to the RSO, you can only increase rent by a specific percentage annually. For example, the allowable increase for rent-controlled units is capped at 3% or the Consumer Price Index (CPI) increase, whichever is lower. If your property isn’t rent-controlled, you can charge market rates, but you should still be mindful of tenant demand in your area.
• Eviction Protections. Keep in mind that in Los Angeles, tenants have strong eviction protections. Raising rent too aggressively or pricing it too high could make tenants more likely to move out or challenge a rent increase in court. Consider these factors when pricing your property.

Rent control limits how you raise the rent. It doesn’t affect the starting amount when you’re renting the property to new tenants. This is important to remember because while you want to be competitive, pricing a rent controlled property too low will mean you struggle to bring it up to market rents later.

Avoid Overpricing and Risking Vacancy

While it’s tempting to push the rent price as high as possible, overpricing your property can backfire. If your rental price is significantly higher than comparable listings, you may face extended vacancies. That’s going to cost you more in the long term than dropping the price just a bit when you list your property. 

Pricing too high can deter potential tenants who may not even consider your property if it’s out of their budget. Instead, price your property competitively to attract a larger pool of renters. We like to price rent just below the average for similar properties in the neighborhood to make it stand out. For example, if homes just like yours are renting for $2,800, even listing it at $2,795 will get the attention you want.

Offering a range of lease terms, such as 6-month or 18-month leases, can also help you avoid vacancy and attract more potential renters. Tenants looking for short-term leases or longer term leases may be willing to pay a premium for that flexibility, especially in a city like Los Angeles where people’s living situations can change frequently.

Setting the right rent price in Los Angeles requires a blend of research, strategy, and flexibility. By analyzing local market conditions, considering your property’s unique features and amenities, and staying within the confines of rent control laws, you can find the maximum competitive rent for your property without causing vacancy. 

And we can help. Contact us at Earnest Homes for some targeted and specific pricing help.